JOINT COMMITTEE ON ECONOMIC REGULATORY AFFAIRS debate -
Tuesday, 7 Sep 2010

Debt Problems: Discussion with the Future Group

Chairman

We are joined by the Future Group to discuss proposals to assist people experiencing severe debt problems. On behalf of the joint committee, I welcome Ms Frances O'Hanlon, Mr. Denis Lenihan, Ms Sandra Maher and Mr. John O'Riordan, all of whom are independent financial advisers. By virtue of section 17(2)(l) of the Defamation Act 2009, you are protected by absolute privilege in respect of the evidence you are to give this committee. If you are directed by the committee to cease giving evidence in relation to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not comment on, criticise or make charges against a person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that Members should not comment on, criticise or make charges against a person outside of the House or an official by name or in such a way as to make him or her identifiable.

The meeting will be webcast live, therefore it can be seen worldwide on the Internet. I ask Ms O'Hanlon to proceed with the presentation.

Ms Frances O’Hanlon

I am the founder of the Future Group. I am joined by my colleagues, Mr. Denis Lenihan, Ms Sandra Maher and Mr. John O'Riordan. I will make a short presentation outlining our proposal and would then welcome any questions members may have.

The Future Group was founded almost 18 months ago. Since then we have made representations and presentations to various interested parties, including the former Minister for Social and Family Affairs, Deputy Hanafin, the Minister for Finance, Deputy Brian Lenihan, the Minister for Enterprise, Trade and Innovation, Deputy Batt O'Keeffe, and their respective officials, as well as the mortgage arrears and personal debt expert group.

We are a group of self-employed independent financial advisers with extensive experience in the areas of banking and finance. We work on the ground on a daily basis with the banks and their customers and are regulated by the Financial Regulator.

The reality is that many people are caught in the purgatory that lies between the Monetary Advice and Budgeting Service, MABS, and NAMA. They are under a tremendous financial strain which is leading to family breakdown, mental illness and suicide. They are afraid of the banks because of their power and what they are capable of doing. They are terrified at the prospects of their businesses failing or losing their family homes and farms. They are weary of the reporting culture which exists instead of the action culture we so desperately need. They are being choked by the banks' restrictive lending practices and the shortage of credit. They are no longer able to operate their businesses because cash flow has dried up.

On a larger scale, MABS and charities much as the Society of St. Vincent de Paul are unable to deal with issues pertaining to complex debt and the self-employed. The waiting times for MABS are too lengthy. High unemployment is here for the foreseeable future, mortgage arrears statistics are getting worse and bank margins are under continuing pressure from mounting bad debts. Interest rates will only go up because banks will need to increase their margins to regain profitability. The recent withdrawal of certain banks from the Irish market has left consumers with diminished competitive alternatives. Debt management companies are flourishing in an unregulated market, sometimes charging exorbitant fees. Small and medium sized enterprises are on the edge of a financial cliff and consumer confidence is being undermined further as ever more businesses on the main streets of our towns and cities close their doors and leave empty units behind them.

The Future Group can support, enhance and work in unison with the structures that are already in place, such as MABS, the Society of St. Vincent de Paul and other support groups. We can independently assess individuals' situations and options on a one-to-one basis. We can approach the banks to reach a satisfactory outcome or arrange alternatives for the individuals concerned. We can bring clarity to what is often a web of individual and business debts. By opening channels of communication and helping individuals to move on, we can ensure they are best positioned for recovery. We can help to restore their confidence by nursing their financial affairs back to stability. We can relieve the stress on individuals by demonstrating that there is a light at the end of the tunnel. We can educate them in budgeting and forward planning. We can provide a service via a national network of qualified financial advisers who are regulated by the Financial Regulator. We can help to keep the family unit intact. We can assist employment creation by supporting existing and potential small and medium enterprises. As debts should not be considered in isolation, we would examine individuals' overall exposure, including secured and unsecured debts.

We ask the joint committee to endorse and promote our proposals for the good of our people and our country.

Deputy Damien English

I presume there will be a charge for the people concerned. How do these services operate for the people with whom the group works? What kinds of people has it dealt with in recent months? The situation is getting worse. Will the delegates give an analysis of it? I presume much of their work involves negotiating with the relevant financial institutions on behalf of their clients.

