Wednesday, 25 September 2013
Ceisteanna - Questions - Priority Questions
Personal Insolvency Practitioners
1. To ask the Minister for Justice and Equality the number of personal insolvency practitioners; the ethical guidelines laid down by the service for PIPS; the payment procedures for PIPs that have been appointed by the Insolvency Service of Ireland; and if he will make a statement on the matter. [39932/13]
I am advised by the Insolvency Service of Ireland, ISI that as at 23 September 2013, there are 47 personal insolvency practitioners, or PIPs, authorised as well as eight Money Advice & Budgeting Service companies, representing 28 individuals, authorised to act as approved intermediaries. I understand the ISI is processing a large number of practitioner applications and the number of authorised PIPs and approved intermediaries is expected to increase in the coming weeks.
Practitioners are expected to meet a number of standards, including fitness and probity. The fitness and probity requirements are set out in the Personal Insolvency Act 2012 (Authorisation and Supervision of Personal Insolvency Practitioners) Regulations 2013, SI 209 of 2013. These regulations set out the qualification criteria, authorisation requirements and regulatory standards which must be met for an individual to be authorised by the ISI to carry on the practice of a PIP.
The ISI charges an application fee of €1,500 for persons wishing to become authorised as such practitioners. In so far as practitioner fees associated with the development of debt settlement arrangements and personal insolvency arrangements are concerned, the ISI does not prescribe practitioner fees. These fees will be negotiated with an individual debtor by the personal insolvency practitioner in advance of a case proceeding, and will be deducted from the amount of money an individual creditor is calculated as having available to pay his or her creditors during the term of the arrangement.
I thank the Minister for his response. The first issue is that of cost. Will the Minister and his Department keep the cost of these operators under scrutiny? An Irish Independent survey indicated that the PIPs might charge anything from €5,000 to €20,000 to families suffering severe financial difficulties during the five to seven year period of their debt. We hope this regime will be successful, in the interests of the many hard-pressed families it is to serve. However, it got off to a somewhat shaky start earlier this month. We heard one PIP claiming that hospital consultants and solicitors, for example, would need bigger houses than other individuals. What sort of criteria has the Minister in place to ensure the performance of these professionals is monitored and reflects the type of model the Minister and his Department put before the House when this legislation was introduced?
In the first place, the Personal Insolvency Service has a regulatory function in respect of personal insolvency practitioners and I expect it to carry out that regulatory function properly. As to the Deputy's question, I do not wish to talk about individuals in this House as that is not appropriate. However, there is nothing in the legislation which suggests or provides for any different treatment of individuals in financial difficulties who require the service of a PIP in regard to the nature of the professions in which they may be engaged or the work they undertake. I found the matter that was reported in the newspapers somewhat extraordinary because what was said was completely at variance with the express provisions of the legislation.
There is, of course, an obligation on personal insolvency practitioners to perform their duties in accordance with the legislation, deal with debtors in a manner that accords with the legislation and engage with creditors in a manner that is appropriate to the legislation. There is important provision in the legislation, given the very nature of the personal insolvency arrangement, to seek where appropriate to protect an individual's home where that home is appropriate to his or her needs. There is no suggestion, nor could there be in any circumstances, nor do I believe creditors would countenance it, that some individuals should get special treatment by virtue of the nature of the profession in which they are engaged.
I appreciate the points the Minister has made but there continues to be some concern about the pricing arrangements in place. One hears reports, albeit anecdotal at this stage, that some PIPs are requiring upfront payment and that there is a vast variation in the charges applying. Will the Minister put a system in place to monitor this type of operation? He indicated to us that 47 PIPs are operational. Is the Minister satisfied there is an even enough distribution of these personnel? Has he or his Department identified the optimum number of such practitioners for the system to work effectively?
It is a matter for the insolvency agency to license PIPs or individuals who are qualified to perform their functions as PIPs. There are very specific provisions in the legislation in regard to the fitness and probity requirements for PIPs. SI 209 of 2013 contains several provisions regarding fitness and probity of PIPs and states:
A personal insolvency practitioner shall be free from any undue influence, undue guidance or undue control of or by any other person which could prevent or hinder in any material respect the performance of his or her functions ... A personal insolvency practitioner [must] demonstrate to the satisfaction of the Insolvency [agency] that he or she ... is sufficiently competent, proficient and independent to undertake the role of a personal insolvency practitioner ... has the qualifications, skills, competence and capacity appropriate to the role ... has a clear ... understanding of the relevant legal, regulatory and financial environment applicable to the role ... has the organisational and financial competence, capacity and resources to undertake the role.In the context of the financial issue raised by the Deputy, I wish to draw two matters to his attention and will try to do so with speed. The first is that a PIP "must be able to demonstrate to the satisfaction of the Insolvency [agency] that his or her ability to act as a [PIP] under the Act is not adversely affected to a material degree where the [PIP] is, or has been, in any jurisdiction ... issued a warning, censure, suspension, reprimand or other administrative or judicial sanction". A PIP is required to "manage his or her financial affairs relating to his or her practice as a personal insolvency practitioner in a sound and prudent manner".
The issue the Deputy raised about charges is one about which we had a great deal of discussion during the course of the legislation.
Personal insolvency practitioners will not be able to charge what might be described as inappropriate or outlandish fees. When a proposal is made by a PIP on behalf of a debtor to creditors with a view to resolving an individual's debt difficulties by the conclusion of a debt settlement arrangement or a personal insolvency arrangement, as the fees payable to the PIP will in essence come out of the pot that is there to meet the indebtedness to the creditors, the creditors will effectively be able to reject a fee proposed if they feel it is inappropriate. There is an inbuilt control in that respect and I am sure if any complaints or difficulties arise over the initial 12 months of the operation of the legislation, they will be brought to the attention of the insolvency agency.