BANKS HAVE had an “absolutely unacceptable input” into the Personal Insolvency Bill and their apparent influence on the legislation is obvious and regrettable, the Dáil has heard.
Independent TD Shane Ross made the allegation as he claimed financial institutions were being treated with “the same deference today as they were given in 2008”, when the blanket bank guarantee was introduced.
The Dublin South TD said: “The power of the banks has not been broken or reduced. When it comes to the nitty-gritty, they have had an absolutely unacceptable input into legislation.”
He was speaking during the ongoing debate on the Bill, which reduces the length of bankruptcy from 12 to three years, establishes a non-judicial debt settlement system and sets up an independent insolvency service to oversee it.
Mr Ross said the Bill seemed to be guided by “extraordinarily conservative and institutionalised thinking”. There were novel suggestions but “there seems to be a pattern that those who are controlling the strings in our lending policies and institutions are still in positions of great strength”.
The Bill “fails to recognise that the villains of the piece in the insolvency problems faced by Ireland are the same people today as they were in 2008 and before that”. The threat the banks “carried with them on September 29th, 2008, is still there and they are still listened to as though they have some sort of authority”.
This was clear in the “unequal” treatment of debtors and creditors, Mr Ross said. The debtor, particularly one with a mortgage, only has one weapon, but the creditor “which is nearly always the bank, has several”. The only option for the debtor if they do not like the settlement is bankruptcy. “The bank can walk away and veto it.”
Mr Ross said “the idea that this Bill should give that power to those who have proved themselves to be manifestly unsuitable in their treatment of citizens and in their reckless lending in the past is unacceptable”.
Labour TD Eamonn Maloney believed the Credit Union movement would be negatively affected by the schemes in the Bill, including debt relief notices for debts of less than €20,000.
Many borrowers fell into this category and he was concerned those on low incomes would be prohibited from borrowing again, throwing them “into the arms of unlicensed moneylenders”.
David Stanton, Fine Gael TD and chair of the Oireachtas Committee on Justice, which conducted bankruptcy hearings, said they had to work to ensure “all the banks operate in an equal and transparent way. Less transparency will lead to more cost” and time. He said the implementation of the legislation had to be monitored from day one because the proposed five years was too long.
“If there are issues, mistakes and problems with the legislation, they must be identified and dealt with early,” he said.
Fianna Fáil TD Éamon Ó Cuív said that in existing law there were a large number of remedies, particularly dealing with small debt. “We need to reach out to people and remove the shame associated with their debt,” he said.
He added: “We must ask how many suicides have been caused in recent years because of debt worries. How many relationships and marriages have broken up because of debt?”
Independent TD Finian McGrath said many people were concerned about the Bill because the proposed debt management systems “are so convoluted and complex. A citizen will need a heavyweight of professional expertise to understand or access them.” The debate continues next week.