Ms O'Hanlon noted that the group has written to various Government bodies. Has it put forward general solutions on personal or short-term debt which deserve our consideration?

What is the group's forecast for the next two or three years? We urgently need to examine the issue of short-term debts and do something about putting them into longer term repayment schemes because these debts are causing major pressure. Mortgages will still be there but the €30,000 or €40,000 in credit card debts and credit union loans are causing problems. Nobody seems to be willing to come up with solutions for these problems. The best way to address these debts is to repay them over a period of 25 years but the banks and the individuals concerned would have to take the hit on that.

Ms Sandra Maher

Debts cannot be looked at in isolation and everything has to be taken into consideration. I agree with the Deputy about short-term debt. The problem is that lenders are being very aggressive and are giving people a hard time in order to collect their debts. One solution is to discuss what is out there with the individuals concerned on a one-to-one basis before negotiating with the banks on their behalf to arrange affordable and sustainable repayment terms.

Ms Frances O’Hanlon

Further to Ms Maher's points, while some useful recommendations have arisen from the recent hearings of the Cooney group, part one dealt exclusively with mortgages. The issue cannot be examined in isolation, however, because an individual could have €70,000 in short-term debt behind his or her mortgage. The companies holding these debts are not as forgiving and without considering the entire debt burden one cannot determine the individual's overall repayment capacity, which could put the mortgage under pressure in any event. A further point is that, in the context of the banks, many company directors sign personal letters of guarantee. Parents also sign letters of guarantee in respect of facilities.

This matter is as broad as it is long and someone must consider the overall picture. It cannot simply be seen in the context of something being a mortgage. What is the position, for example, with regard to residential investment properties which were previously so fashionable? How many people bought such properties? Many statistics have been produced in respect of private homes. Ultimately, a private home is a person's castle. Those who purchased investment properties used their homes to cross-guarantee the transaction. Statistics relating to such properties must be produced.

Deputy Damien English

What is the position with regard to the clients with which the Future Group has been dealing to date? What way does the group operate?

Mr. John O’Riordan

It depends. There is a mix of business and personal clients. We could provide numerous examples. Is the Deputy seeking such an example?

Deputy Damien English

Does the Future Group operate in the same way as other firms that offer financial advice or is it a not-for-profit organisation? What does it provide to clients that makes it different from other groups?

Mr. John O’Riordan

We have been examining this matter for the past 18 months. People approach us every week with various issues. Until now we have been considering cases on an individual basis. We have established relationships with our clients and, effectively, we are not charging them at present.

Senator Shane Ross

Does the Future Group not impose any charges?

Ms Frances O’Hanlon

In some circumstances it is not possible to do so. The Future Group is not Robin Hood. There are some very grave situations in respect of which we have provided our services free gratis because there is no other way to proceed. If we do not examine certain people’s cases, they have no other way of proceeding. It is a case of what goes around comes around. We have been trying to get this message across for 18 months, via our local representatives and at meetings with various Ministers. Something must be done and it must be done now. We cannot continue to provide our services for free. We are self-employed individuals; we have our own respective businesses and employees. In such circumstances, something needs to give from the point of view of progressing this matter.

Deputy Damien English

Is the Future Group seeking that the Government should make available, through it and other organisations which provide financial advice, additional resources relating to health checks for businesses and people's personal financial affairs?

Ms Frances O’Hanlon

Yes. We attached our full proposal to the presentation. The type of work to which we refer requires people who will roll up their sleeves, pull away the layers and get down to the nitty-gritty to discover exactly where individuals and businesses stand. In the context of everything I have read and seen to date, I am of the view that too many people are examining this from different angles. There is no uniform approach. Such an approach is necessary when considering debt. For example, a company director may have purchased an investment property and may have signed a cross-guarantee in respect of it. This means that his family home is now at issue. There are so many different layers and parts to this. What is needed is action.

Deputy Damien English

I fully agree with that. I am just trying to establish how the group operates.

Deputy John O’Donoghue

I am somewhat confused. If the Future Group is not Robin Hood, I presume it is not Ned Kelly either. One must, therefore, reach the conclusion that its objective is to become involved in assisting MABS, the Society of St. Vincent de Paul and other charities and support groups in dealing with various problems and that such assistance will be provided for a fee. Is that a fair reflection of what the group intends to do?

Ms Frances O’Hanlon

Absolutely. However, we are at this meeting because we require funding for the proposal we have put forward.

