Ann Phelan (Carlow-Kilkenny, Labour)
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I thank the Leas-Ceann Comhairle for allowing me to address this serious issue. There has been news that there have recently been a number of debt write-downs for mortgage holders with AIB. While this is a positive and welcome step, no real detail seems to have been given as to how these write-downs were achieved. In highlighting this issue I do not want in any way to jeopardise any possible deal being done or that may be struck for individuals, as I understand the situation is extremely stressful. However, there is a need for clarity on how these deals are negotiated. The lender has chosen to remain silent on some of them which has caused resentment and angst among those who cannot obtain a similar deal and among taxpayers who are required to finance the deals through their taxes. I understand negotiations can never take place in public. However, it is important that deals are struck, but it is also important that they be as transparent as possible. I have constituents who are at a loss to understand how some individuals have been able to attain deals and they cannot, even though they consider themselves to be in an equally serious position. It seems some of the deals have been leaked to the media, but I do not understand how that helps the situation.

AIB is 99.8% owned by the taxpayer. Therefore, it has a duty to the State and the taxpayer to be fair and transparent. There has been selective leaking of deals to the media, which is not acceptable. We do not know the specific criteria used.

We have information from some sources which seem to be in the employment of AIB but I could be incorrect about this. The danger in reporting these deals to the media without relevant information as to how they were negotiated is that it leads to a false expectation among other borrowers. On this basis there is an urgent need for clarification. It is like a game of "Deal or No Deal". The debtor simply fills out the standard financial statement, AIB examines it through its own process and determines whether it will give the person a deal. I have been informed it applies the minimum standards as determined by the Insolvency Service of Ireland plus 20%. It then writes off the proportion over 130% of the current market value. The Insolvency Service of Ireland was established for a reason, which is in the interest of the debtor. It is fair, open and transparent. Could AIB's present approach impact negatively on the Insolvency Service of Ireland and on the personal insolvency service as a whole?

Is it the case the banks apply guidelines and criteria to benefit themselves and not the debtor or taxpayer? It is clear the banks do not want to engage with the regulated solutions as set down by the Personal Insolvency Act as they stand to lose out. I call for these details to be clarified and for transparency in respect of all deals. Consistency needs to be applied across the board.

Brian Hayes (Dublin South West, Fine Gael)
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I thank Deputy Phelan for raising this very important issue. As the Deputy will be aware the relationship framework with the bank provides the State cannot intervene in the day-to-day operations of the bank or its management decisions. These frameworks are published on the Department of Finance's website. The Minister for Finance must ensure AIB is run on a commercial, cost effective and independent basis to ensure the value of the bank as an asset to the State.

I understand AIB is acutely aware of its fiduciary duty to protect taxpayers' money and can only write down residual debt if there is no prospect of that debt being paid back or no affordability to pay it back. From the bank's perspective, it is not possible or practical to set out absolutely strict guidelines on applicable levels of write-down as each case is different and circumstances vary from customer to customer. However, once it has been determined a customer's level of net disposable income does not allow for a standard forbearance solution, it is sometimes necessary and economically sensible to involve debt compromise as part of the overall resolution. This debt flexibility usually arises in the application of a split mortgage or a voluntary sale for loss arrangement. All resolutions offered to customers in difficulty are assessed on the basis of the borrower's maximum affordability in respect of his or her mortgage.

The approach of the Government on this issue has been clear, and it is that mortgage holders and other borrowers who can meet their loan obligations should continue to do so and that appropriate assistance should only be afforded to those mortgage holders, or other borrowers, who experience real and genuine difficulty in meeting their commitments. This approach was recommended by the Keane report, which recommended against blanket debt write-off on affordability and distributional grounds. It is clear the vast majority of mortgage holders can and will continue to meet their mortgage commitments.

