Land and Conveyancing Law Reform Bill 2013: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

My view on the Bill is that it is unpalatable but necessary. Home ownership, as we know, is particularly strong in this country. It is something of which we should be proud. The figures are quite interesting. Our repossession rate is 0.25%, as opposed to figures we heard from the Secretary General of the Department of Finance who said that in the UK it is 3% and it is up to 4% or 5% in the US. Our low rate of repossessions, notwithstanding the recent lacuna, is something of which we should be proud. Unfortunately, I recognise in the Bill that if lenders cannot call on the security against a loan that they will do some bad things, ultimately, for citizens as the price of loans would go through the roof.

The task before us is to ensure that the lacuna in the law is fixed and that repossessions are brought back in but that they are always a last port of call, that the process of repossession is as compassionate and understanding as possible and that it protects the borrower. Obviously, there is significant asymmetry in power between a bank, armed with lawyers, accountants and so forth, negotiating with, usually, very distressed borrowers. There is an enormous imbalance of power and we need to do everything we can within this Bill to make sure that the relationship between borrower and lender is rebalanced in so far as possible.

I welcome the section of the Bill which gives judges the discretion to refer a borrower and lender to the personal insolvency arrangement process rather than go through with repossession. That is a very welcome change and I thank the Minister for including that provision in the legislation.

I would like to cover six issues in my contribution today. There are six additional opportunities presented by this Bill and I will propose solutions against five of those. On one issue, I am afraid the Minister will have to find a solution himself because I do not know what the answer is to it. The first issue relates to the veto that the banks have under the personal insolvency arrangements. The Minister knows that I do not believe the banks should have been given a veto but they have one and my sense is that it could be abused in repossession cases. Let us say a bank moves to repossess a home. It goes before a judge who says that he or she is not comfortable about granting a repossession order because he or she believes that an agreement could be reached via a personal insolvency arrangement. The judge then directs the bank and the borrower to go through the personal insolvency arrangement process. The bank can agree to do what the judge suggests, in the knowledge that it will eventually apply its veto and that it does not really matter what any personal insolvency practitioner might come back with. The bank knows it has a veto, complies with the court order but returns to court at a later date and applies that veto. There is a danger that the veto could be abused.

In that context, I ask the Minister to examine the possibility of including a provision whereby when a case comes back before the judge and the bank issues a veto, the judge can take evidence from the personal insolvency practitioner, as an independent, expert third party, and, ideally, from the borrower too. Should the personal insolvency practitioner give evidence to the effect that the bank is not co-operating with the personal insolvency arrangement and is exercising its veto despite the fact that a structure has been put together which that bank or other banks have accepted in other cases and that the bank is not co-operating with the spirit of the legislation, it would be very useful for the judge to be able to order further adjournments or keep instructing the bank to go back to the insolvency arrangement process. As long as the personal insolvency practitioner was not satisfied that the bank was co-operating - recognising that there may be a repossession at the end - the judge could continue to direct co-operation with the personal insolvency arrangement process. It would be very useful for the judge to know whether the lender has co-operated, has turned down reasonable offers or turned down offers which it or other lenders have accepted in other cases. That would be very useful, evidence-based opinion.

The second issue relates the bank's behaviour during the Mortgage Arrears Resolution Process, MARP, and whether it has adhered to the code of conduct on mortgage arrears, CCMA. My reading of the proposed legislation is that the bank's conduct within the MARP and whether it has adhered to the CCMA is inadmissible in repossession proceedings and does not matter. We would all like the banks to adhere to the CCMA but it is a voluntary code and ultimately the bank can decide to enforce the security, enforce the contract and take possession of the house. We know that there are pretty onerous requirements placed on the borrower to co-operate with the MARP and that a bank, if it deems a borrower to be unco-operative, can designate a borrower as such. In such circumstances, there is a chance that the borrower will not have access to the provisions of the personal insolvency legislation. I would like to see a situation whereby the behaviour of a bank, up to the point of the repossession hearing, can be taken into account by the judge. Ms Noeline Blackwell from the Free Legal Advice Centres, FLAC, suggested recently that the Central Bank code of conduct should be converted to a statutory instrument. If we could find a way whereby, in a repossession hearing, if a lender has clearly not co-operated with the spirit of what the Minister and the Government intends, then that could have some substantive influence on proceedings, that would be very welcome.