Deputy John O’Donoghue

Yes, but in the final analysis is the objective of the exercise to make a profit, is it to be altruistic or is it both?

Ms Frances O’Hanlon

We referred to that earlier. We have already given a great deal of our time free gratis. It has certainly not been about profit on the cases with which we have dealt to date. As individual business people, we cannot continue to do that going forward. In the past 18 months we have identified that there is a grave and acute need for intervention.

Deputy John O’Donoghue

So what the Future Group is saying is that it will intervene, for a fee, in respect of clients who might possibly be introduced to it by MABS or charities such as the Society of St. Vincent de Paul or other support groups. Is that a fair reflection of what is proposed?

Ms Frances O’Hanlon

Yes, absolutely.

Deputy John O’Donoghue

I am sure Ms O'Hanlon can understand that a statutory committee such as this, which was established by the Houses of the Oireachtas, is in no position to endorse one set of private business people above another. The position is quite the contrary. We are obliged to act with equanimity at all times. In such circumstances, do our guests, irrespective of their goodwill, see the difficulty in which members are placed? MABS, the Society of St. Vincent de Paul or other charities and support groups would not be in a position to provide information relating to individual clients without the permission of the latter. There are several difficulties which arise and I suggest that these require further consideration.

Deputy Joe Behan

I welcome our guests. The presentation was very thought provoking and the concept put forward by the Future Group is extremely interesting. Our guests indicated that they met several Ministers. Will they indicate the nature of the response of the latter to the work of the group? Will the Ministers in question communicate further with the group in the future or have the possibilities been exhausted? Do our guests seek the committee's support for the principle behind their proposal and suggest that we put it to the relevant Ministers for consideration?

An extremely interesting aspect of the proposal is the ten or 12 examples it contains of our guests' experiences as financial advisers with regard to the behaviour of the banks. This highlights the fact that the reality is very different from the PR spin being put forward by the banks. The relevant information is provided on pages 4 and 5 of the document and is well worth reading. In reality, it appears that the banks are bleeding customers dry and are doing nothing to assist them with their difficulties. As our guests stated, off-the-record statements indicate that the banks do not want to lend for the next five years and that they are entirely focused on taking in deposits. We all suspect this to be the case. However, what our guests are saying is that their day-to-day experience in respect of clients who are in difficulties shows that the banks — despite all of the public money they receive from the State — are not fulfilling their obligations. Is that a correct assessment of the position? Perhaps our guests will elaborate on that.

Ms Frances O’Hanlon

That is why we refer to market reality. These are the blockages we encounter each day. It can be from the point of view that the banks do not like someone's occupation. I would not find it easy to deal with the banks at present because they do not like my occupation. They are reticent with regard to dealing with people in the areas of finance and construction. Extremely tight criteria are being applied in respect of particular professions. That is well documented and well known among our community. These are the realities.

Referral fees constitute a major issue. Such a fee is imposed if one exceeds one's credit limit or if one's account is overdrawn. One must be in a position to show at least three to six months clear bank statements before an institution will even consider dealing with one. Some banks have an automatic decline in place in this regard.

Many people are involved with the Irish Credit Bureau, ICB. When I meet someone — I know the position is the same in respect of my colleagues — if I get the feeling that an issue might arise, I advice him or her to have a credit check carried out by the ICB which I can then assess. If an issue is identified by the bureau, it will, from the time it is corrected, stay with that person for a minimum of five years. If an issue arises in 2010, for example, and it is not resolved until 2013, it may stay with the person involved until 2018. The effect of this on individuals and businesses is unbelievable.

Back to Deputy O'Donoghue's point; that is what we are about. That is what we can see and that is what we can look at, which is beyond what MABS is doing. MABS offers a very good service but it has had 28,000 cases this year to date, which have been dealt with by approximately 234 what it deems permanent employees. There is a huge problem and somebody needs to look at it head on. Somebody needs to stop looking at different angles and look at it on a broader basis. I do not apologise that we have to be paid. Whatever about Ned Kelly or Robin Hood, we have to be paid, but we have a vital service to offer and we are genuine in that. I am passionate about it as well, which I think I convey.

Deputy Joe Behan

With regard to the reaction of Ministers, what have they said to the group?

