Alan Shatter (Dublin South, Fine Gael) | Oireachtas source

It impacts on all individuals in financial difficulties and the functioning of the banking and financial system. Ultimately, these are issues that must be addressed in a comprehensive and coherent way, not simply by looking in isolation at one aspect of the problem which some speakers have sought to do.

Like everyone else, I want to see as few people as possible confronted by repossession. As I quote the statistic from the Courts Service Board's annual report for 2012 from memory, I may be slightly out, but I think there were between 430 and 440 repossession orders made in 2012, which is fewer than the number made in 2011, which in the circumstances is quite extraordinary. It is right to acknowledge that in the absence of legislation and with the old Land and Conveyancing Act where banks have failed to engage properly, the Judiciary has adjourned proceedings. It is not in a position to adjourn for the purposes of a personal insolvency arrangement, but there have been cases where proceedings have been adjourned and judges have exercised their discretion, either to refuse or delay the making of repossession orders. Now we will have an important new legislative structure which will be to the benefit of those who have some prospect of working their way through their financial circumstances.

I am conscious that much of the debate we have had is not so much about the issue of this Bill but comes back to the insolvency legislation that we have already enacted. The amendment refers to something I have consistently opposed since it was first tabled in the other House. It was first tabled as amendment No.9 in the other House where I said: "I cannot accept amendment No. 9 for a number of reasons. The amendment seeks to rewrite provisions of the Personal Insolvency Act, which is not the purpose of this Bill. Overall, the amendment is poorly drafted, confused or somewhat disingenuous as to its intentions and is not acceptable." That is the main fundamental flaw in the amendment; it does not seek to improve on the provisions contained in the Bill but rather seeks to rewrite the Personal Insolvency Act.

I shall summarise the difficulties with the amendment once again. First, the protection for a mortgagor provided for in section 2 of the Bill is to require that the court allow for a personal insolvency arrangement to be considered where, for example, none previously had been attempted, as with the requirement now in the case of bankruptcy petitions. The proposed amendment would, in effect, go beyond that protection and essentially provide that the court should direct a first or a new personal insolvency arrangement and effectively determine its outcome. The amendment would not simply be providing protection but effectively asking the court to direct that a personal insolvency arrangement be concluded. This is a basic misreading of the personal insolvency legislation. Senators should remember that, once a personal insolvency arrangement proposal has been rejected by the creditors' meeting and no subsequent proposal is made during the protective certificate period, the personal insolvency practitioner's role ends as a mediator or negotiator for the debtor. Where a proposal is rejected at a creditors' meeting and where the protective certificate period still applies, there is a possibility of a personal insolvency practitioner making a further or different proposal that creditors might accept if they did not accept the first one. Therefore, once a proposal has been rejected and where there is no other proposal that can properly be made within the timeframe, the personal insolvency practitioner has no standing whatsoever in the repossession process and the law does not provide for the court to appoint him or her as an officer essentially to force a settlement on creditors as such a practitioner cannot do this.

Second, the amendment ignores the fact that the personal insolvency legislation is designed to allow agreed settlements to be reached as an alternative to court-ordered settlements. I am conscious of the comment that we do not want courts unnecessarily involved, but we would like some other person to deliver a judgment which will be referred to as a settlement. It is either a judgment or a settlement. One cannot have both. Under the Constitution, the only body that can deliver judgments in areas such as this is a court. To appoint any single other individual, no matter what one calls him or her, effectively to adjudicate on whether a home should be repossessed would be to supplant the role of the courts in a fundamentally important matter and the Attorney General would certainly not stand over this, based on the advice we have received. In the context of the amendment, it is my view that it would overturn this carefully calibrated approach contained in the Personal Insolvency Act. The proposed provision that a personal insolvency arrangement proposal should only offer to repay the current value of a property would represent a huge interference in contractual and property rights and would be likely to be subject to swift challenge in the courts.

Third, the amendment makes no reference to the repayment capacity of the debtor, which it seems would essentially be determined by the current value of the property. This would have obvious negative consequences for banks, other financial institutions and, ultimately, the taxpayer.

Fourth, the amendment could encourage delinquent behaviour on the part of all debtors, nearly 90% of whom are repaying their mortgages, in order to have their mortgages reduced to the current value of the property. This would seriously risk a complete collapse of the property market and threaten the solvency of financial institutions and the economy. This issue cannot be addressed in isolation. There is a connection between a whole range of areas of substantial importance and it is far too simplistic to make the case that one can deal with the matter in isolation.

I consider that the amendment would run the risk of turning every proposal for a personal insolvency arrangement into a costly preliminary to repossession. That is neither the intent nor the purpose of the legislation.

I appreciate the concerns Senators are expressing. We are all on one page on one issue. I do not want to see any individual or family evicted from his or her or their home. I do not want to see any repossession order made in any circumstance where, with a reasonable engagement, having regard to the overall financial background over time an individual could be facilitated to work his or her way through his or her debt difficulties and get his or her feet back on the ground and move on with his or her life.

It is not and cannot be the answer to give banks the power, but it would be of some benefit to the consumer and provide some protection for families and some hope for those who are in trouble. I will, therefore, certainly press the amendment. Although it has received criticism from Senator Trevor Ó Clochartaigh - one could call it a sticking plaster, as that is, effectively, what it would be - with the repossession gap opening, an Opposition party is trying to provide for a rebalancing between banks and homeowners in trouble.