The third issue is, I hope, just a technical one. The Bill provides that a judge can grant two months for borrowers and lenders to reach agreement under the personal insolvency arrangement process. The guidelines given by the Insolvency Service of Ireland, ISI, refer to 70 days. In order to engage with and set up a personal insolvency arrangement, a personal insolvency practitioner must first review the case, including the financial statements. The practitioner must then submit an application for a protective certificate to the ISI and from that point on, he or she has 70 days to develop a proposal, have it voted upon by the creditors and submit it to the court for assessment. The practitioner must obviously ensure that 65% of the creditors are in agreement with the proposal as well as carry out other tasks, such as recording meetings and so forth. The ISI itself has said that personal insolvency practitioners need 70 days to do their work but this Bill says two months. I am hoping this is just a technical timing issue. I would like to see the practitioners being given three or four months rather than 60 days or two months. If the timeframe could be extended from two to four months, that would provide some much needed time. I hope the Minister will give this proposal favourable consideration.

The fourth issue is a difficult one and relates to costs. Let us go back to the court, where a family is having their home repossessed. They clearly have no money or at least insufficient money to pay their mortgage or even a restructured version of the mortgage and hence the repossession proceedings. The judge can order them to engage a personal insolvency practitioner to put together a personal insolvency arrangement with their lender or lenders. The family has no money or certainly has no spare cash. The market will obviously decide how much personal insolvency practitioners will cost but we are hearing estimates of between €5,000 and €7,000. However, there is no direction regarding who must pay for that. We could very conceivably have a situation where the borrower tries to find a personal insolvency practitioner but the bank refuses to pay for that, except perhaps as part of a restructuring of the loan. The personal insolvency practitioner sees that the borrower has no money and may not be convinced that the borrower will succeed in getting a restructured arrangement, under which he or she will be paid. In that context, it is quite conceivable that the borrower will not be able to find a personal insolvency practitioner to do the work or maybe one or two practitioners who cannot get work elsewhere would agree to take on the case for a lower fee or on the basis of an agreement, but in the context of the market, the borrower would probably not be getting the best available service.

I would like the Minister to consider, in cases where a judge directs the parties to engage in the personal insolvency arrangement process, finding some other source of funding. I would like the banks to be that source of funding, obviously, but perhaps it could be done through some of the civic society groups such as New Beginning, for example, or through the Money Advice and Budgeting Service, MABS. I know that MABS is dealing with debt relief notices but I am not convinced it will be engaged in the personal insolvency arrangement process. Some method should be found whereby the banks or the Government, through service providers in the community, can provide the fees to the borrower. I ask the Minister to examine that option before Committee Stage and consider introducing an amendment to the Bill to ensure that an inability to pay does not exclude very distressed borrowers from the personal insolvency arrangement process. Such an amendment would be very welcome.

The fifth issue is the one for which I do not have a solution because it is very complicated. The scenario is one where a buy-to-let property and a family home are connected and the repossession is coming about not because of the family home, but because of the buy-to-let property. This is a pretty standard case where there is a family home and the borrower has enough income to pay the mortgage. The mortgage may in fact be ten or 15 years into payment. The borrowers made an investment, like so many people, for a pension or other purposes, and bought a single apartment. That apartment has collapsed in both value and rental yield and, as a result, the bank moves for possession of that property. However, the property is in negative equity so the bank also moves for possession of the family home which, from a financial perspective, makes sense because the bank has security on the family home and the buy-to-let property.