Ms Frances O’Hanlon

We had a hugely positive response from Ministers, in particular the Minister for Finance. It was on his recommendation that we spoke to the Cooney committee. To be fair to him, he was hugely receptive with regard to what we say. He is very much in touch. It is funny that the Deputy picked up on the market realities because the Minister is aware that these issues are cropping up on a daily basis. With respect to then Minister for Social and Family Affairs, last November Deputy Hanafin recommended that we speak to the Minister for Finance, which we did. The final stop was the Cooney report. There are some good points in it but it stops short and something needs to happen now.

Senator Shane Ross

I thank the representatives for coming along. Are they looking for money?

Ms Frances O’Hanlon

Yes.

Senator Shane Ross

How much?

Ms Frances O’Hanlon

We started this 18 months ago. I spoke to my local representatives saying people need something, something needs to happen. I am not completely au fait with the budgetary workings of Departments but we have to be paid. We all pay levies as individual financial advisers to the Financial Regulator annually, as do the banks, and I suggest a socially responsible fund for clients who benefit from banks and financial advisers. Some of the money could be given back to help those individuals. That is my view on it, which may be simplistic. The other idea is that MABS could be enhanced or we could work hand in hand with MABS and some of its budget could be allocated to us. I am not familiar with departmental workings and budget arrangements.

Senator Shane Ross

Who is funding the group at the moment? Are the advisers funding themselves?

Ms Frances O’Hanlon

Yes. I am a company director. I own my company and I have three employees. I reiterate that this is a proposal to lift this up and help people on a broader basis. I look after people and I cannot turn them away because I know their cousins or whatever but I cannot continue to do that. I cannot open the floodgates to do that.

Senator Shane Ross

I understand that. Is it not part of the job of independent financial advisers to represent their clients in this way anyway?

Ms Frances O’Hanlon

I do.

Senator Shane Ross

Is this something advisers would normally do?

Ms Frances O’Hanlon

I am not talking about my clients.

Senator Shane Ross

Is Ms O'Hanlon talking about other people as well?

Ms Frances O’Hanlon

Yes.

Deputy Damien English

The wider community.

Ms Frances O’Hanlon

The workings of my business are different. The Senator will be familiar with the workings of independent advisers and how we get paid. We are up-front about our terms of business and we make that clear but that is totally different.

Deputy Damien English

Will Ms O'Hanlon clarify that she suggests that a pot of money should be made available for advisers, which does not necessarily have to be used by the Future Group? This is something all members would call for. This money would be set aside to help people attain financial advice that they cannot afford, to help them out of their problems. This would not necessarily be done through the Future Group because we cannot direct that to happen. Is that what this is about?

Ms Frances O’Hanlon

Yes.

Deputy John O’Donoghue

In short, the group wants something similar to what is available under the legal aid system for clients of solicitors and barristers and so on to be made available to financial advisers. Is that it?

Ms Sandra Maher

I suppose it would be something similar to MABS but we are used to dealing with the banks and we would make the intervention.

Senator Shane Ross

Is not the essence of what the group is saying that MABS cannot cope with the problems and if the service had a larger budget, financial advisers would not be necessary?

Ms Sandra Maher

No, MABS does not have some of the expertise needed.

Deputy Kieran O’Donnell

What is the group's relationship with MABS? Do members get referral work from MABS?

Ms Frances O’Hanlon

Bar a statement on my website, which says, "Contact MABS", we do not have a relationship with the organisation because it is not in a position to do that. Deputy O'Donoghue pointed out earlier that there would be all sorts of implications without an official arrangement, even in the context of data protection and confidentiality. There is no relationship other than that on a local basis somebody might say, "Maybe you could remortgage and you should speak to an independent adviser". We want to enhance the service provided by MABS. The organisation cannot look after everybody. It does not look after the self-employed or people with complex debt.

Senator Shane Ross

This is a lack of detail and budgeting in the proposal. We do not know how for much the group is looking or for what the money will be used. It is reasonable, given the state of the Exchequer's finances, that the committee should be given projections and funding requirements. If financial advisers approach the Minister and his civil servants, they will ask how much they want and what the money will be used for and where will they get the payback. The proposal is full of aspirations but it does not have concrete detail. How big is the problem in terms of what it will cost the State?