The Government's strategy to assist those in genuine and significant mortgage difficulty is built around measures in four distinct areas. These are personal insolvency, which the Deputy mentioned, a mortgage advisory service, the mortgage to rent scheme, and engagement with the banks. Considerable progress has been achieved across this strategy. This strategy is being managed across several Departments and reflects the fact there is no single solution to the mortgage arrears problem.

The Central Bank's code of conduct on mortgage arrears, the CCMA, also provides a strong consumer protection framework to ensure borrowers struggling to keep up their mortgage repayments are treated in a fair and transparent manner by their lender, and that long-term solutions are sought by lenders with each of their borrowers. The CCMA provides an integrated package of consumer protection measures for borrowers facing or in mortgage arrears. It seeks to deliver on the following principles: to ensure appropriate resolution of each borrower's arrears situation, to ensure lenders deal with borrowers in a fair way, to support and facilitate meaningful engagement between lenders and borrowers and to ensure borrower awareness of the benefits of co-operating with the lender and the consequences of not co-operating.

In its mortgage arrears resolution targets, or MART process, the Central Bank has set clear targets to require the main mortgage lenders to propose and conclude sustainable solutions to mortgages which are more than 90 days in arrears. However, the appropriate solution in each individual case is one for the bank and lender to conclude having regard to the particular circumstances involved. So far, lenders have reported to the Central Bank they have met the quarter two and quarter three targets for 2013.

Ann Phelan (Carlow-Kilkenny, Labour)
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I accept the comprehensive answer the Minister of State has given. Very varied situations exist and I accept wholeheartedly we cannot have a one size fits all solution. Does the Minister of State accept that in some cases, which have been reported widely in the media, people have received debt write-down while other people cannot obtain this? Does he accept this causes resentment not only among debtors but in society in general?

I accept the bank will have to do individual deals with people but we must level the playing field. I have constituents who have been trying to deal with a bank other than AIB who cannot get anywhere. Their phone calls are not returned. They keep a diary of how they try to contact the bank. The bank will not engage with them and has told them to surrender their home. We then have reports in the media of people receiving debt write-down on half their mortgage so one can see why people are getting very upset.

I accept a bank must be commercial and such activities must be taken into consideration, but this involves people and it is not only an economic situation. I have been in a home where the mortgage difficulties are such the fire cannot be lit until after 7 p.m. The mortgage must continue to be paid and the people cannot afford to buy coal to light the fire. These are the situations I am dealing with and the people who need debt write-down. I hope the Minister of State will take what I am saying on board.

Brian Hayes (Dublin South West, Fine Gael)
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Not only do I take on board the very relevant points made by the Deputy, and she is absolutely right to highlight this matter to the House, I very much hope AIB take them on board. It would be very useful if AIB clarified the matter on foot of the very constructive remarks made by Deputy Phelan in the House. It would bring some clarity to the issue.

These issues will only be resolved on a case-by-case basis and it will depend on the level of indebtedness. My understanding from the Department of Finance's perspective is we are only speaking about people in personal dwellings and it does not involve investment properties. This is an important message to send out.

When the Government had to recapitalise the banks, provision was made for this and there was always going to be a circumstance where some form of partial write-down would have to be part of the mix of solutions, depending on the indebtedness of individuals and the circumstances, and whether in a forbearance test they were able to pay back in a circumstance where a solution could be found. The task of the Government has been to get onto the banks to get this done. Clear targets have been set by the Central Bank as I stated in my remarks. It is now the task of the banks to achieve these targets. This is the focus of the Government. There was always going to be a mix of solutions.

However, I accept the point the Deputy raises that for those who are trying to get a workable solution to the banks and who then hear willy-nilly of what I understand to be a small number of cases, in which some kind of debt write-down has been given as part of the solution, a more substantive statement by the bank or possibly the bank's involvement in a parliamentary committee setting out the circumstances would be of general assistance. The point made by Deputy Ann Phelan is absolutely on the money. People need to know these things and customers who are dealing with the bank and who are having difficulty in arriving at a solution also need to hear this. Consequently, I echo her remarks.