Dáil debates

Thursday, 28 March 2013

Credit Reporting Bill 2012: Second Stage


1:30 pm

Photo of Michael NoonanMichael Noonan (Minister, Department of Finance; Limerick City, Fine Gael)
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I move: "That the Bill be now read a Second Time."

The Credit Reporting Bill 2012 puts in place the legislative framework for a central repository of credit information, to be known as the central credit register. A credit register is a database of credit information based on credit applications and credit agreements. It assists lenders in making informed lending decisions and protecting higher-risk borrowers from excessive debt. The creation of a central credit register was sparked by reports produced in recent years by the Law Reform Commission, the Expert Group on Mortgage Arrears, the Central Bank and the Government's banking inquiry, which illustrated the prevalent weaknesses in the Irish reporting system and highlighted the potential benefit of having an effective credit reporting system. Some privately run credit bureaus are operating in Ireland, but there is no central repository of credit data on a statutory basis. The private credit bureaus require their members to report credit information. As a number of credit providers are not members of any credit bureau, the information gained does not present an accurate picture of how much creditors are lending and how much an individual borrower is borrowing. Consequently, the full extent of a borrower's indebtedness is not apparent.

The current system does not allow the Central Bank of Ireland to see the overall borrowing situation in this country. This may lead to lenders' being unable to assess total borrower exposure properly. Equally, the current system does not allow for the identification of systemic risk. This unsatisfactory situation led to the establishment of an inter-agency working group tasked with developing a strategy to put in place an effective credit reporting system in Ireland. The report of the inter-agency working group on credit histories was presented to me at the end of June 2011. The recommendations contained in the report, which were developed following consultation with stakeholders, helped to inform the Department of Finance in drafting the general scheme of this Bill, which was published at the end of August 2012. Following the publication of the general scheme, further consultations were held with representatives of the finance industry, the Central Bank and the Data Protection Commissioner. Their comments were taken on board in developing the general scheme into the Credit Reporting Bill now before the House, as published on 28 September 2012. The achieved deadline of the end of September 2012 was a structural benchmark under the EU-ECB-IMF financial support programme. The changes that were made to the general scheme were in the interests of enhancing consumer protection. Some technical changes were also required.

I wish to outline the key elements of the Credit Reporting Bill 2012 and set out the benefits that will be afforded to consumers as a result of the establishment of the central credit register. The key elements of the Bill are the establishment of a central credit register, to be maintained and operated by the Central Bank of Ireland, and the creation of a statutory credit reporting system under which lenders will be obliged to report information regarding loan applications and loan agreements that reach a threshold in excess of €500. The Bill provides for the categories of personal and credit information to be held on the register and the purposes for which it can be used. Detail is provided regarding when that information may be accessed and by whom. The Bill requires lenders to check the register when considering giving approval to credit applications of over €2,000. The circumstances in which information on the register can be amended are provided. The Bill prohibits misuse of the information held on the register.

The creation of a central credit register is in the best interests of the consumer and the financial services industry. The register supports the financial services industry by providing greater understanding of a consumer's total indebtedness. This will help lenders to make informed lending decisions which are based on accurate and up-to-date information. The consumer benefits by being able to keep track of his or her creditworthiness by reviewing his or her record on the register. Consumers will be entitled to one free copy of their own record every 12 months. By allowing for this transparent process, consumers will be able to see their credit situations clearly and identify any errors or inaccuracies on the register. A mechanism has been provided for in the Bill to allow a consumer to apply for inaccurate information to be removed, amended or supplemented. This will assist in maintaining a high quality of data on the register and providing a true representation of the consumer's credit situation. The drafting process was influenced by the advice of the Data Protection Commissioner to ensure the rights of the consumer are always protected. The Bill enhances consumer protection by limiting access to the information held on the register to specified circumstances and reasons.

Before I explain the provisions of the Bill in further detail, it is important to point out that the Government intends to seek a number of amendments on Committee Stage. Some of these amendments will be explained as I outline the provisions of the Bill section by section. Further amendments are being developed by my officials. The Office of the Attorney General will advise on completion of the deliberations. Part 1 of the Bill is the preliminary and general part. Section 1 provides for the Short Title and the commencement provisions. Section 2 is the standard interpretation provision, defining a number of terms used in the Bill, such as "credit agreement", "credit application" and "credit information subject". Section 2 also sets out the circumstances in which the Bill will apply and brings within the scope of the Act those parties that have acquired the rights of a credit information provider. Section 3 provides that any regulation or order made under the Act may contain incidental, supplementary or consequential provisions. Any such regulations or order made other than under section 1(2) must be laid before each House of the Oireachtas and either House may annul that regulation or order within 21 days. Section 4 is the standard section for expenses incurred in the administration of the Act. Section 5 provides that the Central Bank of Ireland will establish, maintain and operate a database of information, to be called the central credit registry, which will contain both personal and credit information.

Section 6 defines the personal information relating to credit information subjects which may be held on the register. The type of personal information which can be held is determined by whether that subject is an individual, an individual carrying on a business or not an individual. Personal information includes names, addresses, place and date of birth, telephone number, PPS number - subject to a commencement order - employment status and value-added tax registration number. Power is given to the Central Bank to make regulations to specify additional personal information which may be held on the register. To ensure the addition of personal information is appropriate and beneficial, the Central Bank must consult with the Data Protection Commissioner and is also required to obtain the consent of the Minister for Finance before specifying any additional information.

In addition to the personal information referred to in section 6, the register may hold credit information relating to a credit information subject. Section 7 provides that the type of information held will depend on whether the information is obtained in regard to a credit application or a credit agreement. Credit information includes the nature and term of the credit applied for, the nature of any guarantee, indemnity or security, and the rate of interest payable. Section 7 also provides details as to what constitutes "credit information" which will be held in regard to a credit agreement made by a credit information subject or a credit agreement of which the credit information subject is a guarantor.

The Central Bank also has the power under this section to make regulations specifying additional credit information which may be held on the register. As in section 6, the Central Bank must consult with the Data Protection Commissioner and receive the consent of the Minister before making such regulations. This procedure will safeguard the interests of the consumer.

Section 8 provides time limits for the holding of personal and credit information on the register. Where the information identifies a subject and relates to a credit application, it may be held for six months, beginning with the day on which it is entered on the register. Where the information identifies the subject and relates to a credit agreement, it may be held for five years from the date it is entered on the register in respect of debt arrangements.

The current situation in regard to personal information in regard to closed credit agreements is incorrect. What had been intended was for such personal information in regard to closed credit agreements to be retained for five years after the agreement is closed. We will be amending this to reflect what was originally desired. In regard to anonymised information, this section permits the information to be held on the register indefinitely.

Section 9 illustrates the application procedure to make an amendment to the information held on the register. Applications from credit information subjects or credit information providers to amend information held on the register must be made on the basis that the information is inaccurate, not up to date or incomplete. Enhancements to this section have been suggested by the Data Protection Commissioner and the Central Bank to ensure that appropriate procedures are available for subjects to seek the amendment of inaccurate or incomplete information. These are currently under consideration and my officials will examine all of these proposals.

Where the Central Bank makes the decision to amend the credit information held on the register, a number of parties must be advised of this decision, as provided for in section 10. Notice of the decision, along with a copy of the amended information, must be given to the following: the borrower who is the subject of the information or the credit information provider who requested the information; any person who is party to an ongoing credit agreement; and any credit information provider who has made an application to access information on the credit information subject. Where the Central Bank decides not to amend the register, it must, if required to do so by the credit information subject, enter on the register a record of the amendment sought.

Section 11 applies the provisions of the Data Protection Acts 1988 and 2003 to credit data held on the register for individuals and bodies corporate with an annual turnover of not more than €3 million. The Data Protection Commissioner will, therefore, be able to deal with complaints from micro-enterprises and SMEs in respect of their data held on the credit register. Section 11 provides that the Central Bank may make regulations, with the consent of the Minister, specifying how and by reference to what year annual turnover is to be calculated.

This section will be subject to a Committee Stage amendment. We have learned from consultation with the Data Protection Commissioner that applying the entirety of the 1988 and 2003 Acts to the Credit Reporting Bill is not necessary. As a result, it is proposed to amend this section to leave only the relevant provisions being applied to the credit data.

Section 12 obliges credit information providers to supply certain information to the Central Bank in regard to qualifying credit applications, qualifying credit agreements, credit information subjects and credit information subjects who are guarantors in connection with a credit agreement, which the Central Bank will then hold on the register. This section also provides that the Central Bank may, with the consent of the Minister, make regulations specifying the information and the form in which it is to be provided. Those regulations may differentiate between classes of applications, agreements, providers and subjects. A qualifying application or agreement is one under which the amount of credit exceeds an amount specified by order of the Minister following consultation with the Central Bank and having regard to the consumer price index, or in the absence of such an order, €500.

Section 13 obliges a credit information subject who makes a credit application to give notice to the credit information provider of any aggregate foreign debt in excess of €5,000 outstanding. This refers to credit agreements not covered under section 2(2). The aim of this section is to give credit information providers a better picture of the subject's debt commitments. The Central Bank may make regulations specifying the information and the form in which the information is to be provided. A credit information provider is then obliged to provide the information to the Central Bank, which will include the information on the register. The amount of aggregate outstanding debt provided for in this section may be amended by order of the Minister following consultation with the Central Bank and having regard to the consumer price index.

