Nicky McFadden (Fine Gael)

I commend the protocol of the Irish Banking Federation and MABS which are working well together. They have set out guidelines for people in debt to agree a sustainable repayment schedule with their financial institutions. I hope this protocol is working and not totally aspirational.

Financial services such as MABS have seen an enormous increase in the number coming to them for advice and help. We in Fine Gael acknowledge and commend the work of MABS but are now calling on the Government to expand the organisation in a way that gives greater support to individuals and families facing enormous financial pressures. This can only be done if the Government provides more resources for MABS in both finance and staff training. There are so many who simply do not understand financial jargon and need their affairs explained to them in simple terminology and there are many who need the terms of their repayments changed in order that they can make repayments in proportion to what they can afford.

We must proceed according to the principles of fairness, balance and enforcement on a case by case basis. Alternative ways of dealing with indebtedness which could assist individuals include debt counselling and advice. Common sense should prevail when people end up in serious debt but fear, embarrassment and lack of confidence can inhibit them from contacting lenders. Many people bury their heads in the sand in the hope that their problems will go away. When people have been deflated by unemployment, their loss of hope can persuade them there is no reason to make contact with lending institutions. I am also aware of cases in which people have agreed unsustainable terms or promised overly high repayments to satisfy their lenders. This is where MABS can play a bigger role. Experienced personnel could act as a third party, offer a level headed perspective and keep emotions calm while at the same time offering sound advice.

Earlier this week, Professor David Blanchflower expressed serious concern about the toll of unemployment on family life and the skills and esteem of our talented workforce. We have to find ways to stimulate the economy and return people to employment. I am also fearful of increased rates of suicide and dependency on alcohol and drugs. Financial stress also increases domestic violence and marital breakdown. It is ironic, therefore, that many couples cannot afford to separate because of the recession and accordingly have to endure each other's company in adverse circumstances.

In June 2009, the financial adviser, Mr. Liam Croke, told the Joint Committee on Social and Family Affairs that a lender can only offer assistance to couples when they are in arrears with their mortgages. This outrageous fact is indicative of the Government's reactive agenda. Banks should be obliged to encourage young people to pay as much as they can afford on a monthly basis. Lenders should not advocate that borrowers get into unsustainable debt because prevention is better than cure.

Too many people who genuinely cannot repay their debts are going to jail. Fine Gael has drafted legislation which would allow the State to make regular deductions from social welfare payments or wages instead of sending people to jail. Last June, the High Court ruled that it was unconstitutional to send a woman, Ms Caroline McCann, to jail for failing to repay her loan. In her judgment, Ms Justice Mary Laffoy noted that the failure was not due to wilful refusal or culpable neglect. Many people across the country would share the personal circumstances of the woman at the centre of this case, a single mother of two with psychiatric and alcohol problems who depends on the lone parents allowance. When her debts, which totalled €18,000, went into arrears her credit union obtained an order for her arrest. She requested MABS assistance in applying for an extension of time but the application was refused. This is the type of situation we must seek to avoid. As public representatives, we have a responsibility to put in place a system that is both effective and personable. It serves no purpose to fill our prisons at enormous expense to the taxpayer with people who genuinely cannot pay their debts.

Fine Gael has proposed measures to regulate debt collectors and prevent criminal gangs from acting as debt enforcers. No legislation is in place specifically to cover debt collection services. My party calls on the Government to take immediate action on regulating debt collection. NAMA must include a homeowners' support scheme to protect the 35,000 families in mortgage arrears. The housing charity, Respond, also supports such a scheme. The ESRI forecasts that 200,000 families will be facing negative equity by next year. Fine Gael believes we must restore stability to the financial system and provide a mechanism to protect the tens of thousands of Irish families facing repossession. To become eligible for the homeowners' support scheme, applicants' main residences must have a market value of less than €750,000 and they must be at least three months in arrears, able prove a loss of income, have investigated different repayment methods and used the facilities of MABS. NAMA would purchase the entire mortgage from the bank at the current market value and write down the loan to the benefit of the homeowner, who would service the remainder of the debt while also paying a rental fee to NAMA set by market rates. Subsidies may also be provided through local authority shared equity schemes. The objective is to provide people who have shown a commitment to repaying their mortgages the opportunity to make affordable and sustainable payments.

I ask my colleagues across the floor to support this motion because we have a collective responsibility to look after the people we were elected to serve.