Michael McGrath (Cork South Central, Fianna Fail)
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328. To ask the Minister for Social Protection the reason the Money Advice and Budgeting Service has withdrawn from participating in the Central Bank pilot scheme for the restructuring of secured and unsecured distressed consumer debt across multiple lenders; and if she will make a statement on the matter. [36396/13]

Joan Burton (Dublin West, Labour)
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The Money Advice and Budgeting Service (MABS), under the aegis of the Citizens Information Board, assists people who are over-indebted and need help and advice in coping with debt problems, in particular those on low incomes and people living on social welfare payments.

The Central Bank of Ireland recently announced its intention to operate a pilot scheme to a sample of borrowers (approx. 750) for the restructuring of secured and unsecured distressed consumer debt across multiple lenders. The aim of the pilot framework is to achieve sustainable and fair outcomes without the need for the borrower to enter the full insolvency process.

The pilot scheme envisages a third party service provider, acting as an intermediary between the borrowers and the lenders, who would look at the borrowers overall debts, issues of affordability of all debts and make agreements with the banks and credit unions on new levels of repayments ( including write downs) etc.

When the framework was announced the third party service provider hadn’t been identified. Facilitated by the Central Bank, a pilot working group comprising banks, credit unions and lenders bodies has been established to oversee the pilot, a sub group of which examined the proposals, from a number of applicants, submitted to manage the pilot. CIB / MABS made a detailed submission outlining how they would manage the pilot if they were successful in becoming the third party service provider.

The CIB/MABS proposal was successful and they confirmed to the Central Bank their acceptance of the offer. However at follow up discussions with the lenders to discuss the proposal, CIB / MABS, after much consideration, decided that the proposed approach of the lenders was not the best fit for MABS at this particular point in time and notified the Central Bank of the withdrawal of their proposal. MABS felt that the pilot provides for a very specific role for the service provider, which is significantly narrower than MABS current role and provides only a limited facility for MABS to advocate on behalf of clients.

MABS has communicated its continued commitment to the approach and principles of the pilot and its support of the comprehensive approach to multiple-debt resolution proposed. Furthermore, MABS is willing to incorporate aspects of the pilot in its own work with borrowers and lenders and has offered to contribute to the work of the Steering Committee for the pilot.

I am satisfied that MABS will continue to play an important role and provide a high quality personal service to assist people in overcoming their indebtedness and managing their finances.