Section 14 permits a credit information subject to add to the register a short explanation, of no more than 200 words, about the subject's credit information held on the register. The Central Bank is obliged to include this information on the register.

An important aim of setting up the register is to allow for the level of indebtedness of a credit information subject to be accessible and evident. In support of this aim, section 15 obliges a credit information provider to access information on the register which relates to a credit information subject when that subject makes a relevant credit application. A relevant credit application means a credit application where the amount of credit sought exceeds an amount specified by order of the Minister following consultation with the Central Bank and having regard to the consumer price index. In the absence of such an order, the specified amount is €2,000.

The register does not have to be accessed where the credit information provider has previously accessed information relating to the subject in question within seven days before the credit application is made. Information accessed under this section may only be used for purposes specified in section 17 of this Act.

Under section 16, a credit information provider may apply to access information on the register where a person has made a credit application for an amount less than €2,000 or is proposing to give a guarantee or indemnity in connection with a credit agreement. A credit information provider may also access information on the register where a credit information subject who is party to a credit agreement has requested to change the nature or terms of the agreement or failed to comply with their obligations under a credit agreement, guarantee or indemnity and that failure has not been corrected.

Information accessed in accordance with this section may only be used for purposes specified in section 17 of this Act. Section 16 allows a credit information subject or any person who has the consent of the credit information subject to access information relating to that subject. This section also permits the Central Bank to use the information held on the register for the performance of its functions. The CSO is permitted access under section 16 to information on the register in connection with the performance of its functions.

Section 17 details the specific reasons for which information on the register can be accessed by credit information providers.

The reasons include verifying information, evaluating the risk of extending credit, evaluating the risk of changing the nature or term of a credit agreement, monitoring default under a credit agreement or evaluating whether to make an arrangement in respect of the debts of a credit information subject.

Under section 18, the Central Bank may, having consulted the Data Protection Commissioner and with the consent of the Minister, make regulations relating to applications to access information, information to which the Central Bank is required to give access in response to such an application, and the manner in which such access is to be given. A credit information provider is required to keep a record of each application made to access information on the register for a period of five years. If required to do so by the Central Bank, a credit information provider is obliged to provide information on any occasion on which that provider has been given access to information on the register. The Central Bank is required to keep a record for five years of all occasions on which access to the register was granted. Section 18 allows for a credit information subject to request from the Central Bank a report detailing each occasion access has been given to information on that subject within the previous five years, the identity of the persons who applied for access and the dates on which these applications were made.

Under section 19, a credit information subject who reasonably believes he or she has or may have been impersonated by any person may require the Central Bank to enter a notice of suspected impersonation on the register at least within 48 hours. The subject may also require the Central Bank to remove such a notice and the Central Bank shall, in any event, remove the notice after a period of 90 days, unless requested to retain it by the subject for a further period of up to 90 days. Where a notice of suspected impersonation is entered on the register, the Central Bank is required to notify the credit information subject at least within 48 hours if an application is made to access information on that subject or if information is provided for the Central Bank in connection with a credit application made by that subject. Under this section, the Central Bank is obliged, where it gives a person access to information on a credit information subject at a time when a notice of suspected impersonation is entered on the register, to make that person aware of the notice of suspected impersonation.

An amendment is being proposed in respect of section 19 to increase the protection offered by the section to the consumer by extending the section's application to impersonation which may imminently take place. This has the result of allowing a consumer who has reason to suspect impersonation is about to take place to report the possible impersonation before the harm actually takes place. The current draft only permits the consumer to demonstrate that an action resulting from compromised identity has taken place. Thus, the amendment will increase the protection offered to the consumer in the case of identity theft or impersonation.

Under section 20, a credit information provider is required to take steps to verify the identity of a credit information subject who makes a credit application or credit agreement with that provider or proposes to give a guarantee or indemnity in connection with a credit agreement to which that provider is a party. The Central Bank has the power under this section to make regulations, following consultation with the Data Protection Commissioner and with the consent of the Minister, specifying the steps credit information providers must take to verify a subject's identity.

Section 21 obliges a credit information provider to take reasonable steps to verify that the information it obtains from credit information subjects is accurate and complete. What is meant by "reasonable steps" will be set out by way of regulations.

Under section 22, a credit information provider shall notify a credit information subject where that provider reasonably believes the subject has been impersonated by any person. Section 23 imposes an obligation on credit information providers to ensure credit information subjects who make credit applications or enter credit agreements, guarantees or indemnities with that provider are made aware of their rights and duties under the Bill.

Section 24 stipulates that credit information providers are required at the application stage to notify applicants that this Bill requires information on qualifying credit applications and agreements to be supplied to the Central Bank for inclusion in the register. The Central Bank may by regulation, with the consent of the Minister, specify the form and content of the notices to be provided.

The register will not be set up to generate a profit. However, section 25 allows for a levy to be imposed on credit information providers to meet the expenses of the Central Bank in performing its functions under the Bill. The levy will be set with the consent of the Minister. Regulations made under the section may provide for the amount of the levy, the dates for payment of the levy, penalties for not paying on time, collection and recovery of the levy and refunds of the levy. They may also differentiate between classes of credit information providers. This will assist in ensuring smaller lenders are not disproportionately affected by a levy.

Section 26 instructs that the Central Bank may make regulations, with the consent of the Minister, to set out the fees to be.paid for accessing information kept on the register or being provided with a record of occasions on which access has been given. The regulations made under this section may provide for the amounts of fees, their payment, collection and recovery and refunds of fees and make different provisions in respect of different cases. Exemptions from the payment of fees may also be provided for.

Section 27 outlines how the Central Bank may compel credit information providers to comply with their obligations under the Bill. If the Central Bank considers a credit information provider has failed or is failing to comply with imposed obligations, it can direct that credit information provider to take specific steps to comply with its obligations. If necessary, the Central Bank can apply to the High Court to make an order requiring the credit information provider to comply with the direction.

Section 28 outlines the provisions of a direction under section 27. A direction by the Central Bank under section 27 shall set out the terms of the direction, including any date specified as the date by which or period specified as the period within which any provision of the direction is to be complied with and any incidental, supplementary or consequential provision for securing that direction is fully complied with.

The Bill provides for a number of offences in section 29. It is an offence for a credit information provider to knowingly supply false or misleading information that is required to be supplied under the Bill. It is an offence for a credit information provider to knowingly use information accessed by the provisions of the Bill for a different purpose than those set out in the Bill. The penalties for the offences provided for in section 29 are a class A fine and a term of imprisonment not exceeding six months following summary conviction or a fine or imprisonment for a term not exceeding five years or both following conviction on indictment.

Section 30 provides that the Central Bank may produce credit scores in respect of credit information subjects and also general reports, analyses and statistics which contain anonymised data only. This means data which cannot be used to identify credit information subjects. Section 31 requires certain staff of the Central Bank to attend before the relevant Oireachtas committee and provide the committee with information on the performance of its functions under the Bill, if so required.

Section 32 prohibits the unauthorised disclosure of confidential information received by the Central Bank in connection with the performance of its functions under the Bill. This prohibition is applicable to any person who is or has been the Governor, an officer or employee of the Central Bank, a consultant or auditor employed by the Central Bank or an agent of the Central Bank, a member of the commission, a head of function or the Registrar of Credit Unions. The disclosure of confidential information constitutes an offence. The penalties for the unauthorised disclosure of confidential information are a class A fine and-or a term of imprisonment that does not exceed 12 months following summary conviction or a fine not exceeding €30,000 and-or imprisonment for a term no longer than five years following conviction on indictment. It is not an offence under section 32 to disclose information in compliance with the Bill or other Acts to the Central Bank, the Minister by or on behalf of the Central Bank, the Data Protection Commissioner, the Garda, an officer of the Revenue Commissioners, the Director of Corporate Enforcement or the Competition Authority where the disclosure of information may reveal the commission of an indictable crime.

Section 33 disapplies section 33AK of the Central Bank Act 1942 in relation to information provided for the Central Bank under the Bill. This ensures the confidentiality restrictions provided for under the section do not apply to data obtained under the Bill. However, it is incorrect to apply a blanket disapplication of section 33AK of the Central Bank Act 1942. I intend to seek a Committee Stage amendment in relation to this matter.

Section 34 provides that summary proceedings for offences under sections 29 and 32(4) may be brought and prosecuted by the Central Bank.

The Credit Reporting Bill aims to support the removal of the deficiencies in the financial services industry by establishing a statutory credit reporting system. It aims to support the promotion of responsible borrowing and lending. It will also aid the supervisory functions of the Central Bank and enhance consumer protection measures in respect of lending. The legislation will assist in providing a tool to produce an overall picture of the level of indebtedness in Ireland. I refer to my statement when the general scheme of the Bill was published:

The establishment of a mandatory credit reporting and credit checking system, regulated and operated by the Central Bank of Ireland, will ensure that lenders have access to the most accurate and up to date information regarding a borrower's total exposure. This provision will benefit both borrower and lender and will ensure that lenders are in a position to make informed lending decisions. This establishment of a Central Credit Register will also help to support policies to combat over-indebtedness.
I commend the Bill to the House and look forward to the contributions of Deputies.

2:00 pm

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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I welcome the opportunity to speak on Second Stage of the Credit Reporting Bill 2012. I acknowledge that the Department has engaged in significant consultation with the key stakeholders in the finance industry, the Central Bank and the Data Protection Commissioner. I also acknowledge and thank the Oireachtas Library and Research Service for its excellent information on the Bill and the information supplied on all other Bills. The comprehensive documentary information provided is particularly helpful for Opposition spokespersons, as it puts the Bill in context and is particularly useful for the purposes of debate.