It is a perverse outcome for somebody to have a solid home which he or she can continue paying the mortgage for but as an investment has gone wrong, and the person would lose both. I do not know the solution and it is a tricky issue but I would like the Minister, his officials and the committee to think about how to stop this happening.

There is an analogy in the private sector where viable businesses in towns around the country bought one or two investment properties which have since tanked. Businesses may be shut down as a result. There is probably reasonably broad agreement in the House that we should not shut down viable businesses because they made one or two failed investment decisions about property. We are trying to ring-fence viable businesses.

The Deputy has used in excess of ten minutes in the slot. He could have had a 20-minute slot but I believe he indicated he would take ten minutes. Does he wish to proceed?

I will finish now. I apologise, as I thought the Acting Chairman would tell me when I had two minutes remaining.

The Deputy has another ten minutes if required.

I appreciate that. I do not know the answer to this issue but I would hate to see a case of people losing their homes because they bought an apartment in 2005.

Although not strictly connected to the legislation, the next issue should be considered in conjunction with the Bill. This is funding on the borrower side for representation. There is a range of organisations, including the insolvency service, the Money Advice and Budgeting Service, New Beginning, etc., and borrowers need representation. If the process has moved to the point where the bank is seeking to take possession of a house, it is at a pretty bad stage. In my office in Wicklow and I am sure in the Minister's office we can see a case of a bank negotiating with all its power and expertise with a couple who may have nothing and be stressed out of their minds. They have no representation or anybody to go into the bank with them in order to negotiate or go to court. They are fed to the wolves, as far as I can see, and I do not believe any of us would like that to happen. Perhaps in conjunction with the Bill - or even incorporated into it - we should ensure that any individual or couple going through a repossession process should have the kind of professional, legal and financial representation that the likes of New Beginning offer.

I am more than happy to submit the issues to the Minister in a letter and perhaps we could pick up on them on Committee Stage. I thank the Minister for listening.

I wish to share time with Deputy Alan Farrell.

I am thankful for the opportunity to speak to this complex legislation which deals with repossession. It is important to note from the outset that this Bill attempts to balance the law so that on the one hand, the principal private residence of an individual is protected, while on the other hand the banks' commercial interests can also be maintained. This is not an easy process in the current climate. As a public representative, not a week has gone by where an anxious and stressed constituent has not sat before me in my clinic, pleading for assistance in dealing with many debts and particularly mortgage issues. This is a recurring issue.

Any debate dealing with repossession must outline the current state of affairs in the overall picture. The current rate of repossession in Ireland is much lower than any other European country, according to the Secretary General at the Department of Finance, Mr. John Moran, who recently addressed the Committee of Public Accounts. He indicated that the Republic of Ireland has a repossession rate of just 0.25%, compared to 5% in the US. However, the Central Bank estimates that nearly 95,000 mortgage accounts are in arrears of over 90 days, which equates to nearly 12% of all mortgage accounts. The issue is nearly at breaking point.

Repossessions will always remain a measure of last resort but our current position demands robust, fair and sympathetic legislation that is practical for all parties concerned. This Bill deals with two particular issues striking the balance required between banks and homeowners. There is the issue of Start Mortgages v. Gunne and the provisions for banks to repossess a house are ambiguous for mortgages that started before 2010 and where court action did not start before 2010.

All efforts must be made to ensure a person can retain the principal private residence. That is important as these are the residences in which people raise their families, so they must be protected. With a neighbour who bought a house after 2010 or the local bank who sold the mortgages, there must be a satisfactory conclusion for all parties. If we are to have fair rules or regulations to deal with the unfortunate cases that can occur when repayments become unsustainable, we must ensure that all people will be treated the same and have the same legal entitlements, regardless of when the house was purchased. We should also remember that a commitment to closing this loophole was agreed with the troika in 2010.