Ms Frances O’Hanlon

It is what is asked of us. This came up before but it is hard for us to quantify. MABS or the Government could say they will allocate X number of cases to us, perhaps the more complex cases, and, on that basis, they are happy to give us an up-front administration budget to set up but, thereafter, they will pay us on a case-by-case basis. I do not know because this is a big problem.

Senator Shane Ross

That is why it is important to have figures.

Ms Frances O’Hanlon

I fully appreciate the question but I am not being evasive in saying it depends on what members ask us to do.

Senator Shane Ross

We have not asked the group to do anything. The group is asking us to do something. If so, Ms O'Hanlon should say it will cost the following in certain circumstances or cost it in some sense. Department of Finance officials will not run after the Future Group saying, "Here is some money, go and do something with it".

Ms Frances O’Hanlon

We are all running our own companies and we have to be mindful of costs, especially in the current climate. We are also employers and all of this must be factored in. We are financially shrewd when it comes to our own businesses and we would have to completely respect taxpayer's money. I am not being evasive but it depends on whether anything is asked of us.

Senator Shane Ross

No one is asking anything of Ms O'Hanlon and her colleagues currently. She is asking for funding from the committee, which is perfectly reasonable. This happens every day but she is not saying how big the problem is, how much work she will do and how much it will cost. If I was in the Department of Finance, I would not give the group a penny until it had done that.

Ms Frances O’Hanlon

I appreciate that.

Chairman

In so far as a principle can be established for the proposal, MABS is dealing with certain categories of people but there is a deficiency in the advice available for those with complex arrangements in which personal and business debt overlap. Does the group suggest that a fund should be established, by way of levy on the financial services or banking sector, which would enable organisations like The Future Group to advise people with large amounts of debt as opposed to those with smaller amounts of debt, with whom MABS is dealing?

Deputy Damien English

Perhaps what the organisation seeks is a financial aid package as suggested by Deputy O'Donoghue. Would it be possible to come at this from a different direction? What is the average cost to the client to have his or her affairs sorted? Perhaps, if the Government decides to go down this route — it should although not necessarily in respect only of the group before us but in general — it could introduce a voucher system whereby a particular amount would be made available to each person to spend on proper financial advice from a panel of advisers agreed by Government. If the delegates could provide us with a rough figure of the cost involved we might then be able to work out what would be required. We are all aware that a huge number of people are in financial difficulty. What roughly would be the cost of providing good advice to the average client with, say, short term debt of €40,000 or €50,000, a mortgage and so on?

I have to go now but perhaps the delegation would come back to us another day with that figure.

Ms Frances O’Hanlon

Yes.

Senator Ned O’Sullivan

I am not sure that MABS would agree with all that has been said on deficiencies in its operation. It is important we obtain MABS' view on what additional service can be supplied by the Future Group. How does the group measure success in its activities and what level of success has it had in terms of dealing with the individual complex situations outlined?

Every time I visit my local AIB branch I notice new brochures and leaflets advising the public of how anxious AIB is to assist them with their indebtedness and how it is available to work with people. The most recent brochure-leaflet relates to AIB's proposals to assist-small and medium-sized businesses into the future. Is this a con job? Why do the banks go to the expense of publishing leaflets and brochures if they are not serious? From the group's experience in terms of dealing one-on-one with individuals and their banks, are the banks seriously trying to deal with the debt problem or are they running away from it? Are these leaflets just a smoke screen?

Mr. John O’Riordan

We see ourselves as supporting MABS. We do not criticise MABS which we believe provides a good service. Without MABS people would be worse off than they are now.

In terms of dealing with people on a day to day basis, we have dealt with personal debt issues and with business debt. On the banks, it is fair to say they have their own agenda and need to be seen to be doing a particular job. In recent times, the banks set up a system which allows people to appeal decisions internally and then externally if their appeal is not successful. I dealt with a case involving a person running a business whose bank refused him his working capital facility, which decision we appealed to the bank concerned. It took the bank six months to notify him of its decision to deny him his working capital facility. A week later we appealed that decision to the appeal committee which three weeks later overturned the earlier decision and gave him his working capital facility. The problem that arises for me is the bank taking six months to make a decision on the application in the first instance during which time the man, his wife and young family had to, on three separate occasions, discuss whether to keep the doors of the business open. The process dragged on for too long. I accept the banks have put in place the appeals committees to assist people. However, the process is taking far too long and people are suffering tremendously in the interim.