Last night the House debated a Fianna Fáil motion on mortgage arrears and debt restructuring. While the motion was defeated, we had a very useful exploration of the topic. The Bill is directly relevant to the issues of consumer indebtedness which were discussed in that debate. It is a welcome update on the current arrangements for the recording of consumer credit information. Fianna Fáil will support it on Second Stage. However, I have some concerns which I will outline and I hope the Minister will address. Fianna Fáil will bring forward amendments on Committee Stage to deal with them.

Ireland is about to embark on a major loan restructuring programme, involving tens of thousands of families. If this is to be done in a fair and transparent way, we need accurate information on the credit position of borrowers. The key issue is to have a central repository to hold information on the total indebtedness of individuals. This is essential when making proper lending decisions. It is in the interests of the consumer and also the lender that the complete picture is available in order that decisions can be made. A comprehensive and accessible credit register is necessary in order to facilitate the making of decisions. When does the Minister hopes this central repository, the credit register, will be in place? It is a positive development, which is to be welcomed. However, I hope its establishment will be regarded as a high priority. Having spoken to some industry sources in recent days, I have concerns that there is a lack of urgency. I have heard suggestions that it may not be in place before 2016, which I hope is not the case. I, therefore, ask the Minister to address this point.

I will deal with a number of aspects of the Bill. Section 15 sets the amount for a relevant credit application where the lender will be obliged to check the register for any amount above €2,000. By setting the exclusion amount so high at €2,000 per application, moneylenders, in particular, will be excluded in many cases, in that most of their lending amounts are normally under the €2,000 threshold. The provision also excludes the likes of UK pay day lenders who charge an APR of up to 4,000%. These lenders are not in the Irish market as yet, but they are rumoured to be testing the market here. Many would see the constraints the personal insolvency regime might impose on people's capacity to access credit as relevant in this regard. Either way, if this provision is intended as a protection, the small borrower should be protected against over-indebtedness. Moneylending at an APR of 188% is the scourge of housing estates, particularly in deprived urban areas. We all encounter this problem in our constituency work, but these borrowers are effectively excluded from this provision. A simple amendment to bring the limit to €500 would be reasonable. I intend to bring forward an amendment in this regard on Committee Stage.

I realise that section 16 gives a lender considering a loan application for less than €2,000 the right but not an obligation to seek information from the register. This provision does not go far enough. In essence, it is asking lenders to act on what might be described as best practice.

The head of consumer protection in the Central Bank, Mr. Bernard Sheridan, recently expressed his concern that multiple loans were being issued to consumers by moneylenders and indicated that action was needed in this regard. The more comprehensive the credit register is, the easier it will be to prevent this. Moneylenders should be required to ensure they have trained staff to properly assess information in order, for example, to identify signs of possible over-indebtedness such as multiple short-term loans with different lenders, which is often the case.

I refer to the use of information held on the register. A credit register is a very valuable tool in the hands of those who are allowed access to it. There needs to be clear control of who can use the data and in what circumstances. For example, we all agree that it is acceptable for a financial institution to check the register when it receives a new loan application. However, it is less certain whether it should be permitted to check on existing customers who are meeting their repayment obligations. I ask the Minister to clarify if this will be the case. We all agree that the register should not be available for general marketing purposes. Some of us may have seen the marketing carried out in the United Kingdom or the United States where individuals are invited to apply for a pre-approved loan of £10,000 or $10,000. That practice was prevalent in Ireland up to relatively recently. All the customer has to do is lodge a cheque or complete the credit card application in order to draw down the loan. We do not want that form of promotion taking hold in the Irish market. It is essential, therefore, that the guidelines covering the use of the code are robust to prevent this practice.

On a separate point, the National Consumer Agency makes an interesting suggestion that spouses, guarantors and executors also be allowed to access information held on the register as they have an obvious financial interest in the credit position of the person concerned. It is a suggestion worthy of consideration, assuming that such requests can be handled in an appropriate way. While the collection of information provided for under the legislation is very welcome, it must be ensured that it is verifiable and accurate. In so far as possible, there should be an obligation on lenders to validate and cross­check information, where practicable, for example, in comparing recent bank statements and pay slips to verify income and employment data. In addition, I have a concern about procedures being put in place to identify and prevent possible fraud, particularly where repayments are to be made using a third party debit card.

The Data Protection Commissioner is not in favour of an individual's PPS number being used on loan applications. I understand his concern, as this is not the purpose for which the PPS number system is in place.

We must consider building a unique identifier system such that the data on the credit register can be considered entirely robust. The ESB has built its own complex coding system, while Bord Gáis Energy and the mobile phone companies have done similar work.

It is imperative that we get the balance right between protecting the privacy of the citizen and preventing unnecessary data retention, while ensuring the opportunity for identify fraud is minimised and, if possible, eliminated. It is welcome that consultation has taken place with the Data Protection Commissioner. All Deputies are aware that they are subject to rules about retaining the personal data of constituents on the constituents' database which has been provided for us. We need the consent of constituents to retain their data which, in any case, cannot be retained for an indefinite period and beyond the purpose for which it was originally provided.

Once the credit register is in place, it will be essential to introduce a widespread programme of consumer education to ensure members of the public understand their rights in this area. In the United States people are very conscious of their credit standing and will regularly check their current status. I doubt that many people go to the trouble of checking their status on the Irish Credit Bureau register. This is a pity, as people need to understand how banks go about making loan decisions and the type of information that can go in their favour or against it. In schools there is a very useful CPSE programme to educate students in all matters relating to civic society. I would like to see some time devoted in the curriculum to basic financial planning and the provision of skills students will need throughout their adult lives. Financial skills would be a great tool to have in later life as they undertake making financial decisions, whether it is buying a house, taking out a pension or making an investment decision. It should be possible in a simplified manner to work into the curriculum a knowledge base for students that would stand them in good stead in later years.

Where customers check the register and find that the information held on them is inaccurate, the procedure for correcting the record must be as straightforward as possible. Similarly, if a customer misses a payment through no fault of his or her own, it must be correctly recorded on his or her file. Customers should be reassured that they will not suffer any adverse impact. I am thinking of the recent example of customers of the former Irish Nationwide Building Society who found that their mortgage payments had not gone through owing to a change of sort code following the liquidation of the IBRC. An individual could find that there is a black mark against his or her credit history in circumstances where he or she was not at fault. As a result, a person's credit standing would be diminished. It should be possible to put a note on a customer's file to explain missed payments where there are clear, extenuating circumstances. I have seen cases in my constituency in which people had been made redundant and had to fight to receive the redundancy payment to which they were entitled. This led to many getting into short-term difficulty. It would be very unfair if a missed payment on a loan or credit card which occurred through no fault of the customer were held against him or her on the credit register.

I note the statement of the National Consumer Agency:

The Bill highlights the necessity to acknowledge debtors who actively co-operate with their lender if they find themselves in financial difficulty. The draft Bill proposes that co-operation should be 'rewarded' with a reduced retention period. However, without a definition of 'co-operation' issuers of credit may have no obligation to pass on the benefits of this provision to all relevant consumers.
It is an important point which should be taken on board. Speaking of the National Consumer Agency, I congratulate its new head, Ms Karen O'Leary, on her recent appointment. I wish her the very best in her important role. The importance of consumer rights and advocacy on behalf of consumers is not something to which we tend to give enough acknowledgement. Given the range of challenges and difficulties consumers face, from indebtedness to rising bills, there is a case for having a full Cabinet Minister to look after this area. It is something to which consideration should be given.

It is arguable that ten years ago, at the height of the boom, there were too many lenders in the Irish market. Banks were falling over each other to offer new products on ever more attractive terms. We saw the introduction of the 100% home loan. In some cases, people received loans of over 100% of the price of a property, as they accessed additional funds by borrowing against their credit card limit and from credit unions. Cut-throat competition among the financial institutions proved to be disastrous for the economy and society and we are still picking up the pieces. However, we now seem to have moved in the opposite direction. Competition is limited in respect of mortgages and non-existent in some categories of the market. In years gone by, if a person wished to transfer a mortgage from one institution to another, normal competitive conditions allowed them to do so, but that is no longer the case. This week, for example, small retailers have complained about an impending massive hike in transaction charges, including in depositing cash.

I have seen Ulster Bank referred to as the sleeping giant of the sector. It has the potential to play a much more significant role on the banking landscape in the years ahead. We need an injection of new blood in the banking sector which could come in various forms. We must look at a new State-supported bank to replicate the work done in the past by the ICC or attract an overseas bank, with a clean balance sheet and the capacity to lend to small and medium enterprises and personal customers. While Ireland may not be seen as an attractive market for new entrants, that will change in time. The economy will improve and there will be opportunities for new lenders to provide much needed competition. In either scenario, we need a usable dataset that would provide a clear picture of the financial position of potential borrowers. The credit register can do this and, if it is subject to the appropriate controls, benefit consumers by making available credit options that would not otherwise be available.

Overall, the legislation is welcome. We want to put the financial services sector on a sound footing. Accurate information, accessible in appropriate circumstances, is integral to achieving this. I have some concerns about the use of data and security and hope the Minister will be able to address them and that we can work together to make improvements to a welcome Bill.

