Kathryn Reilly (Sinn Fein) | Oireachtas source

I know Senator O'Brien dealt with his proposals earlier on.

I would like to speak about the current Government proposals. My party has expressed concern about the power of veto that is given to the banks in the Personal Insolvency Act 2012. Our fear is that the Act will be of little use to the majority of people who are currently in distress. We believe we need to stop treating the banks with kid gloves. We have allowed the threat of repossession to loom large. We need to start taking better and more decisive action in this regard. My colleague, Deputy Pearse Doherty, has expressed concern that the code of conduct on mortgage arrears leaves the power of final say in cases of mortgage restructuring in the hands of the same banks that allowed the crisis to escalate. We are also concerned that residential and buy-to-let mortgages are being put in the same category.

Matthew Elderfield has said there will be an increase in repossessions if banks consider it more beneficial to sell a house at its current value than to restructure the loan. There was a fear that banks would be allowed to repossess after 30 days when the 12-month moratorium was lifted. There were also concerns that as part of the suite of new measures, banks would be given the power under the revised code of conduct on mortgage arrears to move borrowers from tracker mortgages as part of any restructuring. We believe there needs to a fair approach to mortgages that involves putting the family home first, with independent adjudication leading to resolutions.

I will go through some of the proposals we have detailed in our amendment. We believe an independent statutory distressed mortgage resolution process needs to be established. As part of that process, it should be possible to establish legally binding mortgage distress resolutions on a case-by-case basis. It would protect the family home by means of a variety of measures, including write-downs, shared equity and transfer-of-tenure-type social renting.

One of the benefits of our proposals is that money can be saved by reducing an at-risk mortgage to a payable amount. As we all know, unmanageable mortgages cost the State money. If the banks do not deal with distressed mortgages, they will be required to raise more capital. We feel that if this is not dealt with in a concrete way that helps home owners, further economic problems will be created. In other words, the domestic economy will be further depressed if a large section of the population is taken out of the spending economy. That, in turn, will exacerbate the problems we face down the line.

We need to direct the banks to deal with this issue in a proactive manner. We should make sure the banks do not have the power of final say on mortgage restructuring. We have to ensure this is done in an independently adjudicated way. If we require the banks to pass on the interest rate reductions agreed by the European Central Bank, that will ensure people get the best value. We have detailed some solutions and suggestions in our amendment, which I appreciate will not be taken. I am sure the Minister of State will comment on them when he contributes to this debate.