Call for clarity on insolvency legislation flaw

The Irish Mortgage Holders Association has called for clarity on why the Government has not acted to address an apparent flaw in the personal insolvency legislation.

It emerged yesterday that the Department of Justice was warned in April an amendment was needed to address potential problems with the act.

A briefing note, prepared for Frances Fitzgerald on her appointment, said a short technical bill was needed to correct “a potentially serious drafting ambiguity” in the 2012 Personal Insolvency Act.

Ms Fitzgerald was told that the amendment had been on the Cabinet agenda since April but had not been addressed, and that the Taoiseach’s department was concerned about amendments appearing so soon after the controversial legislation.

David Hall of the Irish Mortgage Holders Association, a recent by-election candidate, said answers were needed on why the amendment was not addressed before now.

“The Taoiseach needs to clarify his role in not having this flaw addressed with the urgency identified and recommended by the attorney general,” he said.

Mr Hall said it appeared there may have been other motives behind the lack of urgency and that the priority needed to be the plight of debtors affected by the insolvency regime.

Yesterday, The Sunday Times revealed that a memo to Ms Fitzgerald was inadvertently published on the department’s website with redacted sections still accessible.

The memo said the ambiguity in the wording of two insolvency methods, the debt settlement arrangements and the personal insolvency arrangements, could be interpreted in court as allowing banks to have an extra veto over the deals worked out for borrowers. The note said without a technical bill, the current draft could make it more difficult for debtors.

The Department of Justice said that, notwithstanding the concerns raised in the memo, amending legislation would be dealt with when the Dáil returns in September.

Mr Hall said this commitment did not explain why the problem could not have been addressed before the summer recess.

“It is concerning that it appears the new minister for justice has had this report on her desk for the past two months without any action,” he said.

“We call upon her to immediately carry out a review of the insolvency act and system, to allow it deliver what was intended, a mechanism for debtors to deal fairly with their over indebtedness.”


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