2:10 pm

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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Cuirim fáilte roimh an reachtaíocht seo a cuireadh os ár gcomhair inniu. Táimid ag fanacht leis an Bhille seo anois ar feadh tamall maith agus tá an triúracht ag cur brú ar an Rialtas ag iarraidh seo a thabhairt isteach. Níl amhras ar bith ann ná ceann de na lochtanna móra a bhí ann le blianta fada ná nach raibh a leithéid de sheirbhís ar fáil. Bhí seirbhís phríobhaideach ann agus ní raibh mórán dualgas ar na bainc agus na hinstitúidí airgeadais difriúla a bhí mar pháirt den tseirbhís sin. Bhí daoine leagtha taobh amuigh, daoine in ann míúsáid a bhaint as ná fáil thart ar an chóras.

I welcome the Bill which represents a positive contribution to the restoration of confidence in the banking system and addresses some of the serious deficiencies in the absence of a centralised credit register. Matters were left to the private sector, which led to many deficiencies, as previous reports indicated. It is to be welcomed that these deficiencies are being addressed. There has been a significant delay in bringing forward the legislation and the troika has insisted on its implementation. When will the provisions become operational and people be able to access their information? What is the position on existing information that the banks hold through the Irish Credit Bureau? Will the data be transferred automatically or will there be two concurrent registers, one in the private and other in the public sector? I hope we can tease out some of these questions on Committee Stage. Nevertheless, I welcome the Bill.

We are living through a crisis which was caused, in part, by reckless lending. We have seen that the financial sector requires strict rules and monitoring at all times. Sinn Féin supports any measure that will lead to more a responsible lending culture. If the Bill achieves nothing more than removing from the banks the possibility of their relying on an excuse for reckless lending, it will be worth supporting. It will also be worth supporting if the new register helps banks to lend more confidently to the small and medium enterprise sector.

When speaking of banks, we are conscious that the public has bailed them out. Through this Government and the previous Government, the public has pumped vast billions of euro into the banks to get them up and running to deal with the legacy of the past. Still, the banks are not lending in sufficient volume to the small and medium-sized enterprises. From the debates on Fianna Fáil's Private Members' motion on mortgage distress this week and on Sinn Féin's Private Members' motion three weeks ago, we know the banks are not doing enough and are, in some cases, making the situation worse for those struggling with mortgages.

The register will be a mainstay in the coming years for the decision-making procedures of lenders, which is to be welcomed. I will refer later to the lending threshold that enables lenders to avoid taking the register on board. Borrowers must be aware the register exists. Much personal financial data will be stored here and it is important that citizens are aware it exists. They should also be aware of what the data is, what the implications are for their credit history, that their credit history is available to other lenders, local authorities, the likes of NAMA and hire purchase companies, and the type of information on the register.

We must also inform people that they have the ability to access the information. Information held by the banks on customers' credit histories was proven to be inaccurate. Some banks deemed customers to be in default or in arrears when that was not the case. We hear about banks making mistakes, such as overcharging on interest rates or making mistakes on credit histories. Any system operated by humans will always make mistakes, so it is important that the public has full knowledge and can access information. A proper information campaign is necessary. It is not just a case of educating borrowers to know that financial institutions hold this information but also of allowing people to access the information so that they can ensure the information is correct.

The National Consumer Agency stated that the Irish Credit Bureau is not well known among consumers. Its successor must be different in this regard. I welcome the fact that a statement will be issued to people every year. That will go part of the way, but we must go further. How will the level of knowledge about the register be raised? This must be taken on board and, alongside the legislation, a campaign is necessary.

We have debated the mortgage arrears resolution process, MARP, and we are all aware of the figures. One quarter of domestic households with mortgages are in distress and there have been increases over the past number of quarters. It is a very depressing story for those in mortgage arrears of more than 90 days. Hopefully we will see a reduction and a reversal of the trend in the near future. We have been clear that in some cases there must be write-downs. I welcome the statement by David Duffy, CEO of AIB, on the need for write-downs. This is the first time the CEO of a bank has spoken about the write-down of debt. I have been very critical of bankers in the past but Mr. Duffy has been bold enough to take steps other banks have not taken in terms of remuneration. Although some may argue this has not gone far enough, he is breaking new ground by talking publicly about the need for debt write-down. We hope that will be followed up on a case-by-case basis where merited and where it is clear the loan is unsustainable.

The question about the legislation is how the register will affect those in arrears or those who will be slipping into arrears in the future. What safeguards exist to ensure consideration is given to those whose circumstances have changed because of the current economic collapse or a future economic collapse? What safeguards exist for those who have fallen ill and those who have disruptions in their lives? Section 14 allows for a 200-word statement to be placed on the record. However, it is important that this is not just left to the individual. People do not think like that. When dealing with the bank when a loan has fallen into arrears, people may tell the bank manager that they are ill and the bank manager may give them breathing space. However, the information may not be relayed to the register, and when the customer applies for another loan, a three-month gap will be shown. It should not be left up to the individual. If it is, it is important that we stress the option of the 200-word statement on the customer's circumstances. There are questions about where people stand at present and how to ensure the Bill does not blacken them further in respect of availing of new credit just because of a blip in their history.

There is potential for abuse of the register. It is important that the credit register is nothing more than a credit register. There are always fears, although sometimes ill-founded, that it will morph into something else. This may mean legislation should be tightened so that the register is used only for assessing consumers' suitability for credit and not for other services such as insurance. If the legislation is not tight in this regard, it is conceivable that some people will find themselves blacklisted from other services. There are also concerns in respect of utility services. It all depends on how it will be structured. Hire purchase is included this year, but people will have concerns as financial companies start to provide services and as we start to privatise water services. I ask the Minister to ensure safeguards are included so that insurance is not encompassed in this. I hope the Minister is open to amendments to ensure the legislation is tighter and more robust.

There is also a question about how the register will be configured to stop creditors from using the information to chase businesses or target people in marketing exercises. The Minister said the register would be subject to data protection provisions but it is important that this measure is robust and watertight so there is no abuse of information. Reference was made to what other jurisdictions do with the information held in these registers. This should be examined on Committee Stage.

I welcome the fact that consumers will receive one free copy of their record every year. Perhaps the Minister will explain whether it is automatic or upon request. If it is automatic, it will heighten awareness of the facility, but if it is on request we will also need an information and awareness campaign. Very few people know about the Irish Credit Bureau. One of the banks made mistakes about people's credit histories and then people became aware of the Irish Credit Bureau. People can check credit histories at a cost of €6. There will be a cost for a second copy of the record, which people will look for if they are concerned about inaccurate information. It is important that costs be kept to a minimum. A cost will be incurred by sending out copies of the records, but consumers should not be put off by the financial cost of applying for records.

This will be hosted on an ICT system and will be an electronic system. Banks will not post pieces of paper for every credit application above €500.

I presume this will be done through digital or electronic copies. Are there plans to allow access to this through a secure network? For example, if I want to log on to my bank account in Bank of Ireland, I type my PIN code into my iPhone. I got my PIN through a secure system in the past and I am able to access the details of my car loan and of my mortgage and the balance in my bank account, if there is one. Is it planned that consumers would be able to tap into a system such as that using an individual PPS number, as mentioned in the legislation, and an individual tracker? A person could apply for a unique code and sit at a computer to obtain information without a cost to the service, because he or she would not be posting things out and tying staff up trying to pull down records and so on. There would be a unique record there which they could access through IT and move into the modern age.

It is also interesting that the new register will come under the control of the Central Bank of Ireland. There are questions in regard to the resources of the Central Bank of Ireland to maintain and manage this register. I understand the legislation contains an option, or the Central Bank of Ireland has within its powers at this point in time the option, to outsource the management of the register. The question that really needs to be answered at this stage is whether that is the intention of this legislation - that is, that the Central Bank of Ireland would outsource this register. That raises concerns in regard to data protection, although it would be governed by the same data protection laws. There is that fear, whether right or wrong, when such information goes to a private company for profit, that it is not as secure. Are we taking something away from the private sector and then selling it back to it, although the private sector will charge us to maintain it? Is this just shifting it about or will it definitely be located, managed and fixed within the Central Bank of Ireland and not outsourced?

It is appropriate to raise at this stage the concerns I have about the policy of the Central Bank of Ireland in regard to the outsourcing of different systems. Last week the Minister confirmed in a parliamentary reply that the IT system of the Central Bank of Ireland will be outsourced. I am not an IT specialist but I am concerned about this. The cost of the tendering process is estimated at €150,000, including the cost of legal advice and assistance with the complex contract. What this means is that all internal traffic will now go through the base of a private company, Hewlett Packard. Our communications with the ECB will be managed by Hewlett Packard and our e-mail systems will move to and be administrated by Hewlett Packard staff. All e-mail traffic will go through the Hewlett Packard network.

The Society for Worldwide Interbank Financial Telecommunication, SWIFT, will be moved to the Hewlett Packard data centre. This is the financial payment system for moving large sums of money around. SAP, the system used for internal financial control, will also move to the Hewlett Packard data centre and will be administered by Hewlett Packard staff. Application servers that run the various applications used by the Central Bank of Ireland to carry out its various functions will all be moved to the Hewlett Packard data centre and be administrated by Hewlett Packard staff. Databases are at the heart of the Central Bank of Ireland and they contain all the information the bank applications use. These will also move to the Hewlett Packard data centre and be administered by Hewlett Packard staff. Network services, domain controllers, DNS servers, DHCP servers, monitoring servers, etc., will all move the Hewlett Packard data centre and will be administered by Hewlett Packard staff, who are private sector staff.