While we have raised with the committee the issue of funding we want also to raise with it the necessity to assist people to remain in business. Towns are suffering social problems owing to the closure of units. We must assist people to remain in their homes and to keep the family unit intact. We mean business and are passionate about addressing the problems brought to our attention every day of the week. We want to do something to help.

Ms Frances O’Hanlon

In regard to the point raised by Senator O'Sullivan, we are speaking here about multiple debts. A person may have his or her business account with AIB, mortgage with Ulster Bank and credit card account with MBNA and as such we must deal with more than one bank. As Mr. O'Riordan said, every bank must look out for itself in terms of its shareholders and so on. From our point of view, we are addressing multiple bank situations. While every bank will seek the best deal it can for itself, we are seeking the best deal for the client. We must put to the bank with whom the client has the mortgage that it is not realistic for it to seek a particular amount because the client also has short-term debt and so on that must be addressed. The process of addressing problems with one bank after another is tiresome and stressful for individuals. I accept there needs to be accountability everywhere but there also needs to be accountability for individuals. The process is broad and long and cannot be over-simplified.

I reiterate that we did not highlight deficiencies in MABS. We are talking about enhancing it. The Future Group is different in that it is made up of qualified advisers. I commenced working in the banking sector when I was 17 years old. I have spent approximately 22 years thus far working in the financial sector, which I do not believe to be a short time in the scheme of things.

Deputy Kieran O’Donnell

I thank the group for attending today's meeting. I have a couple of questions I would like to put to the group.

The group will appreciate that through our work, in terms of people visiting our clinics, we deal with MABS almost every day of the week. What is the profile of people contacting the Future Group? If these people are in business one would expect their accountants to be dealing with issues such as re-financing with banks and so on. The delegates have already outlined the process of dealing with the banks. Do they see merit in the banks paying for the proposed advice rather than it being a cost for the taxpayer? I know the reason the group is here today. MABS does great work. Politicians put a great deal of work its way, but MABS is over-stretched. Perhaps the group will give us a flavour of the profile of people it works with and state why they contact the group rather than have their accountants do this work.

Ms Frances O’Hanlon

We would always say we are not accountants and accountants will say they are not financial advisers. In my experience, some accountants will grab the bull by the horns and go with the business individual to the bank.

Deputy Kieran O’Donnell

I want to know why people contact the group.

Ms Frances O’Hanlon

Word of mouth. My business is referral-based.

Deputy Kieran O’Donnell

From whom?

Ms Frances O’Hanlon

People I have dealt with during the past 22 years.

Deputy Kieran O’Donnell

What typically is the profile of people in financial difficulty who contact Ms O'Hanlon? Are they self-employed?

Ms Frances O’Hanlon

It would be a mixture of various people, first-time buyers, self-employed people or company directors. I provide free seminars for people and all of my business is based on referral and word of mouth. If people see somebody in difficulty, they suggest that person should come and see me. That is how I am in touch with so many people.

Deputy Kieran O’Donnell

If everyone is to get something out of this meeting, can the Future Group explain in two or three sentences what it wants in terms of what should be done, how it should be funded and how it would work in practice?

Mr. John O’Riordan

There are three questions there. On what should be done, there is a significant social aspect to our work. We deal with people on a personal level. We go out and meet them in their own kitchens and sitting rooms and chat to them and offer them some kind of hope in their situation. With regard to how this work should be funded, Deputy O'Donnell mentioned the banks and we have discussed that option. We have also discussed funding from fees collected by the regulator. These are two options we have considered. We have not entertained the idea of charging these people because they are already going through tremendous grief and stress and are not in a position to pay us.

Deputy Kieran O’Donnell

Is the work the Future Group does in this area regulated?

Mr. John O’Riordan

Absolutely.

Ms Frances O’Hanlon

We are regulated by the Financial Regulator, as required.

Deputy Kieran O’Donnell

Is the provision of advice on banking regulated also?

Ms Frances O’Hanlon

We would have specific agencies ——

Deputy Kieran O’Donnell

But they would act as intermediaries.

Ms Frances O’Hanlon

Yes.

Deputy Kieran O’Donnell

However, if someone came to the Future Group who owed money to five or six different banks, would anybody oversee the quality of the work done or advice provided? Can the Future Group's idea be put in place in a transparent and effective way in which everybody can participate and which will not cost the State an arm and a leg? The charge should be laid on the banks. Are the structures there for that currently?

