Darragh O'Brien (Fianna Fail) | Oireachtas source

I second the amendment. It is safe to say that the Government is going to give away its biggest stick with which to beat the banks, which would make them do what we all apparently believe they should do. Senator Byrne mentioned the revised code of conduct on mortgage arrears. I have tried every day over the past two weeks to get a response from the Minister for Finance as to why the Government approved the new code of conduct on mortgage arrears, which removes any protection that mortgage holders have. It effectively means that the banks will be able to move on individuals and remove the protection on contacts and various other issues. Only yesterday I got a response from the Leader of the House, which effectively stated that the Central Bank is independent from Government. Did the Cabinet approve the new code of conduct on mortgage arrears? What input did the Department and the Minister for Finance have into the new code of conduct? We were told previously that this was waiting for the approval of the Minister for Finance. I am aware that Deputy Shatter is not the Minister for Finance, but he is a senior member of the Government and both Ministries are related. This Bill, proposed by the Minister for Justice and Equality, will close the loophole which inhibited the banks from moving on repossessions.

I have read several cases into the record of individuals whose applications have been refused by the banks' own appeals committee. These are principal private residences. These are people who have families. These are not investors. These are not developers. These are normal Irish citizens who are paying every month to ensure that we have a banking system and who expected more back from that system. We have no insolvency set-up. There is no way to track the conversion rates in respect of the banks' own solutions, and the Government has decided not to put in any definition of a sustainable mortgage. It has not set any limits for 35-40% of net take-home pay, which would be the mortgage payment, and it has failed miserably in respect of the one solution which I think will work, namely, split mortgages. Our banks have approved 144 split mortgages out of over 142,000 mortgages in arrears.

Our amendment simply requests that should a decision be made through a personal insolvency arrangement, the court can determine that to be unreasonable. The amendment will give power to the court to state that.

This is in the absence of the Minister and the Government not agreeing to the establishment of an independent debt settlement office. What they are still doing today is closing the loophole but giving all the power to the banks.

I have heard the Minister on the record, including in this House, and I know he personally put a lot of work into the Personal Insolvency Bill, as did his officials. However, what he should have done was to allow this to happen and then see how the banks would manage it. The Minister said that if the banks did not manage it, he would come back with further legislation. I put it to him that the best thing to do with the banks was to use the Dunne judgment as the stick, and to say he would not bring in the Land and Conveyancing Law Reform Bill 2013 until he actually saw the colour of their money, saw they had done 14,000 or 15,000 split mortgages and saw they were actually playing ball with citizens. He should have held back on this. Instead, what has he done? He has introduced a new code of conduct on mortgage arrears that is open season on mortgage holders and he is closing the last protection by way of a legal loophole for mortgage holders.

I would love to know what advice the Minister and his Department have been given in this regard, and what protection he believes will be in place for distressed mortgage holders should this Bill be passed. We are talking about people's homes. I do not see where this will get us. Only 78 personal insolvency practitioners were registered as of last week, all private individuals and some of them with the "Big Five". How in God's name will we even be able to process this with just 78 practitioners? If one considers the cost of a personal insolvency practitioner presenting a plan to the court, who is going to do that without being assured he or she will be paid? What mechanism will the Minister put in place to ensure they are paid? Will there be a promise to pay? I believe the banks should underwrite the Bill. Has the Minister dealt with the VAT issue in this regard?

I believe this amendment is worthy of being accepted because, at least, it provides a safety net. It does not give the banks the full power in this regard and gives power back to the courts. What the Minister is outlining here is a definitive and clear timeline for banks to repossess properties after 60 days. That is what the legislation means. After 60 days, they can move straight ahead to a repossession order. I cannot fathom why the Minister is doing this. If he is going to hide behind the personal insolvency legislation and say that is going to be the panacea for all our ills, I put to him that it is not.