While most of these systems will ported to Hewlett Packard servers, including firewalls, we are not simply talking about Hewlett Packard staff looking after the hardware. Hewlett Packard staff will provide full level 2 and 3 support on the systems. They will be the domain controllers and the database administrators, and will have full control of the system. All of this is currently located in the Central Bank of Ireland. It is secure and it is not outsourced to any private company, so staff fulfilling these roles will be moved to different jobs where access is required. Central Bank of Ireland staff will have user access and must request any changes from Hewlett Packard staff who will then, through their change control process, carry out the changes.

The reason I raise this is that this type of transfer to the private sector does not happen in any other European country, but we are doing it on a massive scale. We saw the debacle with Ulster Bank, which outsourced some of its IT system and could not get the payments of approximately one million customers on the island of Ireland up to date in an appropriate time. We are giving away very valuable information, or the hardware behind it, and all the elements I mentioned, and outsourcing them. That causes concern to people. It might cost-effective today but information held by the Central Bank of Ireland is deeply sensitive and should be controlled within the bank.

That takes me to my next point, which is that this register should not be outsourced to a third party for profit. It will contain very sensitive information and it should be held and managed in-house. Whatever resources are required should be assigned to the Central Bank of Ireland to deal with that.

The issues I raise relate to a number of headings but, again, I very much support this Bill. I refer to the thresholds mentioned. We have two basic thresholds of €500 and €2,000. An application for credit of €500 or less does not have to be reported to the register. For anybody applying for €2,000 or more, the bank must go to the register to see the credit history. The question will always be where one draws the line. One does not want to make it too bureaucratic for banks but we need to ensure people do not evade the system.

The real issue is in regard to moneylenders, an issue about which I feel very strongly. I brought legislation before the House to curb the interest rate that moneylenders can apply to individuals. The moneylending system has grown dramatically in recent years. We know they are making house-to-house calls and rolling over loans. This is happening in every county in this State and it needs to be dealt with, although it involves a small amount of money.

Deputy Michael McGrath spoke about reducing the €2,000 threshold to €500, but I do not think that will deal with this issue, because moneylenders generally lend €500 or less. If one goes on to any of their websites, one will see the type of money they are lending is €250 or €500. If moneylenders are lending on average below €500, the moneylender is not required to report it to this system because it is below the €500 threshold. There is a genuine issue there. To my knowledge, people do not usually apply for a €2,000 loan from moneylenders, so the moneylender would not have to go to the register to check it out.

If somebody is heavily indebted with bank debts, credit union debts and hire purchase company debts, his or her details will be on this register, which will show that he or she is heavily indebted. Moneylenders can call to his or her door and offer a loan of between €250 and €500, which is what is on their websites, but do not have an obligation under this legislation to report it to the register, which is a problem. I am not saying all moneylenders are wrong, because there is definitely a role for them, but in a regulated way and definitely not in a way that allows them to charge 188% APR, go door to door and pretend they do not know that people are up to their eyes in debt because they do not have to check their credit history. That must be dealt with. I do not know if we could include another section to deal with those who issue smaller loans.

Moneylenders do not give out the larger loans. I ask that we consider this on Committee Stage.

I support the Bill and commend the Minister on introducing it. I hope to make amendments on Committee Stage to improve its efficiency. The designated purpose of the Bill is one that Sinn Féin supports wholeheartedly. I hope there will be a constructive debate on Committee Stage that will deal with some of the concerns over data protection, outsourcing, moneylenders and the reporting of disruptions to one's life. While a person can have a note applied to the register, will it actually be done? Is there a greater onus on the banks to include the notice first and foremost while still giving the consumer an opportunity? I hope to tease out some of these matters further on Committee Stage.

2:40 pm

Photo of Finian McGrathFinian McGrath (Dublin North Central, Independent)
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I am sharing time with Deputy Mattie McGrath from Tipperary.

I thank the Ceann Comhairle for the opportunity to speak on this Bill. I welcome the debate as it is very relevant to what has happened, is happening and will happen in this country and to how we will get out of this economic mess. The Bill aims to promote more responsible borrowing and lending. The key word is "responsible" as many of us were not reckless during the boom and are fed up to the teeth taking the hit for those people who were simply greedy or grossly irresponsible. The senior bankers, developers and regulators who allowed the problem to occur are an absolute disgrace. This should be always said because many innocent people are caught in the crossfire, and they should never have to pay the cost. Most people are very angry about this and most people are suffering financially every day.

Today we see results coming in for the Meath East by-election. They represent a wake-up call in that 62% of people did not bother to vote. There is a considerable disconnect between many people and the political system. I feel very strongly that these people should have voted. I do not blame the weather or time constraints. Everybody should vote and copping out should never be an option. However, we should consider compulsory voting in the future. Too many have died for the right to vote. When we are dealing with credit, mortgages and major hits to the pockets of people, not voting should never be an option. There is plenty of choice in the current political climate. Economics and politics are linked and if people do not see this when voting, they should stop moaning if they keep getting the policies that they dislike or with which they disagree. That is the bottom line. It appears that Ms Helen McEntee will win the seat in the by-election. I congratulate her and the Minister on this victory. I sympathise with the McEntee family on the difficult time it has experienced.

It is important that we focus on the legislation. I support the Bill because it is important. As I stated, it is about responsible borrowing and lending. The Bill establishes a statutory credit reporting system. It creates a central credit register, to be maintained and operated by the Central Bank. Information on credit applications and agreements, and parties thereto, will be held on the register. All lenders will be required to give the Central Bank information on credit applications and agreements. Incomplete or inaccurate information can be amended, and the information on the register will give an overall picture of indebtedness and lending in the State.

When talking about lending and responsible borrowing, it is important that we talk about the debt issue. I am from the old school and firmly believe that if people can pay back money owed, they should pay it back. I do not believe in the chancers and conmen who are using a financial and banking crisis, in addition to a mortgage crisis, to cop out. Doing so is grossly irresponsible. There are people ducking and diving when it comes to paying back debts. People should do their best to pay what they owe, regardless of what has happened. The reality on the ground is that there are 94,000 people with major mortgage problems. Most of the people who come to my office state they want to pay something back and that they want to make an effort to do so. These people should be contrasted with some of those people who destroyed the country, and their attitude should be contrasted with the greed that was evident. Most people want to make an effort. With the personal insolvency legislation coming down the track, I urge everybody to support strongly the 95% or 96% of people who want to make an effort but who just need flexibility and support to deal with their debts. We must ensure they receive a proper hearing in regard to holding on to the family home.

I am focusing on the 94,000 people whose repayments are in arrears for more than 90 days because they need our help. Many of them took a hit because they lost their jobs or had their salaries reduced, and now they find themselves in an economic crisis. Of course, there are big guns who are ducking and diving and who believe they will use the crisis as an opportunity not to pay any money back at all. The Minister should ensure that he differentiates between these two sets of people.

It is not all bad news. I know today that there was a return to growth in February in respect of mortgage approvals. The latest mortgage approvals report, published today, shows that 1,093 mortgages, to the value of €169 million, were approved by lenders in Ireland during February. This is up 30% on the equivalent figure for the month of January, which is good news. While the overall figures show a slight fall of 2.1% in mortgage approvals annually, approvals in the key category of house purchases, which accounted for the majority, or 90%, of all approvals, grew by 1.4% year on year. The number of approvals for remortgaging or top-up purposes has continued to decline annually. The value of house mortgages approved during February stood at €159 million. The lion's share pertains to the €169 million approved in total. The average mortgage for a house purchase, €160,695, was down 2.8% on the figure for the same time last year. These figures became available during the day. It is important that we focus on the 94,000 people who have experienced mortgage arrears for more than 90 days. Some 28,000 buy-to-let mortgages are in arrears for the same period.

We must accept the reality that a huge burden has been placed on many families who are struggling with their mortgages, particularly on foot of the cuts to the child benefit. We have heard the row on child care in the past 24 hours. There is a considerable crisis over child care costs payable by many young mothers and fathers. Many families are paying more than €1,000 per month for child care. We must not shaft them, nor must we cut child benefit. There have been PRSI increases and the home tax and other measures have been introduced. People are having a very difficult time. This is having an impact not only on the economy and family life but also on the mental health of many. We need to address the issues that are connected to the broader issue, particularly in regard to this legislation.

There is widespread concern about the threat of a significant increase in family home repossessions arising from the mortgage arrears resolution targets programme, the proposed changes to the code of conduct on mortgage arrears and the Government's plan to reverse the Dunne judgment. I urge the Government to examine sensible options. If somebody proposes a mortgage resolution office under the new insolvency service scheme, it should be considered. We should place greater emphasis on the implementation of long-term sustainable mortgage solutions, such as split mortgages, shared equity and permanent interest rate reductions.

Perhaps the Ministers who regularly complain that the Opposition does not propose solutions to the problem will consider those options. The people of whom we are speaking are our friends, neighbours and citizens of this State who deserve to be supported.

Section 5 provides that the Central Bank of Ireland will establish, maintain and operate a database of information containing personal and credit information. This database will be known as the central credit register. Although not explicitly stated in the Bill, this register will be owned by the bank, the maintenance of which can be outsourced by the bank to a third party. However, the Central Bank already has the power as part of its current functions to outsource the operation and maintenance of the register.

