Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach debate -
Wednesday, 5 Jul 2023

Defective Block Redress: Redress Focus Group for Banking and Insurance

An Cathaoirleach

Apologies have been received from Senator Higgins.

In today's session, the committee will meet representatives of the Redress Focus Group for Banking and Insurance on the topic of defective block redress. I welcome the witnesses to the meeting: Mr. Patrick Sharkey; Mr. Seán McCabe; Ms Sarah Shovlin; and Ms Donna McDade. I understand that each will make an opening statement.

I will remind members and our witnesses about privilege. They are covered by privilege when they are in Leinster House or its precincts. Those who join us remotely will only have limited privilege. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person or entity outside the Houses or an official either by name or in such a way as to make him, her or it identifiable.

I call Mr. Sharkey.

Mr. Patrick Sharkey

I thank the committee for inviting our group to attend today's meeting.

At the beginning of 2023, the redress focus groups initiative was set up by Ms Roisín Gallagher, Ms Joy Beard, Ms Brenda Tierney-Joyce and Ms Claire McDaid. This initiative saw a public call to our wider community in County Donegal seeking volunteers with a range of skill sets to focus on the many issues we faced resulting from the defective blocks crisis in our county. One such area is that of banking and insurance, which is what our group has been focused and engaging on over the past number of months. The shortcomings of the Government's response to this crisis is leaving our community having to work together to try to make the best of what is an inadequate scheme.

By way of personal introduction, I am an impacted homeowner, with my family home showing all the signs of defective blocks. Relatively speaking, the property is not yet in bad condition, so I am yet to apply for redress and am awaiting details of the enhanced scheme. I volunteered for our group, having experience of working in financial services and harbouring concerns about how banks had not been helping to address the problem.

My wife and I were wrongfully removed from a tracker mortgage by Permanent TSB. We were only restored to a tracker rate after a five-year process through the office of the Financial Services and Pensions Ombudsman, FSPO. We were overcharged by tens of thousands of euro. In 2019, while the ombudsman's investigation into my rate was ongoing, my mortgage was sold to a vulture fund and is now managed by Pepper on a rate of 7.25% and rising. As we know, Pepper is not a normal lender and I simply do not know how the funding I will need to engage with the redress scheme will be forthcoming.

Moving on, members of our group who have commenced the demolition and rebuilding of their homes will read statements to the committee outlining the dreadful experience they have been through. Their experience highlights the need for mortgage providers to step up and provide interim finance to ensure that homeowners can carry out the initial phases of work pending drawdown of their grants.

In the opening stages of our group's work, we reviewed our standard mortgage terms and conditions. These are terms that apply to all of our mortgages. We were struck by the obligations placed on homeowners regarding maintenance and repair of our homes. Examples of such conditions within the Banking and Payments Federation Ireland, BPFI 's standard terms and conditions include: not to jeopardise or allow any harm to occur to our homes that may in any way depreciate their value; to keep our homes in good and substantial repair; to allow our mortgage providers access to our homes to assess the condition of our homes without them being liable as mortgagees in possession; and to insure and keep insured all parts of the secured assets.

We cannot comply with these covenants when we have defective blocks in our homes.

Our mortgage terms and conditions contain call demand or enforcement events in which the total debt on our mortgages becomes repayable immediately. Section 7.6 of my terms and conditions state that the debt shall become immediately payable to Permanent TSB if my home is either damaged so as to materially depreciate the value of my house as security or where it is demolished. This clause is consistent across all lenders and brings our mortgage providers into the centre of this issue. Clearly, each and every mortgage secured on a defective block home, of which there are many thousands, are in a technical default position. Effectively, until our homes are rebuilt, we are repaying unsecured mortgages. We cannot understand why we are here in 2023 highlighting these clauses and where banks have not offered any support or assistance outside of their business as usual processes. With thousands of effectively unsecured mortgages on their books, this is a problem for banks and mortgage providers as well as for us homeowners.

Our objectives have been as follows: that banks and loan servicing companies put in place dedicated trained staff, policies, procedures and tailored interim finance products to remove the financial barriers to access the scheme; that all impacted homeowners, without exception, are dealt with in conjunction with the vulnerable client processes; that impacted homeowners have a clear and well-publicised way of contacting the dedicated team in each bank; that the bank approval for demolition be based on their assessment and approval of the proposed works to rebuild our homes, and based on professional and independent engineers' reporting; and that the banking and insurance sectors work together to ensure all homeowners are sold appropriate insurance policies, noting that fully comprehensive cover is not possible with a defective block home.