We must welcome the aspects of the Bill that will allow the adjournment of certain repossession actions to allow for the possibility that the matter could be resolved by recourse to the Personal Insolvency Act 2012. This will offer hope to distressed mortgage holders facing the awful prospect of losing their home, as another arrangement may be found so that they can remain in a family home. The much-debated alternatives in the Personal Insolvency Act can and will provide an alternative to repossessions with the will and co-operation of all concerned. It would be of benefit to concerned parties to reach an agreement to ensure repossessions of the family home remain a last resort.

It is an ugly truth that there will be more repossessions in Ireland over the next few years. Our current rate of repossessions is not sustainable, given the climate we are in. However, this Bill will bring about a fair and practical way of dealing with an awful position that nobody wants or thinks they will be in. The economy could change and we may be in a better place in the not too distant future. People in trouble with banks and building societies in the 1980s suddenly got out when their houses were worth much more because they had time on their side. Along with the legislation brought before the House, people must be given time to pay and the principal of the loan should be spread over a longer period. We should be considering term loans even longer than the 25-year mortgages. In days gone by, when people were poor in rural Ireland and land was divided and given out, land bonds were offered, with some given up to 40 years to repay loans on land. Those bonds were repaid and in the meantime, sustainable businesses were built.

In this debate that concerns repossessions and home ownership, we should seriously consider longer-term loans. When a house is built, it will remain for many years. The standards used, particularly in recent years, are very high and the houses will survive for many years. I ask the Minister to consider the issue and comment on it. The banks, in particular, could be asked to provide longer-term loans.

No one in this House is under any illusion about the absolute necessity to introduce this Bill on the basis that we have to allow banks to be banks, to lend money for mortgage purposes and for that money to be repaid over a period of time. I do not think any mortgage holder is under any illusion that this is the purpose of taking out a mortgage, with the eventual aim of owning one's own home after a period of years. The issue we are dealing with here is the consequence of the Start Mortgages v. Gunn case in 2011, in which we were dealt a blow when it comes to the repossession of properties with unsustainable mortgages or where individuals were unable to repay their debt. There was simply no recourse available to the home owner or the bank.

Equally, no one is under any illusion that the repossession of the family home, or any other property, is the last resort, although there are many anecdotal debates at the moment about individuals who choose not to pay their mortgages. The clear evidence in the number of repossessions that have taken place in the last 24 months versus comparable markets globally demonstrates that something is wrong and must be corrected. This is a very sensitive issue, particularly when it is a family home.

Deputy Donnelly referred to the repossession of a buy-to-let property, which leads to the loss of a family home as a result of a family's level of debt as perverse. I do not find it perverse. I am aware of huge numbers of people who bought multiple buy-to-let properties based on collateral, their own financial ability and the availability of cheap credit. We are dealing with the legacy of that as a nation. Much larger property and speculative deals led to the hundreds of billions of euro of debt this State is in but it all adds up.

The function of the bank is to lend money with a certain element of collateral to ensure it is covered if the debtor defaults. It would be ridiculous if a bank was to lend money and there was no collateral and it had no recourse if the debtor simply stopped paying.

The Government has put in place a number of approaches to deal with this issue, not least of which is the setting of targets for the bank to deal with the 90,000 people who are more than 90 days in arrears at present. They must be dealt with sympathetically to see if there is a sustainable way in which their mortgage could be spread out over an additional period, if there might be some equity in the property, if a mortgage-to-rent scheme would suit, or if personal insolvency is the right solution for that debtor.

Comments were made lately about the FLAC observations on the code of conduct and the need to ensure both the debtor and lender have complied with it, to protect further and compel banks to adhere to the arrangements. The tabling of repossession or debt resolution orders at the Circuit Court instead of the High Court would also reduce the overall cost of the process. Frankly, those are reasonable requests.