This Bill is similar to that published in 2012, which was based on the recommendations of the inter-agency working group on credit history. It creates a statutory centralised register of credit applications and agreements, which information will enable the Central Bank to form an overall picture of borrowings-debt and the amount being loaned out by banks and other creditors. Importantly, the Bill aims to balance the need for credit and debt information with the need to protect personal information. It is important that the person informational which can be held on the register is strictly defined and that timelines for the retention of different types of information are provided. It is not possible under this Bill to use borrowers' PPS numbers. The Minister will commence the section in this regard when the Central Bank can show that their use is necessary to ensure the effective operation of the register.

As I stated, the database will be owned by the Central Bank; there will be mandatory reporting of a comprehensive range of credit information by credit providers; credit providers will be required to meet specified reporting standards and to undertake mandatory credit checks of the register in respect of all credit applications above a threshold of €2,000. These are the nuts and bolts of the legislation. It would be wrong of any member of this House not we welcome this legislation which will act as a support to the financial services industry and ensure responsible lending and borrowing.

This Bill is about responsible lending and borrowing. It also addresses the deficiencies in the financial services sector through the establishment of a statutory credit reporting system. This is positive legislation. It is also a wake-up call to those directly responsible for the mishandling of our finances, which people held positions of power in financial institutions and statutory bodies, including Ministers. This Bill is important legislation which it is hoped will, in conjunction with the personal insolvency legislation, when enacted, assist in our efforts to get out of the economic mess we are in. Nobody in this House wants to see people suffer or without a decent income. Equally, we do not want people to have excessive incomes, including people in the media, financial services sector and so on. It must be acknowledged that people are hurting and that we as Members of the Oireachtas have a moral duty to support them.

I welcome this legislation and look forward to debating it further on Committee Stage.

2:50 pm

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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I too welcome the opportunity to contribute to the debate on this Bill. The Minister, Deputy Noonan, and Acting Chairman, Deputy Jack Wall, are, like me, from rural constituencies. If ever there was a case of closing the stable door when the horse has bolted this is it. Not only has the horse bolted, it has been to Cheltenham, Aintree and other places in the world and has probably at this stage been slaughtered and is being sold worldwide as a burger. However, I do not blame the Minister for this. While I salute the work he has been doing since taking up office two years ago, this is farcical.

What has happened to our country is an outrage. As stated by a previous speaker the former Minister for Finance, other Ministers, their advisers, the Financial Regulation and the bankers all played while Rome burned, which is an outrage. It is an indictment on this House and our justice system that none of these people have been brought before the courts and charged with fraud or any other crime. I do not propose to be judge, jury and executioner. I would not like to be either. Every man and woman charged with a crime is entitled to their day in court. No person, regulator or otherwise, has been held to account for their reckless behaviour. The banks shovelled out money to everybody. A person seeking a loan to buy a house was almost forced to take additional finance to cover the cost of purchasing an SUV and a foreign holiday. People could get loans of any amount. It was all about greed because those giving the loans were receiving huge commissions. There was no regulation. Why do we pay regulators? Are we paying them to fall asleep at the wheel? These questions must be asked.

This Credit Reporting Bill 2012 is a waste of time. It is feeble effort by the Minister, Deputy Noonan, and his officials to close the gate several years after the horse bolted. As a man from my county who died about 15 years would say, "All we have now in this country is fools and horses and most of the horses are nearly dead". It is proposed to microchip dogs. It is a pity given the reckless behaviour of our bankers and regulators that they had not been microchipped. What they did was just short of national sabotage. Their recklessness has wreaked havoc on people's lives. Like other members, I met representatives from the Ballyhea says No campaign outside Leinster House this morning, although I had to leave early as I was due to speak in the House on CAP reform. Ballyhea is not 100 miles from the Minister's home turf.

Neither this Government or its predecessor ever sought a write-down. The Labour Party, in terms of its promise if elected to burn the bondholders has been, following the result of the by-election today in Meath east, reduced to a mudguard. I mean no disrespect to the Acting Chairman, Deputy Wall, who is a decent man. Hell's fire was not going to be as hot as what they had planned but all they did was fall into line. Hence, the result of by-election in Meath east. I do not wish any ill to the Acting Chairman, Deputy Wall, who is a long-time member of what I recognise as the old Labour Party rather than of the new one, the so-called remnants of the stickies who knew how to do everything, including print money but did not know how to get a write-off. Fine Gael did not seek one either, which is shameful. What is the Government afraid of that it cannot stand up to its so-called masters-crucifiers? This is Holy Week. Every Irish man, woman and child has been crucified on the cross for the next 40 years by the so-called great deal achieved by the Government. One would think given all the clapping and laughing that it was manna from heaven. As I said then, the laugh will be on the other sides of their faces before the electorate is finished with them. The Labour Party felt a cold chill this morning following the final result of the Meath East by-election.

The people are frustrated by the fact that nobody in this House is taking responsibility for what they do or standing up to the bankers. The late Deputy Brian Lenihan and all of us who voted for the bank guarantee were lied to by the banks about the extent of the problem. Voting for that was the biggest mistake of my political life. I regret that. Fine Gael also supported it. The Labour Party promised it would have nothing to do with it but all we got when this Government was elected was a change of seating arrangements. People are outraged. I disagree with my colleague, Deputy Finian McGrath, that voting should be compulsory. People have lost all faith in democracy. There is no democracy. It is now a case of Heil Angela rather than Heil Hitler. Despite the efforts of those who fought here in Easter 1916, which is to be commemorated during the 1916 centenary celebrations, democracy has gone out the window. I understand the Government proposes to call the election after that.

That is all in the Government's great plan - that is if the mudguard does not fall off or the screws do not come loose and disappear like the snow off the Dublin Mountains today. A bit of sunshine at this spring time and then it was gone. The Spring tides and the Gilmore tides might be well gone. The tide has turned. As the Minister said, after the liquidation of IBRC, the boat has left the shore. It has left the shore. I saw more reckless behaviour the night the Minister came into this House and introduced the legislation to wind up IBRC. I challenged him on the floor of the House that night and spoke to him afterwards. I blamed the Attorney General here. How could he give us such reckless advice on that Bill that a stay could be put on any court case against IBRC that had been initiated in the courts. The Minister said that could not happen, but it was in the Bill, and I challenged him in writing the following day. Thankfully, a High Court judge decided last week that was not the case, that there is a Constitution, and that the citizens, whether they be small or great, are entitled to protection from the Constitution. We could not allow people with court cases before the courts to be wound off. How could the Minister continue to allow IBRC pursue people while the lay litigants could not pursue IBRC? Children in first class in national school with respect for the Constitution would know that is wrong. The Attorney General has cost us the court case, and there is the cost in terms of former Attorneys General and all their advice. We cannot tackle the people with the big pensions. We cannot tackle the fat cats in RTE. We cannot tackle any big problem, but we can screw the ordinary people, introduce emergency legislation any day of the week, and persecute the ordinary people of this country, but we cannot touch the fat cats, the former taoisigh, the former Ministers for Finance, the former Regulators, the former bankers or the former advisers. They are all on big pensions, and we cannot touch them. We are like a horse that is afraid of water and shies away from it, but we can ride a coach and four through the ordinary people of Ireland. We have done that for too long.

This Credit Reporting Bill is not worth the paper on which it is written because it is inept and feeble. I see the ECB and the IMF, our new masters, written all over it. This is an insult to the people we are supposed to represent, and the Minister should remove some elements from it.

Most people, whether they are small business people or home owners, want to pay the debts they incurred. All they want is time to do that, respect and support. Why can they not have their mortgages extended? I meet a blank wall when I deal with bankers. If one wants to meet a bank manager, one is told he or she has been transferred to some other department or area. I meet people who want to pay and will pay their debts. They are not the people who will not pay anything. I am talking about ordinary people who have commitments in terms of their families, homes and so on.

As I said, 94% of people have been in arrears for several months and are unable to pay their mortgages. They are not cavalier people. These people are in the minority, and we must be alert to them. They have hijacked this situation, they had no intention of paying back the money and they have moved off.

The Minister, Deputy Noonan, has left the Chamber but I want to raise an issue with the Minister of State that I raised on Leaders' Questions this morning, and I also raised it on the Order of Business, as did Deputy Joan Collins. We have talked about the gardaí and the way they are being persecuted. We know many of them are in sad circumstances. The Minister of State will know some of them in his county; if he does not he is not active on the ground. They are there in their dozens. In the case of a married couple in the Garda, in particular, they cannot meet their payments. We know that legislation prescribes that they cannot be in a state of indebtedness. When I and my colleague, Deputy Collins, asked the Tánaiste, Deputy Gilmore, about this, we got glib answers. Our questions were not answered. Will the Personal Insolvency Bill allow members of An Garda Síochána to be dealt sensitively? My understanding from previous legislation covering employment and enlistment in the force, is that it will not. Can we can have plain honest speak? We had plenty of it when the Minister of State was in opposition but we have had not honest speak since. I want those questions answered in this debate, and they must be answered.

There Bill contains lovely language but we are arriving on the playing field after the game is over and has been played out. Five years later we have this Bill, the policy background to which takes account of the current credit reporting system, the problems that may arise and the reasons for the policy change. Somebody has woken up in the Department and said we must have a policy change in regard to lending policy. We had it when we had bank managers, with whom I and my father before me dealt, who were sensible people. Some of them are still in place but they were sidelined by the whizz kids, the senior bankers - the greed people. When they did not want to lend recklessly they were sidelined and put to bed. I can name one of them from my own county who retired recently, Mr. James Ryan. He told me how hard he fought but he was told he was old fashioned. He did not have the buzz factor or the whizz look and it was considered that he did not know the position but he knew his customers. He knew their ability to pay and what they could pay.