The key measure of the scheme should be to restore our homes in an unambiguous manner to a fully mortgageable condition, leaving no shred of doubt about our homes being fully restored to market value. We believe there are issues regarding proposed rebuild on untested foundations, where there is an outer-leaf replacement or where a semi-detached home may be demolished in isolation from an adjoining property. We have discussed these scenarios with local auctioneers who believe such scenarios will probably not restore the full market value of a property. The repair of our homes must satisfy us as the homeowner and our mortgage provider that full value is restored based on a professional engineer's recommendation. We have very serious concerns as it is becoming clear through scientific research that homeowners will have non-compliant material retained within their homes as per IS EN 12620. This leaves us, as mortgage holders, with a lasting damage default on our mortgages. Such an outcome is not an effective use of taxpayers' money and it highlights the need to do things right. I thank the committee members for their time. I pass over now to Mr. Seán McCabe.

Mr. Seán McCabe

I thank the Chairman and committee members for inviting me here today to participate in this meeting. Like my fellow volunteers within the focus groups, I am a defective block homeowner. My wife and I moved into our home in 2016 and, after core testing in July 2021 under supervision with the appointed engineer, we were advised that our home should be demolished due to high levels of deleterious materials. We completed stage 1 of the scheme and we are now due to enter stage 2 of the scheme as it stands.

I have a financial services background and I am based in the North where I specialise in mortgages and insurances, but I must add that I am here in a personal capacity. I was invited onto the focus group in February past and I accepted as I could no longer sit back and watch my family, neighbours and community suffer due to the failings of the scheme. This is the reason I am here.

Today I will focus on our group's meetings and work to date, in particular our meetings with the main banks, Banking and Payments Federation Ireland, BPFI, and the Minister for Finance, and some of the key areas that were discussed. With the meetings, we engaged and met with all of our local Deputies and we requested their help. As a group, we have met individually with AIB, EBS and Bank of Ireland, and we await a meeting with Permanent TSB on a local level. At our own request, we engaged in a meeting hosted by Brian Hayes with Banking and Payments Federation Ireland on 29 May, at which the following banks attended: AIB, EBS, Bank of Ireland, and Permanent TSB, along with the presence of the Irish Banking Culture Board.

We met most recently with the Minister for Finance, Deputy Michael McGrath, on 21 June at Government Buildings. The key areas we discussed and the areas of concern that we have are the emergency need for an interim finance facility such as an overdraft, a 0% bridging type facility, and the need for interim funding up to the capped level of the scheme. Beyond the capped threshold there is a need for an equity release type facility that is fair for vulnerable homeowners, along with the need for each lender to develop a tailored and bespoke product that allows each homeowner to cover the shortfall of the scheme. In simple terms, this allows the homeowner to pay the tradesmen on time to finish the property. The banks we have met have acknowledged the need for this and the Minister for Finance, Deputy McGrath, has agreed that this is indeed a reasonable request. We need these products implemented by the individual banks with the help of the Government. The banks must understand that these products will be State guaranteed, due to the scheme, and as such the loan should be at 0% interest. We have been very clear when engaging with the banks that they should not profit from the misfortune of defective block homeowners. These products are within the remit and capability of our lenders, and lenders must be reminded that they have a duty of care to look after their customers.

Another area of concern relates to our mortgage terms and conditions. The mortgage terms and conditions state that damage due to the property or demolition of our property is regarded as a demand event and as such, mortgage holders are in breach of their terms and conditions. We need to address these issues and get solid assurances.

With regard to the new scheme, we are hearing soundings about engineers being appointed by the Department of Housing, Local Government and Heritage. We need assurances around the impartiality of this system and the certification of proposed works. Will this address the damage caused in our mortgages?

Another key area of concern is partial remediation on the homes still being party to deleterious materials. We have concerns around how these properties will achieve market value if foundations and partially remediated walls are still left in place. We have concerns around the future impact on the remortgage capacity for the homeowner. For example, if full market value is not restored, this could disadvantage the homeowner on the loan-to-value ratio and indeed their interest rates. Further to this, if our homes are not restored to full market value, what is the potential ongoing effect for the economy and housing stock within Donegal and further afield?

The Government has a track record of implementing tailored financial products in tandem with financial institutions, for example, initiatives such as fresh start, local authority home loans, Government-backed Covid business loans, and various Strategic Banking Corporation of Ireland facilities. The Minister touched on this at our meeting. Again, these are areas that need to be explored and should be discussed as a matter of urgency.