Ms Frances O’Hanlon

We are all singing off the same hymn sheet or proposing the same route. I mentioned the levies we are paying as intermediaries. The banks are paying those anyway, so technically that money is going to the Financial Regulator. Our proposal is that some of that would be returned to fund the likes of us. With regard to the source of our business, it is all referral based. We are seen as the people who can help people. We do not like to stick our heads up every now and then to be shot at, but we feel the need for this. Something needs to happen. Neither businesses nor the country will be able to move forward due to the level of debt that exists currently because the situation is so complex. Something needs to happen. The full picture is not being shown. We hear statistics from MABS and others and recently I heard a press statement from MABS saying it encourages communication between individuals and banks, but nobody stands with those individuals when meeting the banks. We are meeting the banks with the individuals. It is a very daunting prospect for anybody to step into the bank to discuss difficulties. I spent a long time in the bank and still know many decent individuals and advisers in the bank. However, the situation in the banks is very grave and many of them are in collection mode only.

Deputy Kieran O’Donnell

Are the people who come to the Future Group mainly in difficulty with just their mortgages or have they other debts or a combination of debts?

Ms Frances O’Hanlon

Absolutely. There are all sorts of issues, such as a combination of debt or money invested in a pension that has been lost. Another serious issue currently is that individuals are cancelling life cover, health insurance, serious illness cover and other such cover to pay short-term borrowing and their mortgages. There is a serious fallout in that regard, because if anything happens those individuals, their situation is further compounded.

I must convey the message that we are genuine about wanting to help people. I would genuinely like someone to pick up our proposal and put shape and form on it, move on it and provide people with the much needed help they require.

Deputy Kieran O’Donnell

Does the group think a structure can be implemented which can do that, notwithstanding the great work that MABS does?

Ms Frances O’Hanlon

Absolutely. I want to clarify that we are not here to slate MABS. We are here to enhance MABS because there are many issues with which MABS cannot deal because it is not qualified to deal with them. We can. MABS will not suggest remortgaging, clearing a debt and presenting a proposal to the bank, because it is not qualified to do that. We can do that because we are regulated. Deputy O'Donnell raised the issue of the many debt management companies that exist. Many of these charge people a lot of money to deal with just their short term borrowings. I met a lady recently and after analysing what she had paid over a year, found she had paid 37% of the payments she had made in the year in charges to the debt management company.

Deputy Kieran O’Donnell

Was that 37% of her disposable income?

Ms Frances O’Hanlon

If, for example, she had agreed to pay €300 per month, some 37% of that money went to the debt management company for the initial acceptance and set up and ongoing management of the debt. Generally, from 10% to 20% per month is taken in charges from individuals like this lady who are on their knees.

Deputy Kieran O’Donnell

Is Ms. O'Hanlon saying these are interest charges?

Ms Frances O’Hanlon

These are the charges for dealing with the short-term unsecured debt. We are on the ground, seeing the situation daily and dealing with the banks. We know the limitations under which the banks operate currently. We understand they do not have much money to lend and that they are not lending to any huge extent. There is lending to some first-time buyers. Hope and confidence are important and we must get it back.

Ms Sandra Maher

There is much harping on about negative equity. It is an issue, but it is not a blanket issue. Some people are quite happy, once they can pay their way.

Mr. Denis Lenihan

Our experience also is that this is a factor for many people. They are afraid to approach banks. There are many couples where one person has lost his or her job and they are afraid to approach the bank. They are not sure what the effect would be of saying certain things. They are afraid of losing their house ultimately. We want to get across that we are here to help those kinds of people.

Deputy John O’Donoghue

What we have here is an idea. While it was very eloquently and passionately put, it remains an idea which is not implementable at this point in time for the reason that it is neither costed nor structured. No plan has been put before the committee. That is being blunt. In those circumstances I suggest that the group should meet representatives of MABS to ascertain if some form of structure can be proposed and costed to allow us to review the situation again. As of now it is not possible to do so for all the reasons I outlined earlier. Everybody would welcome a useful meeting between the group and MABS to see if flesh can be put on the bones of the idea.

Chairman

I thank the delegates for appearing before the committee. I will certainly come back to them. They might follow up to provide a costing to us and we will take it on board after their discussions.

The joint committee adjourned at 4.30 p.m. sine die.