Reference is made to the current system. There is no statutory obligation on financial institutions to report credit data and no central responsibility for credit data. There is no credit responsibility in the Central Bank for the behaviour of the marauding gangsters it is sending out who are wrecking havoc with people's family businesses and small businesses. The Minister of State might lift his head and listen to what I am saying. We have been told that the Minister intends to pass legislation to repossess people's home. The Central Bank - I have met the people there and discussed this matter - has a nice little code of conduct that it expects its constituent lenders to adhere to but the people there do not give a damn about it. I was in with the managing director of a bank recently, which I name, Friends Friend, and he told me his hire purchase agreement and lease agreement were far stronger than a court order. That is the respect he has for the law of the land. He was enabled, entitled and empowered to send out gangsters, fraudsters, a third force militia to break down people's houses and doors and seize their property and goods. At least it was confined to the sheriff under normal legislation but there is a banker's code of conduct, if you would not mind. This is a code of conduct that was renewed only a year ago because the previous code was not being adhered to. It was updated, shuffled and put in nicer language but, effectively, there is no code of conduct for the banks. The bottom line is the banks' credit balance and restoring the economy.

Each of the three so-called pillar banks were told to spend €3 billion in lending to small businesses. They failed to do so and were brought in and asked to do so again but again they failed. All they are interested in is restoring their credit balance to be fit for purpose again and to go out and make more profits.

We see on a weekly basis that lending institutions - there is no credit control in place in this respect or no data - are selling off their loan books. People all the over the country have telephoned me and said they want to do deals with the banks. They want to sort out their problems, cut a deal and pay 60% to 70% of their loans or whatever figure on which they can reach agreement. They are treated glibly but yet we can read a week later where a bank has now sold off its full loan book for 19% or 20%. It is amoral, disgusting and disgraceful. If we read further we find that a coterie of well-paid individuals within that bank have formed a new company. I think any law will state that if I take a loan with bank X, the loan should stay with that bank; the bank should not be allowed to sell it on to some other greedy vultures who want to make a fast buck again and want to take 90% or 100% off the people to whom they have lent the money, even though they have bought the loan book. Many of them have bought it and sold it to companies outside this country. We saw what happened with Bank of Scotland Ireland and the huge fraud that was perpetrated on this country, and as bad as that is, it is being perpetrated on the British taxpayers, and no one seems to give a damn. Are the bankers, as I call them the gangsters, rather than the politicians, running this country? Those are the people I see running it. The Minister has come in with this feeble effort.

3:00 pm

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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I would like the Deputy to be moderate in the use of his language.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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I am being as moderate as I can in the circumstances about these despicable people. Why would they not do this when they can get away with it and they have got with it? None of them has been arraigned or brought before the courts. I blame this on the Minister for Finance, the Taoiseach, the regulators, high paid advisers and the ECB regulators who shovelled the money in here when our banks did not have it. That is why I have said all along that 50% of the money we are supposed to owe we do not owe because it was shoved in here recklessly. It should not have been shovelled in here. There was no accountability or monitoring. To make matters worse, I am reliably informed in recent times that all these speculators and senior bondholders had their investments insured. They are laughing at what we did here and the way they are crucifying us - I hate using that word in that context in Holy Week. The so-called senior bondholders were insured and their investments can be redeemed. They can have a double laugh. They are laughing all the way to some other bank. It is despicable and sickening. No wonder the people are angry. I do not know how they are so quiet, why they are not marching on these banks or taking some drastic action. I do not advocate that but how long can we take it? How long can a kettle be left boiling before all the water evaporates and one is down to the basic line of defence? People do not have the money. Those in front line services, the members of the Garda Síochána, the nurses and the people who look after our services, are being crucified.

They cannot take any more. They would not mind if it was their own borrowing, but it was reckless lending and there was nobody in charge in spite of the warnings. A former Taoiseach had the audacity to tell people who spoke against it to go away and commit suicide. That was the most horrible suggestion to make to anybody in that situation. We know how many suicides there are now in every constituency as a result of this, yet he can swan around and draw his pension.

It beggars belief that such a travesty could be imposed on our people and future generations and nobody has called a halt. This Government promised so much but it has not even asked for a write-down. One never knows what answer one will get until one puts the question. Chur an ceist agus faigh tú an freagra. Is the Government afraid to ask the question? I do not know how we have become beholden to Europe and to some greater powers. I visited the IMF last week in Washington and handed in a letter of complaint about the way our banks are treating our people and how this Government and the last Government have allowed them to behave. I have not yet got a response but I hope to get one soon. To whom are we beholden? What greater power is there than that of our ordinary people?

3:10 pm

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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The Deputy will have to conclude.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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I will conclude, and I thank the Leas-Cheann Comhairle for his forbearance, but this Bill is only fit for the bin or the shredder because it is ten years too late. It is inadequate, inept, feeble and an insult to the people who are suffering and cannot pay their way. They want to pay but they need more time, leniency and support. They do not want their debts denied. They want some understanding so that they can deal with them. Why should all the big people get preferential treatment and the ordinary people be trampled on?

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
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I would like to be the first on this side of the House to congratulate Helen McEntee on her fine achievement in Meath East yesterday. She belongs to a new generation of politicians. I had the pleasure of canvassing with her last weekend in Meath and she proved to be a top performer. We will all see evidence of that in the months and years ahead in this Chamber. I extend my good wishes to the entire McEntee family and to the people of Meath, who made a very good choice in selecting Helen to represent them.

I welcome the opportunity to speak on this important Bill this afternoon and I thank the Minister for Finance, Deputy Noonan, and the officials in his Department for their hard work in an area that causes a great deal of discontent among the general public and businesses. Protecting the rights of our citizens under the Constitution has to be paramount. I cannot stress this strongly enough in today's world. We are all suffering because of the fraud, corruption and cover-up perpetrated by some former politicians, senior bankers and executives in Ireland. They were responsible for the theft from, and ruination of, many pillars of our State, including our banking system. They left our economy in complete meltdown until this coalition Government took over under the leadership of Deputy Kenny and the Tánaiste, Deputy Gilmore, ably assisted by the Minister for Finance, Deputy Noonan, and the Minister for Public Expenditure and Reform, Deputy Howlin. Their first task was to try to win back our good international reputation, which was in shreds and tatters after the previous administration had dragged us down. They had a huge task, going not only around Europe but around the world to restore Ireland's reputation. Any of us born here are proud Irish people and we were equally fed up with what went on during the Celtic tiger years.

This Bill establishes a statutory credit reporting system to promote more responsible borrowing and lending and creates a central credit register to be maintained and operated by the Central Bank. It grieves me that some of the personnel, particularly in the banking sector, who presided over our economic crisis because of the way they lent are still in situ. They wrecked our economy. It is important that we ensure that those who receive gold-plated incomes pay the most and that those at the bottom of the income ladder pay the least. This is the only way we can win back the confidence of the public in this economic crisis. The Government must deal with those who brought this country to its knees. That is well documented in the media and I do not need to mention the names of those people who are in America and elsewhere and whom the authorities in this State meet by appointment for questioning when ordinary people must go through the rigours of the law. I do not want to mention all their names. I could give a list the length of my arm but it is well documented and I do not want to make any blunder that would let them off the hook when they come before the courts. They wrecked our banks, destroyed our economy and cost us billions of euro, but not one has been put behind bars or punished. As an elderly woman said to me when I was out canvassing last week, there is not a single prosecution in sight. I would like the Minister of State, Deputy Cannon, and the Government to take the views of ordinary people on board because it is time that we listened to and connected with our citizens who are fed up. That is probably why there was such a low turnout at the polls in Meath. We are not connecting with people and we need to connect. It is very important that we do so.

These bankers cannot be let off the hook for milking our banks with one scam after another and breaking the law at the stroke of a pen, and indeed every turn of a pen. What about the golden circle that received €450 million and those who rigged the balance sheets of Anglo Irish Bank to make them look good? They appeared on TV shows and so on, were lauded by interviewers and got away with boasting of their activities and shameful carry-on. We need to get tough with those who destroyed our banking system and are responsible for Ireland's losing her hard-won independence to the EU-IMF-ECB troika.

While we have the Credit Reporting Bill before us this evening, I must ask a question: where is the legislation to bring rogue bankers to book by stamping out white-collar crime? Under the EU-IMF bailout the vulnerable, the disabled, the sick and carers are the target of cutbacks. Every week at my clinics people talk about the dreadful disconnect between ordinary citizens and the State and the way those who wrecked our country are being let off the hook, receiving massive pension packages, bonuses and other entitlements. These should have ceased as a punishment for the way they wrecked our economy. This disconnect was very evident in Meath, where less than 40% of people turned up at the polls yesterday. That is a wake-up call and there is a lesson to be learned. It is important that we take people's views on board. Politicians are elected to implement the will of the people and it is important that we do that.

The public is not at all happy with the length of time it has taken to bring serious charges against those who wrecked our banking system.