We have a small number of banking institutions in this country that lend the vast majority of home loans and mortgages. We do not have a system like other countries where there are hundreds of lenders and a very multilayered banking world. Surely the banks along with the Government can sit down with us in moving forward, listen to our concerns and engage with us on this. I appeal to the members of the committee today to take this message home with them and do everything they can as elected representatives to make that happen. Go raibh maith agaibh.

Ms Donna McDade

I thank the committee for having us here today. I am no longer the owner of a defective blocks home; my home was demolished earlier this year. I am currently in the process of rebuilding and trying to manage all the complications building a home entails, let alone in these circumstances, as well as paying a mortgage, rent, storage costs and a loan while we all deal with a cost-of-living crisis. Before I summarise the financial difficulties I have experienced thus far trying to finance the build, I will outline the lack of support, compassion and empathy from the banking sector - in my case, Permanent TSB. I can also answer questions the committee has on finances and provide a general overview of our journey since August 2022.

Upon receiving confirmation from our engineer in July 2021 that our home was recommended for demolition, I arranged a meeting with Permanent TSB to inform the bank of our circumstances. At that meeting, the bank placed a market value of €320,000 on our home. In that meeting, our home became valueless. For 18 months, I attempted to negotiate with Permanent TSB, first at branch level and I then contacted senior management, as the branch representative was clearly not in a position to offer any form of solution other than forbearance. I outlined a number of options I deemed favourable to both parties. However, the bank never negotiated or put in place specific supports for vulnerable defective block homeowners. It always responded, "We have agreed to support customers by way of payment breaks or applications for further advances, subject to credit assessment." The offer of a mortgage break would be an additional cost to me and credit only subject to normal lending criteria. Do members believe the banks should continue to profit from families who have to deal with this horrendous situation, which is not the fault of the homeowner?

Having nowhere else to turn, I raised a complaint with the ombudsman. Through a mediation process, it was deemed that the bank's position had not changed. It reiterated its final response, dated 15 August 2022. The ombudsman informed me that Permanent TSB responded, "This is not the bank's fault", a rather callous and unsupportive response, as we are all aware that this disaster occurred due to the lack of enforced regulations by Government and Government agencies. In addition, I respectfully remind the committee that the State retains a 57.4% shareholding in Permanent TSB. Further insult came in August 2022, when I received a letter from Permanent TSB informing me that the interest rate on my tracker mortgage was going to increase; it has continued to do so. Since that date in August, our mortgage interest rate has increased by 4%, which equates to an increase of almost €300 per month. I am currently paying more than €1,200 on a property that no longer exists. Do committee members consider this to be fair?

I contacted the European Central Bank and the Central Bank of Ireland, both of which confirmed it is at the lender's discretion to pass on interest rate hikes. Once again, I contacted senior

management in December 2022, requesting that they show an ounce of empathy and pause the continued increase in interest rates on the mortgages of owners of defective homes. The response from Permanent TSB was, "Unfortunately, we are not in a position to amend your tracker rate as this is your contractual rate of interest, which we must honour". Furthermore, the senior manager outlined, "I know that this is not what you had hoped but you will appreciate that we have many thousands of customers on tracker rates and we cannot change the rates for any particular customer segment." Time and time again, I attempted to highlight that owners of defective homes were in a devastatingly unique position with valueless properties through no fault of our own. That support should be considered as unprecedented circumstances and helping this customer segment.

In March 2023, I contacted the same manager and asked if the bank had since implemented anything specifically for defective block homeowners and if there were any further developments or indeed talks with Government, to which the bank responded:

We have supports in place for anyone that needs our help. There are no unique options for defective block owners as our standard supports cover everyone. There have been no further developments since we last exchanged emails.

Throughout this process, I have continued to pay the mortgage as I am aware of the callous nature of how banks sell on mortgage accounts in arrears. This is not about not paying the mortgage, but that banks accept they have a duty of care to vulnerable customers and a vested interest in the outcomes of their customers engaging with the defective blocks scheme and the shortfalls of said scheme. This is what brings us here today. Homeowners yet again are having to work in collaboration to form support groups to tackle these injustices. That is what it is - an injustice. The group worked tirelessly to find a clause; something that would grab the banks' attention. This is how the bank's own terms and conditions entered this minefield of institutional bureaucracy. Once again, an approach was made to Permanent TSB, to which it replied on 6 April 2023, "The bank confirms that for the purposes of clause 5.2 of your mortgage terms and conditions, the bank consents to the mica remediation works (“Works”) taking place in respect of the mortgage property." Permanent TSB continued:

I note from your letter that the Mica redress scheme is unlikely to cover the full cost of rebuilding your property. In this regard, while the bank has no obligation to advance further funding, the bank would be happy to consider any application that you may wish to make for additional borrowing. Such application will be subject to the bank’s usual lending terms and conditions and affordability criteria.

