Matt Carthy (Cavan-Monaghan, Sinn Fein) | Oireachtas source

I thank the Minister for the update. The opt-in before us facilitates the mutual recognition of changing insolvency practices in different European Union member states. As Ireland and other EU member states update, adjust or develop different civil mechanisms, it is generally right that we should continue to facilitate mutual recognition. Sinn Féin will be supporting this opt-in as we believe that, where such mutual recognition exists today, ordinary people and businesses should continue to avail of its benefits. However, I appeal to the Minister to bring any such opt-in proposals before the House in a timely manner so as not to deny needed scrutiny at any stage for the sake of expediency, which is usually necessitated by Government delays in bringing forward proposals.

When discussing insolvency, we cannot avoid discussing what is actually driving insolvency for both businesses and individuals. This includes the high cost of living, the cost of insurance, the cost of rent and sky-high utility bills in this State, all of which the Government has failed to tackle. These costs are the reason so many businesses are struggling, which unfortunately leads to many subsequently facing insolvency.

In addition, we have the specific problems caused by the failure to crack down on vulture funds. Recent Fianna Fáil and Fine Gael governments have not changed our insolvency framework for the better. I note the original 2015 regulation applies to both companies and legal persons and that it specifically states that "The scope of this Regulation should extend to proceedings which promote the rescue of economically viable but distressed businesses" and give them a second chance when needed. That is a worthy endeavour. Mutual recognition being the purpose of the regulation and given that the foundation of this regulation is to support that second chance, it is a shame that, in 2019, the Government approved changes to legal aid in personal insolvency cases, removing a debtor's automatic right to funding for a barrister. The Minister may recall that my party colleague, the Sinn Féin spokesperson on Finance, Deputy Doherty, described this as an attack on the most vulnerable and a coup for the banks and the vulture funds. In effect, it limited the ability of people, particularly ordinary people, to enlist the aid of a barrister in taking the fight to the banks. Sinn Féin opposed this measure and highlighted the fact that, when people actually brought the banks to court, they won nearly two thirds of the time. This lays bare the fact that this measure was intended to disarm ordinary people and to protect the banks.

It is clear that, where insolvency is involved, successive governments have left ordinary people at the back of the queue because, despite the Government having made some improvements for workers via the Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024, a crucial area that remains unaddressed is that of workers being treated as unsecured creditors for the purposes of collectively bargained redundancy agreements.

The Government's failure to reform and rebalance our own insolvency framework continues to have real-life consequences for people today. It particularly impacts on the 27% of people who managed to work themselves out of arrears and get their mortgage back on track since the financial crash and who are now facing an undue financial burden because they have been forced back into arrears arising from exorbitantly high interest rates. More than 100,000 struggling mortgage holders are paying interest rates of 6%. Some 7,000 of these are paying interest rates of more than 8.5%. These are the people whose mortgages were sold off during the austerity years and who, through sheer grit and playing by every rule, managed to get themselves back on a solid footing but who once more find themselves in a precarious position as result of the greed of vultures. The banks gave these people loans but, when the banks got into trouble, they off-loaded the loans to vulture funds at a significant discount. Those same vulture funds have been fleecing those customers ever since. Those people are now being charged absolutely crazy sums of money. Many of them are suffering as a result of that greed. That greed has been facilitated by the inaction of successive Fianna Fáil and Fine Gael governments.

Scrutiny of proposals coming from the European Union is crucial because what the European Union does is not always in Ireland's best interests. We learned that the hard way during the banking crisis when the European Central Bank and European Commission were quick to burden Irish people with 42% of Europe's bank debt. When I was a Member of the European Parliament, I campaigned strongly against a proposed vulture fund directive. This was a proposal from the Commission to develop a secondary market for loans, whether they were performing or not. It is disgraceful that the proposal was supported by the Irish Government. At that time, I warned about the dangers of moving hundreds of billions of euro of bad debt into the shadow banking sector through the securitisation of non-performing loans. That approach is incredibly misguided and I warned that it would cause major new risks to financial stability. After all, mortgage-backed securities played a key role in the 2007-08 crisis.

I welcome the updating of the regulation that facilitates mutual recognition of insolvency across European Union member states. However, we have to focus equally on what is driving people into insolvency. The cost of living and the cost of doing business must be addressed and there must be a crackdown on vulture funds to ensure they are forced to provide interest rates at the same levels as banks. The Government needs to ensure that all mortgage holders who have played by the rules have the right to transfer back to the banks regardless of the status of their mortgages. Otherwise, all we will have to offer those people is assurance that any future insolvency they may have will be recognised in Malta, Luxembourg or another EU member state. We have to do everything in our gift to ensure that businesses and families are prevented from entering insolvency, wherever possible.

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