For those who find themselves in mortgage arrears and beyond the point where they can sustain the debt, whether they be unemployed or trying to pay enormous mortgages without any real hope of doing so over the term of that mortgage, and who wish to restructure their debt, the Government has provided all of the necessary tools to deal with the mortgage problems. Putting in place a reasonable repossession arrangement for the Irish banks is essentially about protecting taxpayers from the need to invest further in banks on the part of the State. It is equally for the banks to succeed and ensure they become profitable so the taxpayers' liability is removed.

I welcome the opportunity to speak on this Bill. Even though it might not be the intention of Government, the effect of the passage of this Bill will be to lead to a significant increase in the number of repossessions of family homes and buy-to-let properties. I fully recognise this Bill closes an unintended lacuna in the law arising from the passage of the 2009 Act but it is important we recognise the inevitable consequence that homes will be repossessed. Despite the Government's soothing words, the Secretary General of the Department of Finance and the Deputy Governor of the Central Bank have acknowledged that a significant increase in repossessions is on the horizon.

I accept the level of repossessions in Ireland is low by international standards; that is a good thing because I do not want to see homes being unnecessarily repossessed. At the same time, and I have advised borrowers on this myself, there are occasions where people would be better off forfeiting the home. There are people with mortgages that are utterly unsustainable, irrespective of any restructuring arrangement that might be put in place. They would be better off in some cases availing of the provisions of the new insolvency service, either voluntarily surrendering the property or having it repossessed and dealing with the legacy debt, the residual balance owing through the insolvency service being written off over a period of time, and starting afresh. For some people that is the best outcome.

The issue now, however, is that because of the build up in potential repossession cases, there are thousands of cases where the banks could move quickly following the enactment of this Bill. We all deal with them at constituency clinics, where the current mortgage arrears resolution process has been exhausted, forbearance measures have been offered and accepted but are coming to the end of their useful lives. It will now be at the discretion of the banks which properties will see this power invoked and repossession proceedings commenced. I listened to Ross Maguire from New Beginning at the weekend. He is not a sensationalist; he provides a fair and balanced analysis of the situation. He said this could result in tens of thousands of home repossessions so we must sit up and take notice.

I have a major concern about how the banks will use this power because there are so many potential properties where it could be invoked. They will chose the properties where it is in the commercial interests of the bank to do so.

In many cases, they will choose the properties that are in mortgage arrears where there is equity involved, where somebody has gone a long way to paying his or her mortgage but has fallen on hard times and is unable to pay the balance of the mortgage. It will be far more commercially attractive for the bank to repossess such a property because it would have equity and the sale of it would clear the outstanding mortgage balance in full than it would be for the bank to repossess a property that is deep in negative equity. If the bank repossesses a property deep in negative equity and sells it, there will still be a substantial amount of the mortgage owing which will be dealt with through the Insolvency Service or whatever. We need to monitor closely how the banks will use these powers and to ensure that they are not deliberately targeting properties which have a significant level of equity which, in essence, would protect the bank's own commercial interests by having them repossessed and sold to clear the balance of the mortgage.

This is a Bill where the only obvious beneficiary will be the banks which, to date, have held off on family home repossessions, not out of any sense of social solidarity or justice, or even out or recognition of the bill of billions of euro the taxpayers have had to take on because of their management of the institutions, but quite simply because so far their hands have been tied as a result of this lacuna in the law.

There is almost universal agreement that the response of the banks to date has been inadequate. The problem has been allowed to worsen steadily over the past number of years. It is only recently that the banks have begun to make offers to customers and we have yet to see if these can be properly and genuinely described as long-term sustainable solutions. The bottom line is that, under the mortgage arrears targets set by Government, it is the banks themselves that will define what is a long-term sustainable solution which, in the opinion of the bank concerned, could put a borrower into the insolvency system.

