Brendan Howlin (Wexford, Labour) | Oireachtas source

This Bill, as the Minister has indicated, provides urgent amendments to the Personal Insolvency Act 2012, which was originally designed to make it easier for insolvent persons to legally resolve their indebtedness. It was designed at the height of the housing market collapse when people who never envisaged they would be in debt found themselves in it. The objective of the Bill was to give a path to recovery for people trapped in debt. The legislation originally had, and still has, graduated mechanisms to achieve this objective, depending on the level of debt and the nature of the debt involved. This legislation was championed by my former colleague, Willie Penrose, who had great experience as a barrister in dealing with intractable cases of debt. I remember his persistence at parliamentary party meetings, in the Dáil and with Ministers and I believe his voice was pivotal in putting the original 2012 Act, important legislation, on the Statute Book.

Concerns were raised initially to the effect that the co-operation of the creditor was required. That was addressed subsequently, in the amendment introduced in 2015, to ensure an avenue for a debtor to apply to the courts where home mortgage arrears were involved and the credit institution was resisting the resolution proposed. Consequent to the 2015 amendment, as the Minister will recall, the court can impose a resolution in these circumstances, notwithstanding the resistance of the institution.

Legislation of this nature has to be reviewed regularly. It has to be refined on the basis of its practical effect, or its outworkings in terms of real life and real cases. Is the legislation achieving the objective we have discussed here and set in the Oireachtas? Are the practical difficulties that we set out to address being resolved? This Bill seeks to update the legislation, which I welcome. We will support it. The requirement for a mortgage to be in arrears before January 2015, which was understandable in a Covid-free world, is to be removed, which is an obvious advance. There is no need for any date to be put in. This is a permanent mechanism for people who find themselves in the circumstances in question, not simply an emergency proposal. I hope that will apply.

As the Minister has said, the Bill also proposes to increase the upper limit of allowed personal assets to €1,500, for the reason he has set out: people could be debarred simply by getting a social welfare payment in a lump sum, which was never envisaged. The Minister set out other changes proposed in the Bill, including changes in respect of the time limit for the application of a personal insolvency court review and numerous other issues I do not have time to deal with individually, unfortunately.

Legislation of this nature is required. Our general bankruptcy and insolvency legislation has been hopelessly outdated. By comparison with that of other jurisdictions, it has been completely unsympathetic. Maybe it dates back to an attitude we had to bankruptcy in this country. In the United States, it is not regarded as indicating failure. We have seen many high-profile individuals residing abroad to avail of other jurisdictions' insolvency laws. It was important for us to update ours.

I can tell from experience in a job I once had that there is always concern in the Department of Finance of Central Bank about legislation of this kind. We need to ensure we have a competitive banking market and, more important, an affordable mortgage market in this economy. It is therefore very worrying that banks such as KBC Bank Ireland and Ulster Bank are withdrawing from this country, as alluded to by others. The reduction of competition in an already overly expensive mortgage market is deeply worrying. Private equity funds have bought distressed mortgages from banks and mortgage-givers and are now complaining, in some instances, that they have not made sufficient money from the acquisition at reduced rates of these distressed loans. They express concern that they are having difficulty in enforcing securities on unpaid mortgages. In the aftermath of the current Covid crisis, these matters are likely to be exacerbated and we will see an increasing number of cases involving people in extreme difficulty. We need to be able to take further action if that is the case. If companies that have acquired distressed loans and want to foreclose on the individuals, families or businesses concerned are going to be able to go to the courts to get judgments against them, based on their wanting to make an instant profit even though a repayment schedule is perfectly feasible, it is wholly unacceptable and we must be prepared to legislate to resist it. That is certainly an area that requires extreme vigilance on our part.

Issues such as Irish banking are very important for us. It is not an appropriate topic to discuss with the Minister for Justice but it is profoundly worrying for any of us who consider the Irish economy that we are now going to return, apparently, to a dominant duopoly involving Bank of Ireland and AIB. The role of the European Central Bank, ECB, in this matter has to be taken into account. The reserve required in Irish banks after the crash is unacceptable. Why have Irish banks uniquely to have a multiple of the reserves required in other banking systems in our common banking union? It is just not fair, equitable or acceptable. There is a genuine debate over what is required to ensure there will not be another banking crash but if we are to have a banking union, it must be based on equity. In other words, the interest rates that apply generally across the Union – the interest rates set by the European Central Bank – should apply here. There is almost a punitive attitude taken in that we have to have reserves that others do not.

There is an enduring debate on the necessity, or otherwise, of a State-owned bank. On this, I would argue in the affirmative. Those of us who have argued this for most of our political careers did not expect us to own virtually the entire banking system after the crash but we need to consider the initiatives taken in the early years of this State. The Agricultural Credit Corporation, ACC, was set up in 1927 to finance agricultural activity because it was required. It was seen that the private sector would not build a vibrant agricultural sector sufficiently.

That was followed by the establishment of the Industrial Credit Corporation, ICC, in 1933, during the Lemass era, to organise sustainable State investment and build an industrial base in this country. Both were later sold off, the ACC sold to RaboBank in 2002 and the ICC to Bank of Scotland in 2001, when, during the Celtic era, people lost the run of themselves and wanted to move to a position well beyond that for which those banks were designed. The Government of Bertie Ahern saw only an unending boom. As we know, as the boom got "boomier", catastrophe loomed.

We have to learn from the past. There are two things I want to say about the legislation. I strongly support the specific changes envisaged in the Bill but we need to be vigilant to see how we can do more if, in the post-Covid area, we see the necessity for further action. I would further argue that we need to have a vibrant, State-sponsored third force to ensure that the traditional duopoly that dominated banking in this State is not returned without competition. That would be bad for mortgage holders, bad for business and bad for our economy.

See this speech in context