The Government recognises the vital role small businesses can play in fixing our economy and creating jobs. This legislation proposes to extend the role of the Data Protection Commissioner to deal with complaints from small enterprises with a turnover of less than €3 million in respect of their data held on the credit register. It is important we breathe new life into this area. The Government is strongly committed and determined to achieve a breakthrough for small businesses and proper recognition for the sector. Last year, we announced 16 financial support schemes for small businesses from starting a business to growing it, as well as recruiting and accessing credit.

As all Members know from their constituency clinics, for small and medium-sized enterprises, SMEs, to get business funding from the banks is like reaching for the stars. SMEs are the backbone of our economy. Up to 95% of all companies are SMEs with 90,000 of them employing 1 million people. At a personal level they represent a commitment by individuals connected with the country to invest in their communities, take risks and create employment. This will play an important role in getting the country up and running again.

This legislation extends to loans acquired by NAMA, the National Asset Management Agency, and loans issued by local authorities. The Minister for Finance must ensure NAMA balances the scales in favour of communities as opposed to developers. It should give local community groups priority in purchasing enterprise-sensitive sites and properties which would potentially enhance and enable economic renewal of such areas currently decimated by the actions of the banks and developers. There is not one rural community which would not benefit from a NAMA property transfer. The recession has brought back a huge sense of community across rural areas and I am sure the same is happening in our cities. NAMA cannot be a private club. Throughout history, we have seen the destructive powers of such clubs and it is important checks and balances are put in place to supervise the agency.

Another important provision of the Bill relates to access to data and the prevention of identity theft. This legislation will inspire confidence in businesses and the consumer in this regard. It is also important from the public's point of view that credit providers will be required to meet specified timelines and reporting standards. Often when credit reports are prepared, no deadlines are issued as to when its recommendations should be acted upon. I am glad this legislation includes timelines.

All in all, the Bill will act as a support to the financial services industry, as well as supporting responsible lending and borrowing which was absent in the Celtic tiger years and which has left us all in an economic mess. Much hard work has gone into the Bill by the Minister for Finance and his Department.

The public, however, is not happy with the length of time it has taken to bring forward legislation to deal with those who wrecked our country. There are several provisions in the Bill with which I am concerned. While individuals will be entitled to a free copy for their own records every 12 months, fees may be charged for access to other information held on the credit register. Will the Minister give an indication of how much this fee might come to? The database will be owned by the Central Bank which will be responsible for operating the registry. It has had a poor record in the past. Hopefully, it will have learned from its mistakes. It is important it does a good job in this area. Will the Minister have control in overseeing the database to ensure it is properly maintained and so forth?

The Bill provides for mandatory reporting of a comprehensive range of credit information by credit providers. I welcome the Bill as it is in the best interest of the public. Similar legislation has been highly effective in other jurisdictions. However, we need action to be taken against those who wrecked our economy. Deputy Mattie McGrath claimed he resigned from Fianna Fáil because of the behaviour of former taoisigh and Ministers but I must remind him it was over a local issue. I hope, however, he is like the lost prophet who has seen the light at the end of the day. I notice every other day he has been advising the current Fianna Fáil leader from the benches. I hope he will play a more independent role in future and be on the side of the people who elected him.

3:20 pm

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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On the face of it, one would say there is nothing wrong with this Bill. Its stated purpose is to promote more responsible lending, particularly in the context of the mortgage crisis the country faces and that this was a condition of the troika agreement. I have no doubt the Government and the troika will present this as proof that they are getting serious about regulating the banking and financial sector, as well as lending in general.

As an aspiration, that is not a bad idea, but what the Government is doing amounts to altogether fake regulation and reform and it is irrelevant to the real issues that are facing us in terms of the mortgage crisis and the behaviour of the banking and financial institutions. In some ways it is an attempt, rather cynically, to give the Government, the troika and the EU authorities some credibility and cover for the real and substantial policies being pursued in respect of the banks. It is, to put it mildly, closing the door after the horse has bolted. In fact, it is worse because the Government and the troika know that the horse has bolted and that the real issue is what the banks are doing now. The issue is what the banks are doing in this country and in Europe and what the Government, the troika and the European authorities generally are going to do about what the banks are doing now. The issue is what the banks are doing to the European economy and this economy, and what they are doing to 180,000 distressed mortgage holders. These are the things people are concerned about.

If there were some joining of the dots between this regulatory legislation and a serious policy to do something about what the banks are doing now, then one could take this legislation seriously. However, everything else the Government is doing with regard to the banks and everything else the troika is doing with regard to the banks and the financial system in Europe is, in real terms and in terms of the real policies, moving in exactly the opposite direction and amounts to continuing the same policy of allowing the banks to run riot and do what they want. In fact, the real policy is to continue to prop up an utterly dysfunctional failed banking and financial model but to cover it with a pretence of some regulation. That is what this is about; it is utterly fake, cynical reform. What do I mean by that? If the context of this legislation is the mortgage crisis that has ensued from the reckless lending of financial institutions, then one would expect that the Government and the troika would move to ensure the banks do not get more power to unleash the consequences of the mortgage crisis they created onto the backs of distressed mortgage holders. In fact, they are doing the opposite. While the Government is putting legislation through the House and pretending to deal with the banks, it is drawing up guidelines and legislation that will let the dogs off the leash, allowing the banks to repossess the homes of distressed mortgage holders and harass people who are in mortgage distress day in, day out. The Government is prepared to allow the banks to break through the current limit on the number of calls they can make to people to harass them about paying off mortgages they are unable to pay. The Government has said it will do away with those limits. The banks were not abiding by the limits anyway. In many cases they were terrorising mortgage holders, and they continue to do so. What is the response of the Government to this? It is to suggest that they should be allowed to do it more. The Government has decided to remove any restrictions on the rights of the banks to harass mortgage holders. In this context, how can one believe the Government is serious about monitoring the lending activities of the banks while, at the same time, it is moving to act in that way? At the behest of the troika, we expect legislation presently which will remove legal obstacles to the banks' repossessing the family homes of ordinary people. It is utterly unacceptable.

The approach is completely lacking and I simply do not get it. Sometimes at the Joint Committee on Finance, Public Expenditure and Reform or in the Chamber, the Minister of State, Deputy Cannon, joins us in lamenting the behaviour of the banks and their failure to deal with distressed mortgages, but at the same time the Government acts in this way. Why? Is the Minister of State simply playing to the gallery? I assume he is simply playing to the gallery, because he knows there is such anger about mortgage distress that he must be seen to express sympathy with those who are in mortgage distress. However, when it comes to real, substantial action, the Government is simply further empowering the bankers to impose more suffering, anxiety, distress and fear onto ordinary mortgage holders. Why is there nothing in the Government's legislation, plans or policies to stipulate that the banks must take most of the hit for their reckless behaviour? Why is there no substantial policy along these lines? Rather, we get exactly the opposite. Why does the Government not believe the banks should be forced to take the hit? When the question is asked, all we get is claptrap along the lines that we need to have a functioning banking system for the economy. Was there ever a moment in history when the banking system as it is currently constituted showed itself to be more dysfunctional, damaging or strangling of the real economy and society - and, most importantly, of the human beings who live in that society - than it is at this moment? Yet the Government insists that we must prop it up and protect it, and prop up private ownership of the financial system, even though that is the main problem.

I realise the Minister of State would not go as far as I would, as a socialist, and take the view that we need to nationalise the banking system to have real control over its policies, priorities and objectives, although that is clearly what is needed; it is crying out to us from the events that are unfolding in this country and throughout Europe that we need to control the banks democratically, because they are a law unto themselves. They are vultures. There is nothing they will not do to people to get money back. It is fair enough if the Minister of State does not accept that, but can he not at least accept that banks should be penalised and should pay the bill for what happened between 2000 and 2008? Let us forget about my aspirations for a different type of economy. If the Government does not take action to unload and transfer the burden of debt that was generated because of the activities of private banks and has been loaded onto the backs of ordinary mortgage holders, our economy as a whole and the European economy, then we are going nowhere and there is no way out of this crisis.

It is simply extraordinary that the Government is contemplating this new regime. The Government refers to the restructuring of mortgage debt, and there is debate about whether people should give up their second cars, whether women should have to give up their jobs and whether such people should have the money for private health insurance. I am in favour of a public health system, but against a backdrop in which the public health system is being savaged to pay off the banks, it is understandable that people feel the need for private health insurance, which might be considered a luxury under these new restructuring arrangements.

Not only is that cruelly unfair on the families that will be saddled with these arrangements as a result of the insolvency legislation and guidelines it appears are due from the Central Bank in regard to these arrangements, not only will this be the most bleak and grim prospect for 180,000 families for a decade or more, but these people will not have a penny to spend in the economy. Every penny or euro the banks or the insolvency practitioner or agency try to pinch from the distressed mortgage holder is a penny or euro that will not be spent in the domestic economy. Can the Government not do the sums on that? People need more money to spend.

Even people with moderate views have said that roughly speaking the international standard is that people should have approximately from 30% to 35% of their income to spend on keeping a roof over their heads, whether rent or mortgage. Why does the Government not introduce a simple measure providing for that? Why does it not decide that whatever the person's income is, it will expect the person to pay 30% of it towards the mortgage and do as they please with the rest? People should be able to spend the rest as they want, whether they are unemployed, lucky enough to still be in a job or whatever their circumstances. That would be the fair way to deal with the issue, rather than the invasive, cumbersome, slow and ineffective process the Government proposes, which will go on for years and years. Why can it not propose a simple model like that?

Debate adjourned.