Spending limits ‘will be the norm’

Restrictions on what struggling families seeking help with debts can spend their money on, set to be imposed by the new insolvency service, will spread across the banking sector, Finance Minister Michael Noonan has warned.

He made the prediction after Fianna Fáil finance spokesman Michael McGrath expressed concern that the rules set to be unveiled next week could force people seeking insolvency help to quit medical insurance, cancel some cable TV packages, and sell a second car.

Mr Noonan would not be drawn on specifics, but indicated that standards imposed by the insolvency service would soon become the norm across the financial sector.

“Obviously, it is a small country and all these people talk to each other. One would expect, therefore, that what is developed by the insolvency service will become the norm for the informal dialogue as well.”

Mr McGrath accused the Government of giving banks a veto over mortgage and insolvency arrangements.

“The banks will now be judge, jury, and executioner when it comes to dealing with the individual mortgage account of any family in the country,” he said.

The controversy arose as it was revealed credit unions look set to lose more than €13m because of the emergency liquidation of Anglo.

Mr Noonan indicated the institutions should take the blame for the hit because they did not take investments out of the bank, renamed IBRC, before its closure.

Mr Noonan told TDs that 16 credit unions had put about €15m into a financial product called the Anglo Irish Credit Union Bond 2005.

Once liquidation occurred last month, the investment was only guaranteed up to a level of €100,000 per union.

The minister insisted the credit unions could have withdrawn their money after Anglo was bailed out but decided not to do that.

Mr Noonan also insisted he would not join a “lynching mob” following widespread outrage that the boss of bailed-out Bank of Ireland Richie Boucher’s pay and benefits package has increased to €843,000.

Responding to complaints from Sinn Féin finance spokesman Pearse Doherty, HE said: “The deputy is accusing me of not attacking Mr Boucher and other people personally. That is not the way I do politics.”


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