With regard to the Bill before us, I wonder what contact the Minister's Department has had with the banks and lenders, and what submissions they made on this legislation. As the Minister personally responsible for this legislation, is he confident we will not see a wholesale issuing of repossession orders under this Bill, when enacted? I put to him that we will. I suggest that by the end of this year, should this be signed into law, we will see some lenders move immediately because the Minister has given no protection to people. Furthermore, this removes any incentive from those lenders which no longer operate here as a lending institution, for example, some of the sub-prime lenders and those who have bought loan books at a discount. They will move immediately to repossess because it is cheaper for them to repossess than to go with any other apparent solution that has been put forward. What incentive will be for those like Start Mortgages, Pepper and others, which are not lending into the economy and not active in the mortgage market, to come up with real solutions? There is no incentive. When the Minister passes this Bill, the easiest thing for any company that bought a loan book at a discount is to move ahead and to repossess the property. That is clearly what will be done.

I ask the Minister to look in detail at the amendments which we have tabled in good faith. These would mean that determinations made in a personal insolvency arrangement can be effectively overturned or stayed by the court. I do not see why the Minister would not do that. We would rather that he introduced a debt settlement office and not take up the time of the courts with these issues, but the Government has refused that at every hand's turn. Furthermore, I would ask whether the Minister's Department and the Department of Finance get regular updates from the pillar banks in particular, and specifically AIB, which has set targets to talk and engage with 4,000 of its customers a month. How do the Departments track what a resolution is? If the banks claim they have dealt with 4,000 people in the last two months, does this mean a resolution is a request for a voluntary sale? Yes, it is. Is a resolution a request to hand over the keys? Yes, it is. They are resolutions, or at least they are what the banks will see as resolutions.

While I do not think the Minister will do it, it is not too late for him to withdraw this legislation. He is giving away the biggest stick he has to hold over the banks in terms of saying that, unless they play ball, we will not enact this legislation. The Minister should hold off on this and give them a year to report back as to how many split mortgages and other arrangements they have put in place. Then, if they are moving along, it is fine. However, I wonder how cumbersome it will be for the Minister to do what he said he would do if the banks do not act under the Personal Insolvency Act, as he believes they will but as I believe they will not. How cumbersome will it be for the Minister to come back and afford the protection to mortgage holders that he is removing here today?

I say to my colleagues on the Government side that this is exactly what they are doing this evening by voting for this Bill. They are removing the protection to householders and closing the loophole. They are doing that in the context of this House not having been allowed to even discuss the new code of conduct on mortgage arrears and to get responses from the Minister for Finance, Deputy Noonan, as to why the new code of conduct is preferable. I will tell the House why it is preferable, namely, because the banks looked for it. At this stage, both the Department of Justice and Equality and the Department of Finance are complicit in ensuring that our banks become profitable again at any price.

I hope I am wrong. I will tell the Minister to his face I am wrong if, in 12 months' time, we have not seen a massive increase in repossession orders being granted. I will say it to the Minister straight. Unfortunately, the Minister, by producing and trying to pass this Bill, is now complicit in opening up the opportunity for the banks to repossess family homes. I honestly cannot understand it. I would love to hear the Minister's response to this, and his response as to why he is not going to accept this amendment, which at least affords some protection and some independent oversight of this process.

Let us remember that under the Minister's Personal Insolvency Act, the banks have a full veto in that 70% have to agree, whereas, for most people, 70% of their debt would be their mortgage. Therefore, if the lender does not agree to the personal insolvency arrangement put forward, it does not happen. The Minister said that the banks will know a person can opt for bankruptcy under the new three-year rule. Does anyone know what bankruptcy really means to individuals? It is the nuclear button. It is not a solution for people to give up everything they have. Where is the solution? This beggars belief.

As I said, the Minister is giving away his last bargaining chip. He is going against everything in the programme for Government and everything that was said prior to the general election. What this is about is simply making the banks profitable and selling them on at the expense of the Irish people and homeowners. With regard to lenders which have loan books in this market but which have exited the market and are only managing the loan books, what incentive is there for them to operate with any of the initiatives the Minister has brought forward? There is none. What this Bill does is to make sure they will move on repossessions.

I want the Minister to give a commitment today, 16 July 2013, that on 16 July next year he will come into this House and provide an update on the level of repossessions on all homes, including principal private residences, buy-to-lets and all other homes.

Will the Minister give a commitment to return in 12 months? I will apologise to him then if I am wrong, but I very much doubt I will be. We are going to see a massive increase in attempts by lending institutions to take properties from homeowners because in proposing this legislation the Minister is giving them the easiest option. I see no reason for it.