Home owners in difficulty with their mortgage payments have been facing a sustained onslaught of late, in a number of policy changes and in legislation. The proposed changes to the code of conduct on mortgage arrears will remove the specific limit on the number of contacts a bank can have with a borrower and replace it with a vague requirement that "lenders draw up and implement a contacts policy" and "ensure that communications with borrowers are not aggressive". That is of cold comfort to borrowers who, if these changes to the code of conduct are implemented, will receive an increase in the number of contacts from the bank on a week-to-week basis. The number of contacts will be left to the discretion of the banks. We all will be aware from our work in constituencies the level of stress and anxiety among borrowers who are in distress and who fear the next call or message from the bank wondering when they will pay up.

In addition, new powers will be available to banks to nudge borrowers off their tracker mortgage in certain circumstances as part of an overall settlement of the mortgage. I do not understand why it is necessary to put that option on the table. We are all in favour of fair sustainable deals being done between the borrower and the lender but why for the first time is it being put on the table that the tracker rate would be removed from the borrower in those circumstances? I do not understand why that is necessary. That is also a proposed change to the code of conduct.

Those on variable rate mortgages face ever-increasing monthly payments which will force many more borrowers into arrears. There was the latest announcement by AIB of a 0.4% increase in the standard variable rate which it is charging on mortgages. Now there is this Bill, which will facilitate an increase in the repossession of family homes. I will not lose any sleep if buy-to-let properties are repossessed where every effort has been made to reach an agreement because it is inevitable, given that almost one in three of buy-to-let mortgages are either in arrears or have already been restructured, but a higher bar must be set in the case of a family home and that is what we are seeking to achieve.

Borrowers look at some of the deals that are being done at a corporate level. For example, there was commentary during the week on the deal which was done by a consortium of eight banks with Independent News and Media where up to €140 million of debt is being written off. That is merely one case which has come into the public domain, but there are many other cases of corporate debt restructuring involving the pillar banks where tens of millions of euro have been written off. Borrowers will understandably compare and contrast their treatment by the banks in their mortgage arrears problem with the treatment the banks are extending to large corporate entities that are going through their own difficulties.

We are all familiar with the arguments around the issue of the bank veto in the personal insolvency arrangements, and I note the Minister disputes that it represents a veto. I have argued strenuously for the removal of this veto and before Easter the House debated a Fianna Fáil Private Members' motion calling for the establishment within the Insolvency Service of an independent mortgage resolution office which would have the power to impose a settlement that would be binding on both the borrower and the lender. It remains my party's contention that only an independent mechanism such as this can break the logjam that currently exists. The Government disagrees. The Government has given the banks certain targets, that they must offer 20% of those in distress a long-term sustainable solution by the summer, 30% by the autumn and 50% by the end of the year. We will see if that works. I hope it does. There is evidence of action, for example, AIB states that it has offered 1,400 split-mortgage solutions to customers in quarter one of this year.

That would be a welcome improvement in activity levels in long-term forbearance, if, indeed, it comes through in the official Central Bank statistics for the first quarter, which we will see shortly. I hope that such is the case because I would be the first to recognise that it is far preferable that borrowers and lenders would reach agreements voluntarily outside of any independent arbitration process as there will be downsides for those who enter into the insolvency regime. For example, they will have their details on a public register and as I understand it, these will remain on that register indefinitely. I would also have concerns about the ability of those who enter into insolvency to get any credit again. Will they get a credit card in the future? Will they be able to borrow to buy a car? Have they any hope whatsoever of being able to borrow, for example, to buy a family home again in the future?

In addressing the issues that arise from the Dunne judgment, it is imperative that what happens now is done in a fair and transparent way. Unfortunately, I do not believe this Bill meets the standard required.

There is provision in the Bill where the court is considering an application for repossession of a primary home for the case to be adjourned for a two-month period if the judge considers that a personal insolvency arrangement, PIA, might be a more appropriate course of action. That is a welcome step in the right direction, although in my view two months is not a sufficiently long period of time. I would suggest that four to six months at a minimum would be a far more reasonable period of time to be considered.