This was the final straw for me and I stopped contacting Permanent TSB. Every request proposed over the past 18 months has been met with indifference and lack of urgency or empathy.

It is profiteering and exploitation by the banking sector, which highlights a blatant disregard for ethical practices and the wellbeing of customers, as it continues to prioritise its financial gains over a vulnerable segment of its customers. If the enhanced scheme is delivered the same as the 90:10 scheme in that stage works must be completed before an interim payment is claimed and the banks do not offer 0% bridging finance and take a level of responsibility, homeowners will simply be unable to engage, especially if the banking sector continues to outline that finance is subject to normal lending criteria. There is nothing normal about our circumstances. Defective blocks homeowners need to be supported, not vilified by the very institutions that claim to have our interests as the core of their values. Permanent TSB and others must step up and deal with this disaster as unprecedented circumstances, not as financial difficulties. This burden has been thrust upon thousands of homeowners and, in the words of the senior manager, "This is not the bank's fault," yet it most certainly is not the homeowner's fault. We are left to rebuild our lives and homes while trying to stay sane and cope with not living the life we should be because this has been ripped from us.

Ms Sarah Shovlin

We should not have to be here today because there should be a fully funded, end-to-end scheme but that is not the case. It is evident that the Government and banks are completely disjointed on the workings of this scheme. I wish to inform the committee of the horrendous experience my family has been through in trying to engage with the defective blocks scheme and our existing mortgage provider, EBS. With the launch of a scheme in 2020, I quickly engaged an engineer. His report stated that our Bison slabs were supported with a 2N block and that the house needed to be demolished; we were distraught. In January 2021, we applied for the defective blocks scheme and notified EBS the same day that the house was affected. We requested information and advice on how best to proceed with the existing mortgage. The response of EBS was to issue a standard financial statement, although we were not in arrears.

EBS then advised that a working group was in place to address the situation relating to defective blocks. We followed up five months later, but EBS still had no direction from its working group. During a further follow-up contact from our side in August 2021, EBS reiterated that normal lending criteria resulted in no approval of a top-up mortgage for us. At no point in this eight-month communication did EBS draw our attention to the covenants of our mortgage terms and conditions. Members can imagine our utter dismay when in March 2023, as we started demolition of our house, which coincided with the creation of this group, I learned that demolition triggered an immediate default, as per the terms and conditions of our mortgage. In two and a half years of constant communication with EBS, it never once mentioned that we would be in default. If this is not a case of dereliction of duty, I honestly do not know what is.

We duly requested a special exemption in March, which was issued, in relation to demolition. The letter from EBS did not cover any of the other covenants that were also in breach since before 2021, such as the damage default clause that my colleagues have spoken about. Two and a half years on, EBS has yet to identify or offer a product that meets the very special needs of our situation as the owners of homes built using defective blocks. It has not engaged in a meaningful way and has demonstrated a clear lack of understanding of the scheme and the circumstances we find ourselves in.

I would like assurance that all banks will categorise defective block homeowners as vulnerable. There is no evidence that EBS has done this in our situation to date. I ask each member here today to ensure that this happens for all defective block homeowners. Normal lending criteria cannot apply to this situation: age, stress tests, and loan-to-value, LTV, ratios are not applicable. We need short-term cash funding, supported by the grant and longer term low-cost funding, to reinstate the bank's asset, which is our home.

It is not only EBS with whom we have engaged in the last two and a half years. In December 2021, we complained to the Central Bank. The case number is 0004055. The Central Bank refused to take any action. It stated:

[W]e are aware that most of the commercial banks have put in place dedicated advisors for those customers who are impacted by mica or pyrite. I would suggest bringing your case to your mortgage provider for your lender to review.

This response was not helpful. EBS then went on to encourage me to go to the Ombudsman, if necessary. I had already been to the Ombudsman in July 2021 regarding the situation and our lack of support from our mortgage provider. That case was 309597. The only solution proposed by EBS at that time was: to review our accounts for affordability under "normal lending criteria", or we were offered a payment break on a full moratorium or interest-only basis. EBS did confirm that it had a full suite of options available if we were in financial difficulty. It must be noted that the bank would profit from the solutions it offered and these options would cost us thousands in the long run. No one should be profiting from this humanitarian disaster. Banks need to acknowledge the complexity and difficulty defective block remediation creates and engage in a collaborative and positive manner offering practical and workable solutions for both short-term and longer term funding. The banks need to be part of the solution on a scheme that does not offer 100% redress.

