FF: Banks should not be allowed to dictate insolvency terms

Proposed new legislation on personal insolvency has been described by Fianna Fáil as "a step forward", but the part said the role of banks needs to be reviewed.

The party's justice spokesperson Dara Calleary has described the Bill as a major opportunity to address the debt crisis facing thousands of people, but questioned the decision to allow banks dictate progress.

“This legislation is overdue," Deputy Calleary said.

"It has taken six months for the Government to progress this vital issue while the scale of the personal debt crisis facing thousands of people has worsened."

Deputy Calleary said Fianna Fáil welcomed the decision to reduce the bankruptcy discharge period from 12 to three years to bring it into line with the European norm.

However, he said that the Bill "appears to have missed" a "unique opportunity for the Government to break the hold the banks have over borrowers and the State".

"The Bill as published requires that creditors holding 65% of a person’s debt agree with the proposed debt settlement arrangement or personal insolvency arrangement," he said.

"For the vast majority of people, this will mean their bank is still in control.

“When read alongside the decision to restrict access to Mortgage Interest Supplement relief, there is a real danger that the Government's response to the mortgage crisis is increasingly relying on the good faith of bankers."

Deputy Calleary said Fianna Fáil would study the Bill in detail and would be engaging with interest groups and bringing forward amendments to the legislation

“If we are to learn anything from this crisis it is that the banks cannot be left to progress these issues as they see fit," he said.