In assessing the legislation, we also need to look at the scenario where the mortgage provider exercises its effective veto on the conclusion of a PIA and then proceeds to court to seek an order for repossession of the family home. In these circumstances, it is imperative that the court, with the consent of the debtor, directs the personal insolvency practitioner concerned to provide to it a report in writing which would include the content of the proposal for a PIA. This report should include an opinion from the personal insolvency practitioner as to whether the rejection by the creditor of the proposal for a PIA was reasonable. This opinion should be based on whether the proposal contained an offer to repay an amount, whether on a restructured basis or not, equal to the current value of the property. At this stage, it would be appropriate for both the debtor and creditor to be given sight of this report from the personal insolvency practitioner and have the opportunity to make submissions based on it.

In determining whether the rejection of the proposal for a PIA was reasonable or unreasonable, the court should take into account a number of considerations. These include the report of the insolvency practitioner and any responses received by the debtor or creditor; whether the proposal of the PIA constituted an offer to repay an amount equal to the current value of the mortgaged property; the housing needs of the debtor and his or her dependents; the conduct of both parties, including the conduct of the creditor, in underwriting the loan secured by the mortgage; and any other circumstances or matters that the court considers relevant in adjudicating on the issue. The court should then, having considered the information laid before it, be in a position to put a stay on the order for repossession and adjourn the application for repossession for such time as is necessary to enable the creditor makes another proposal for a PIA and for a consequent vote by all of the relevant creditors.

Alternatively, if granting the order, the court should be allowed put a stay on the coming into effect of the order for a period of time. We will table amendments on Committee Stage to give effect to these suggestions and others in order to seek to build consensus for what is in effect a reasonable attempt to balance the rights of borrowers and lenders.

If we are going to give extra powers to banks then at the very least as a society we need to ensure that citizens have a fair chance to have their rights vindicated before the courts. I concur with the free legal advice centres in their concerns about the adequacy of resources available to people who are going through the mortgage arrears process or are faced with repossession. The budget allocated to MABS of €19 million is money very well spent. In the context of entire cost of the financial collapse, it is arguable that we should be spending a lot more on high-quality impartial financial advice to distressed borrowers. This week we heard of the possibility of various MABS offices being forced to close. That this could be happening at the same time as the Government is pushing through legislation to facilitate repossession of family homes is nothing short of a scandal.

As has been reported, each of the 53 MABS companies has been instructed by the Citizens Information Board to sign a new service level agreement. While ensuring public money is spent wisely is a concern for everyone, I have never heard anybody suggest that the various MABS offices around the country do anything other than an excellent job with very limited resources. A number of the MABS companies, as they are called, have highlighted concerns about the nature of the proposed service level agreement and the possibility that it may restrict them in the carrying out of their work. In addition, the mortgage advice service that has been established whereby the banks are required to pay €250 towards advice from an accountant for a distressed borrower is not adequate. Very few people are aware of the service. When people come to my constituency office, I tell them about the service and advise them to get as much advice from as many sources as they can, but very few people are aware that they are entitled to some advice from a qualified accountant on their mortgage arrears problems.

Given the inevitable increase of cases and the added concerns of threats of homes repossessions, this is not time for an overly prescriptive regime to be put in place. I appeal to the Minister and to the Minister for Social Protection to ensure that the threatened wave of repossessions does not materialise. In line with what FLAC has recommended, I also believe that all repossession applications should be heard in the Circuit Court. I ask that this issue at least be examined and some clarity given as to the current position. While there are administrative attractions for banks in seeking a repossession order in the High Court, for the individuals involved, there are undoubtedly additional legal costs as well as greater personal inconvenience attached to having the issue dealt with by the High Court. I understand that there is some legal ambiguity surrounding how the 2009 Act applies in this regard. I ask the Minister to clarify the issue in his closing remarks.

