Banks retain veto over insolvency deals, claim opposition parties
As Justice Minister Frances Fitzgerald unveiled a revamped insolvency scheme, the Coalition was accused of failing to live up to its promises.
Fianna Fáil and Sinn Féin expressed concern that people in mortgage arrears would still be subject to the diktat of a bank.
Sinn Féin’s Pádraig Mac Lochlainn said that, because of restrictions on who can seek a court review of a bank rejection of a proposed deal, many householders would still be left with nowhere to turn.
Under the Government proposals, people who incurred arrears after January 1 this year would not be eligible to attempt to gain a judicial review.
Mr Mac Lochlainn said the so-called end to the veto would not materialise in many cases of real need.
“It will only be a temporary measure in certain cases if certain conditions are met, so the veto will remain in the majority of cases,” he said, as the Dáil debated the proposals.
“There are major doubts this solution will work in the majority of cases of mortgage holders in debt.”
Fianna Fáil justice spokesman Niall Collins described as a sham the Government’s claims to have ended the bank veto.
“It is a sham because of all the complexities involved in it. It is not clear who will be able to access a review and that is the big elephant in the room regarding this legislation,” Mr Collins said.
Ms Fitzgerald defended the move, saying that the provision would see rights shift to the person in debt, especially in cases where there was just one creditor.
Under the proposals, the circuit court will be able to overrule banks which have rejected proposals from borrowers with arrears.
Alternative arrangements could then be imposed by the circuit court if the judge thought it workable and in the public interest.
The mortgage arrears must have been built up before early January as the Government wants to deal specifically with the period of the crash and its aftermath
Opposition parties welcomed Government moves to raise the fresh hold for people seeking a debt relief notice from €20,000 to €35,000.
Ms Fitzgerald insisted that a new and improved system of trying to help people manage their debts and mortgage arrears would help households out of their problems.
Tougher regulations are also being brought in for personal insolvency practitioners after the Government flagship debt help deal was condemned as having flopped.
Inspectors will be able to be appointed to carry out investigations into complaints of improper conduct by a personal insolvency practitioner.
The personal insolvency system has come in for widespread attack since it was set up in 2013, with critics saying that it fails to address the real needs of people in debt and gives too much power to creditors while the number of people being dealt with under the initiative has been low.