I will move on to the scheme that has been in place since Monday. The 10% retention is still in place for this. If a local builder is doing two, three or perhaps four defective block homes in a year, he will need significant cashflow of up to €180,000 a year. Many builders in the area will not be able to sustain this and therefore will not take on this type of work.

In addition to the lack of engagement by the banks, the Government continues to contribute to the problems we face. We are paying a 5% levy on all concrete products used to reinstate my home. We are paying VAT on all purchased materials and labour, which adds thousands to my rebuild - thousands that we do not have, and we cannot borrow.

The new scheme should also bring some relief to the registered landlords of the country. However, with a 20-year charge clawback, what incentive is there for a landlord to fix a home? Do any members here today have a rental property as their pension fund, with a 20-year clawback? I doubt it.

I reduced the size of my home but I still cannot make the scheme finances work. Without funding, the entire scheme is not workable, and my project will be stalled, others will never get started and the bank's asset will never be reinstated as things stand. Having raised my case with the Ombudsman, the Central Bank and our current lender, with no solutions forthcoming, I ask each member here today where we should turn now.

Deputy Jim O'Callaghan

I thank all of the witnesses for coming before the committee this afternoon. Hearing the opening statements reminds us of the stress and trauma, to be honest about it, that the homeowners are going through as a result of the defective core block issue.

I will start by asking Mr. Sharkey a question. The finance committee has a use because we can bring banks and financial institutions before us. We also engage with the Central Bank. We will obviously do that with the issues the witnesses raise and follow them up. One of the points he mentions was mortgage terms and conditions. There are demand or enforcement events. As Ms Shovlin and Ms McDaid mentioned, it was never brought to their attention whether at the time of entering into the mortgage or when the scheme was set up that it would constitute an act of default if the house was demolished. Has any financial institution used that as a threat? Is the complaint that the bank's provision should be removed unilaterally and that it should not be regarded as a point of default?

Mr. Patrick Sharkey

What was of immediate concern was knowing that a relatively small handful of demolitions had proceeded, knowing that there were mortgages on the properties. It appears to me as being an absolute dereliction of duty and a lack of professionalism in regard to the lender not being aware that this clause exists. I also have concerns about a Government designed scheme that could allow a homeowner to go down this route without procuring the written consent of the lender. At the end of the day, it simply says on the terms and conditions that the debt is immediately payable where demolition happens. Aside from that, it was very clear that where there is damage contained within a property, regardless of whether that is the fault of the homeowner, it effectively diminishes or in fact removes any value as collateral. It is a demand event.

The bigger picture here is that in the context of the largest state-funded redress scheme globally, surely to God in relation to value for taxpayers' money – of course we are all taxpayers – at the centre of this scheme should be that any damage or any lingering damage is removed so that these homes are not alone restored for our own purposes in our lifetime, but that we are looking at homes that are the homes of our children. In the natural flow of life, in future people may decide they want to sell their homes. People should know that their homes can be mortgaged for a new family to come along and purchase them. To be honest, our group was absolutely gobsmacked. We were always aware that there was conditionality and responsibilities on homeowners to keep a property in good repair, but we have very serious concerns with the damage clause and where a scheme does not have the elimination of damage at its core.

Deputy Jim O'Callaghan

Is it fair to say that it would be the preference of the group if the financial institutions agreed to remove or amend that clause, with the agreement of the other contractors, who would be the homeowners, in order that it would not be viewed as an act of default if there was demolition for the purpose of the scheme?

Mr. Patrick Sharkey

What we are looking for really is that the demolition approval would be granted but also in line with an acknowledgement and acceptance by the banks that the proposed works would restore the property to mortgageable condition.

In Ms Shovlin's case and in Ms McDade's, approval was given for demolition, but there was no process in place to examine the proposals on works even though there were various options on the table. If the redress scheme and the Department of Housing, Local Government and Heritage's engineers recommend an outer leaf replacement, will that eliminate the damage clause in our mortgages? Where there is a damage clause, the bank has a legal interest in these buildings. Banks have to be part of the process and say that they accept the engineers' recommendations. The science and professionalism of engineers as opposed to cost cutting have to be at the heart of this. Short-term cost cutting or cost-management measurements may be a poor use of taxpayers' money where a home is not restored as a fully operational part of our economy and housing stock.

Deputy Jim O'Callaghan

Mr. McCabe comes from a financial services background as well. One would have thought that it was clearly in the interests of the financial institutions that are providing the mortgages to ensure that the properties are remedied to the best quality available, since they are the institutions' underlying security.