The Bill comes at a time when the banks have so far failed to demonstrate their good will by agreeing long-term sustainable deals with the tens of thousands of distressed borrowers. The Bill needs greater balance. The Minister has now published the Bill and we have commenced Second Stage. I hope we can all enter the process in good faith and seek to improve the Bill on Committee Stage. We should also listen to the independent commentators who are dealing at the coalface with distressed borrowers on a daily basis. They have made a number of practical constructive suggestions which should be considered in order to enhance the Bill and give a greater balance between the rights of lenders and borrowers in closing the loophole in the law.

I call Deputy McNamara who is sharing with Deputies Kyne, Jim Daly and John Paul Phelan. Is that agreed? Agreed.

In his remarks, Deputy Michael McGrath spoke about the need to balance the needs and rights of the borrowers with those of the banks. I clearly agree, as I am sure does the Minister and his Government colleagues. It is self-evident that we need to live in a society that is just and in a functioning economy. It is very much in the banks' interest to ensure the economy functions as efficiently and economically as possible.

Deputy Michael McGrath and to a far greater extent those who sit in the Independent benches behind him paint a picture of banks where there is a rush and desire to repossess and take over properties. From what I heard at the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, on which Deputy Michael McGrath sits, and from what I have heard locally in County Clare, there certainly are repossessions. Banks are putting considerable pressure on people and some of that pressure should not be applied. However, the pressure is to pay the banks money. I do not sense that there is a desire among the banks to repossess. There is talk of waivers of repossessions. There is an increase in repossessions, particularly of investment properties and obviously the provisions of the Bill do not apply to investment properties. However, banks are obviously repossessing as a very last resort. Why would a commercial entity seek to take a property it then needs to sell in a completely depressed market and crystallise a loss? I do not accept there is a rush by banks to repossess. The banks are not acting as they should and are putting people under considerable pressure, but that does not necessarily mean they want to repossess.

I welcome the Bill's provisions that any repossession proceedings would be adjourned to seek a personal insolvency arrangement. As I have done previously, I also question the rush to point out the failures and deem the personal insolvency arrangement, which is just about to commence its work, a failure in advance of it even operating after years of having nothing operating. We have to give this a chance. Banks are cold-hearted commercial creatures and it is in their interests to make this work. The Minister, Deputy Shatter, is on record as saying that if the banks stonewall and do not co-operate, which is unlikely, the Government will review the legislation. The banks enter the personal insolvency process knowing that in many instances the alternative is bankruptcy in which case they would lose considerably more. Of course, if they are sufficiently secured, they may gain the property but then have to sell it in a depressed environment. The banks are not interested in property owning, unlike the great majority of people who are caught in this horrendous situation.

I refer to one particular category of people. Considerable noise has come from the GRA conference as it does from all such trade union and association conferences, but usually amid the noise there is a grain of truth. In this instance it has been revealed, as many of us already knew, that many gardaí are in financial difficulties, some of them with their own personal mortgages, but many in respect of investment properties. They find themselves barely able to pay the family home mortgage and unable to pay the investment property mortgage if there is a break in the tenancy for whatever reason.

There is doubt as to whether members of the Garda Síochána can enter into a personal insolvency arrangement. I see the Minister shake his head. If there is absolutely no doubt and the Minister wishes to clarify that for the benefit of the House, I would welcome it. However, there is a doubt among members of the Garda to whom I have spoken, including friends with whom I attended school, constituents and neighbours. There is doubt in their minds as to whether they can apply for and enter a personal insolvency arrangement without falling foul of their code of conduct. If there is no such doubt, I would greatly welcome the clarification.

As long as there is a doubt, it is a matter that needs to be considered urgently in the context of seeking to achieve €300 million savings in the public payroll and also in the context of this Bill.

I welcome the opportunity to speak on the Bill, which is not about assisting banks to repossess homes.

Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.

Debate adjourned.