Frances Fitzgerald (Dublin Mid West, Fine Gael) | Oireachtas source

I thank Deputy Michael McGrath for the raising this important issue. There is not a Member of this House who does not understand how serious the issue of personal indebtedness has been for families throughout the country in recent years. It requires a systemic, multifaceted response. The Government has undertaken to make such a response which continues to evolve on an ongoing basis. While we are no way near the end point and while we are certainly examining the introduction of further innovations, a matter to which I will return, I am satisfied that we are beginning to see progress. I welcome the tangible evidence to the effect there has been a significant increase in bilateral engagement between banks and customers in debt distress. Figures from the Central Bank show that the number of private dwelling home mortgage accounts in arrears declined by over 25,000 in 2014. In addition, I welcome the figures from the Department of Finance which show that almost 115,000 restructure agreements have been reached between borrowers and lenders. This is an important figure to note. While I acknowledge that there is a huge amount of work still to be done, particularly on the issue of long-term mortgage arrears, it is clear that the mortgage arrears resolution strategy is progressing.

It is no coincidence that there has been a significant increase in bilateral deals between the banks and their customers as the Government has in recent years introduced a suite of measures to assist distressed borrowers to keep their homes, including the establishment of the Insolvency Service of Ireland and the reform of the bankruptcy laws. The Land and Conveyancing Law Reform Act 2013 includes provisions which have been put in place to protect the principal private residences of borrowers in mortgage arrears and the revised code of conduct on mortgage arrears provides a strong protection framework for co-operating borrowers who are in such arrears in respect of their principal primary residence. The Personal Insolvency Act 2012 modernised the State's insolvency laws, established the Insolvency Service of Ireland and put in place new debt resolution mechanisms including a debt relief notice, DRN, which allows for the write-off of debt up to €20,000 subject to a three- year supervision period; a debt settlement arrangement, DSA, for the agreed settlement of unsecured debt, with no limit involved, normally over five years; and a personal insolvency arrangement, PIA, for the agreed settlement of secured debt up to €3 million, although this can be increased, and unsecured debt with no limit involved, normally over six years. A number of other initiatives have been put in place to provide information and guidance for those in mortgage arrears. These include the mortgage information and advice service which was launched by the Minister for Social Protection in September 2012; a website maintained by the Citizens Information Board which offers detailed information to distressed mortgage holders; and a mortgage arrears information helpline which has been operational since July 2012.

I note the valuable work done by the Joint Committee on Finance, Public Expenditure and Reform in its report on mortgage arrears last July. There are four recommendations contained in the report which relate to personal insolvency and bankruptcy. The recommendation on engagement by financial institutions has been fully taken into account in my Department's review and forms an important part of the issues I am considering.

Deputies will be familiar with the fact that, on the issue of costs, I have taken some immediate measures. On insolvency fees, I have provided for a complete waiver of all fees payable to the Insolvency Service of Ireland and the courts on insolvency applications with effect from last October. That was an important recommendation. It was clear from my discussions with the service and its director that they felt this measure could make a major difference and improve matters for those who wanted to use the service.

As regards bankruptcy costs, I have provided for a waiver of all fees payable to the courts on bankruptcy applications and a substantial reduction in the costs of entering bankruptcy. The effect is that the fees and charges payable to the courts and the official assignee in bankruptcy by a debtor entering bankruptcy have been reduced from nearly €1,400 in early 2013 to in the region of €935 early last year to approximately €275 since 31 December 2014. This compares to an equivalent cost for entering bankruptcy in England and Wales of approximately €900. Further, in response to the joint committee's recommendations, the Insolvency Service of Ireland is providing support of €750 on a temporary basis to defray the expense of a personal insolvency practitioner in any case in which creditors reject a reasonable DSA or PIA proposal. In this context, the word "reasonable" refers to a proposal which offers a better outcome to creditors than bankruptcy. The Insolvency Service of Ireland will be reporting on the outcome of this initiative during the coming year.

In addition, the Insolvency service of Ireland launched the major "Back on Track" information campaign towards the end of last year, which I supported. This campaign is targeted to reach those most in need more effectively and already appears to be delivering results. However, I take the opportunity to add that there may be a need for an even more targeted information campaign focused on those in long-term arrears who have not engaged to date. Part of the problem clearly lies in the fact that some those whose mortgages are in arrears, perhaps out of fear or as a result of wanting to keep their heads down, are not engaging with their lenders. I appeal to them to engage. I can understand how difficult it is for many people who are frightened because of the situation in which they find themselves and who cannot even take the first step.

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