Mr. Seán McCabe

We were shocked that those conversations had not taken place with the Government. They should be taking place, and it is important that they do.

Deputy Jim O'Callaghan

The mortgage is between the homeowner and the financial institution. Should the Government play a role in intervening in that contractual relationship or do the financial institutions just need to recognise that the provisions need to be amended?

Mr. Seán McCabe

The Government and the financial institutions have a part to play, but the financial institutions definitely need to engage with the homeowners.

Deputy Jim O'Callaghan

From what the witnesses have told us, there has not been satisfactory engagement as far as they are concerned.

Mr. Seán McCabe

No. We met the main pillar banks and were shocked by the questions we received from them and their lack of knowledge of the scheme. That needs to be addressed.

Deputy Jim O'Callaghan

It is mentioned somewhere in the submissions, but have they assigned designated staff to the scheme? Are there sufficient staff?

Mr. Seán McCabe

To date, we are waiting for some reassurances in that regard. One of the lenders has told us verbally that it has set up a three- or four-person team to deal with certain questions around defective block homeowners as vulnerable clients, but we need that across the board among the institutions.

Deputy Jim O'Callaghan

Part of Ms McDade's annoyance with her financial institution is that, when she wrote to them and did not get much of a response, it subsequently replied that she may need to borrow more and that, if so, it would be happy to provide it. It was just looking at it as a commercial opportunity for itself.

Ms Donna McDade

Yes. There was also an offer of a mortgage break, which would have been an additional cost to me, and finance subject to normal lending criteria.

Deputy Jim O'Callaghan

Ms McDade's home has been demolished.

Ms Donna McDade

Correct.

Deputy Jim O'Callaghan

When did that happen?

Ms Donna McDade

In February.

Deputy Jim O'Callaghan

Ms McDade is paying the mortgage and rent.

Ms Donna McDade

I am paying for a mortgage, rent, storage costs and a loan with the credit union.

Deputy Jim O'Callaghan

Regarding the scheme's operation since last February, is it proceeding according to the timeline she had hoped?

Ms Donna McDade

Not really. We had the property demolished in February and I received my first payment from Donegal County Council at the end of May. We have borrowed €50,000 and I have borrowed an additional €16,000 from my parents. Six months into this project, we are €66,000 into this ourselves. I am fortunate to be in a position whereby I could get the money from the credit union and that my family members were in a position to lend me some money, but that is not sustainable at all.

Mr. Seán McCabe

Some may have to borrow at higher interest rates from their credit unions at-----

Ms Donna McDade

At 7.99%. I am paying an additional €15,000 to borrow that credit. The €50,000 is costing me €65,000.

Mr. Seán McCabe

That is essentially a personal loan interest rate. Lenders not being able to facilitate their existing customers in this regard is not right and needs to be addressed. The banks acknowledged that verbally when we spoke to them, but we need assurances and actions on this front.

Deputy Jim O'Callaghan

What action does Mr. McCabe want to see from them? Sometimes, it is easy for banks to say they hear people's concerns, but what does Mr. McCabe want them to do?

Mr. Seán McCabe

I want the banks' product development teams to come up with short-term interim facility loans at 0%. They need to engage with us and discuss timescales in terms of how long we need the loans for in order to start and finish the works. The banks have the infrastructure to do that – the teams, the backup and the knowledge. It is within their remit to set up these products. This issue needs to be addressed. As well as short-term interim finance, there needs to be an equity-type release for people over the cap's level. That would be important in allowing people to finish their properties.

The banks can work together with us. Obviously, though, we expect each bank to do this individually. I agree with the Deputy's point that it is easy to say we need this, but as to the question of how do it, this is how.

Deputy Jim O'Callaghan

That is helpful for us for when we engage with the banks.

Mr. Seán McCabe

We have spoken to them in that regard and they have acknowledged that they have the facility to do it.

Deputy Jim O'Callaghan

Ms Shovlin stated that she would like to see all financial institutions treat all defective block homeowners as vulnerable customers. Does she believe that she is being treated as a vulnerable customer by EBS at present?

Ms Sarah Shovlin

I have not seen evidence of that. It speaks about a vulnerable customer as someone who has gone through some sort of trauma, be it a marital breakdown or an illness. If losing your home is not a traumatic event, I do not know what is. There have to be extra checks and balances and additional care and attention have to be taken. The Deputy asked Mr. McCabe whether the banks had set up designated groups. In 2020, the BPFI published a framework to which all banks signed up, yet here I am three years later and I still do not know who the experts in terms of defective blocks are in my bank.

Deputy Jim O'Callaghan

Ms Shovlin is not getting the benefit of the framework that was put in place three years ago.

Ms Sarah Shovlin

I would go so far as to say that no bank has set up anything. They signed it and walked off without doing anything. I was emailing for more than eight months trying to follow up with EBS about what we were going to do and trying to get ahead of planning, yet no one there could tell me anything. There is still no special product available.

Deputy Jim O'Callaghan

Can Ms Shovlin engage with an EBS office in Donegal-----

Ms Sarah Shovlin

Yes.

Deputy Jim O'Callaghan

-----or is it done over the phone? Is there anyone in there who is in charge of this?

Ms Sarah Shovlin

There is a lady whom we have been speaking to for more than three years, but who is in charge of it?

Deputy Jim O'Callaghan

Ms Shovlin does not believe that defective block homeowners are being treated as the vulnerable group they are, considering the trauma they are going through as a result of the demolition of their homes.

Ms Sarah Shovlin

Correct. They are treating us as normal people looking for money. That is not what this is.

Ms Donna McDade

As late as this March, Permanent TSB responded to me saying that there were no unique options for defective block homeowners because its standard supports cover everyone.

Deputy Jim O'Callaghan

Permanent TSB is not distinguishing Ms McDade at all. It is just regarding her as a standard customer and she is not being treated as vulnerable.

Ms Donna McDade

That is why I did not go to the bank for a loan. Why would I give it further business?

Mr. Seán McCabe

From our conversations with the banks - I have engaged with three of them on a personal level - we have found that there is no reporting as regards defective block homeowners. There is no record taking, no statistics and no numbers. When someone phones a bank and speaks to the mortgage adviser, customer service or whatever the case may be, no record is being taken of that. The banks have no data on the situation relating to defective block homeowners.

When we met the Minister, he was particularly interested to hear that was the current situation. We also wanted to know if that was being reported in the Central Bank. For example, is there anything on record? Are there any data? Are any metrics going through from the institutions in regard to defective block homeownership? We do not believe that there are.

Mr. Patrick Sharkey

From my experience working in the sector, the repayment of the mortgage is not the only measure of compliance. There has to be a recognition that many thousands of mortgages are effectively being repaid. On the face of it, it may look as if there is no problem, but there is absolutely no collateral security in the background.

One of the comments that was made to me in relation to this issue was that the bank in question regarded the existence of this scheme as effectively preserving its collateral security value. Yet, where there are barriers to entry, as well as a need for interim funding and joined-up thinking between the homeowner and the lender, there actually is no scheme to preserve the value of the security. Therefore, suitable tailored products and finance have to be put in place in order to preserve their own collateral security. In my opinion, banks should have provisioning processes in place in the background, even though we are paying our mortgages, because effectively, the bank cannot take possession of our homes and apply for the grant remediation scheme. It has to be the homeowner. Therefore, their collateral is protected by us, the homeowner and, therefore, we are helping the bank.

Deputy Jim O'Callaghan

The homeowners are benefiting the banks then.

Mr. Patrick Sharkey

Yes, but they need to step up and help us.

Deputy Jim O'Callaghan

Maybe they recognise that but are not giving recognition to the homeowners that it is in their interests as well.

Mr. Patrick Sharkey

I think they do recognise it. I believe our group's engagement has been an educational process for them.

Deputy Jim O'Callaghan

Yes.

Mr. Patrick Sharkey

To be blunt, here we are in 2023, which is many years into the crisis, and as Mr. McCabe noted, there have been big shortcomings in the capturing of the data and the reporting of this.

Deputy Jim O'Callaghan

I thank the witnesses. My colleagues will have questions as well. I thank them for coming before the committee today.

Deputy Pearse Doherty

I thank our guests for coming before the committee this afternoon. I particularly thank them for sharing their own personal stories. They are all victims in relation to this scandal. We seem to be dealing with scandals nearly every day in this House.

The revised scheme has been published. I will start on that topic. I am sure all four witnesses have gone through what that means for themselves personally. I have looked at the guidelines. It continues to talk about how it is a 100% redress etc. Have the representatives looked at this themselves? What does it mean? In their own cases, does it mean that there is a shortfall in this scheme? Obviously, any shortfall will feed into the need for, not bridging finance, but actual finance. I ask them for their comments.. While I know this issue is hot off the blocks because it was published just yesterday, can they share any initial views on it?

Mr. Patrick Sharkey

I believe the publication of the guidelines has not fundamentally changed anything from our group's perspective. The first point is effectively the cash, or the working capital that we will need to kick-start works in advance of receiving the grant draw-downs. That is the first point. Second, there is the longer-term shortfall for larger properties, which still exists. The thing to remember, certainly with regard to stand-alone houses, is that the majority of us built our homes as effectively self-builds. As a self-build, we engaged with everything from the architect, the groundworks, the block work and the roofing. We engaged various contractors to deliver the project. When each of those tradespeople finishes their work, he or she will require payment. Let us contrast that with a situation where, for example, there is a turnkey contract, perhaps with a contractor who delivers a turnkey finish. In such scenarios, a contractor may have working capital facilities, as well as the scale and capacity to take on multiple houses. However, they are few and far between in the county. We believe that for the scheme to work, people need the interim zero-cost funding, which will effectively be guaranteed repayment through the ultimate drawdowns from the grant. Thereafter, perhaps with the larger unit types, there is a longer-term shortfall. We need banks to look at that sympathetically and realistically.

Deputy Pearse Doherty

There is probably an impression, because the Government keeps saying it, that there is a 100% redress here. Yet, there seems to be an impression that this issue has been sorted, probably because the topic has not been in the spotlight as much as it was two years ago or last year during the big demonstrations. Therefore, today we are dealing with the issues of the implementation of the scheme and the bridging finance. Mr. Sharkey spoke about the second part of that, which is that there will be a large proportion of homes that do not need bridging finance; they actually need finance. The grant will not cover the cost of remediation of their home. Do the representatives have personal experience of people in that scenario, whereby what has been announced will not remediate their home in full?

Mr. Patrick Sharkey

Absolutely. Ms McDade and Ms Shovlin are in the position where they have started their works and they are patching this together with the assistance of credit unions, family members etc. It is completely unrealistic. The fact is that as a group we are dealing with the reality of this scheme as it is presented, as well as how it interacts with our mortgages. Yet, this ultimately is not an end-to-end, fully-funded redress scheme. This does not cover 100%. We are trying to make do with the grant scheme and we are trying to make it work. There are examples of agricultural grant schemes in the farming sector, whereby they can ultimately draw down grants, but the banks will have the facilities in place to deliver the project. That is a similar scenario to us. We need the banks to provide tailored facilities, not alone for the interim funding, but also for the longer-term shortfalls. Ultimately, this is because the home or the security that is underpinning that mortgage is worthless until it is complete, and that is in nobody's interest.

Ms Donna McDade

I can give an example. We submitted our stage 2 application in May of last year. We had to have our costings worked out by our contractor in that submission. When piecing these together, which is quite a hard task in itself, we had to forecast inflation hikes within the overall budget. As we said, I am not a project manager. I am fortunate that there are construction people in my family who were able to help me with this. Yet, in May last year, our property was estimated to come in at €412,000 to rebuild. I have currently been renting for almost a year. I got the emergency €15,000. However, €15,000 in rent over 12 months does not last that long. Even with that, as well as the €5,000 for storage costs, that is bringing me up to €432,000. Therefore, even before we started the build, we were €12,000 short and prices are continuing to increase. The costs of VAT, supplies and products are continuing to increase. Almost one year ago, we expected to forecast these hikes in inflation.

Deputy Pearse Doherty

Is it the case for Ms McDade that even the revised scheme will leave her short by €12,000? Is that what she is saying?

Ms Donna McDade

As we start.

Deputy Pearse Doherty

As we start.

Ms Donna McDade

As we start, I am €12,000 short.

Deputy Pearse Doherty

Is it the case that Ms McDade is well into rebuilding her home?

Ms Donna McDade

Yes. I can outline some costs for the committee. When you think about the €420,000 cap, our engineer fees are coming in at just over €18,000. That has to come out of that €420,000. Rental and storage costs are €20,000 and that has to come out of the €420,000 cap.

The cost of demolition is not part of the rebuild and has to come out of the €420,000 cap. It cost us €53,000 to bring it up to sub-floor level, excluding VAT. That also has to come out of the rebuild cap. The VAT bill, which is 13.5% of the total cost of the build, is coming in at around €56,700. That has to come out of the €420,000. The total deduction for non-building work, before we even put a thermal block on the ground to start the rebuild, is €147,851.50. That has to be deducted from the €420,000.

Deputy Pearse Doherty

It is a massive amount and probably puts it into context, given that people ask why a house cannot be built for less than that. When the contractor signs over the house to the owners, are they moving into a house the way they left it? Is there anything further that has to be done? Do carpets have to be put down or does anything beyond that have to be done? Is that everything done? Are the curtains hung and the whole lot-----

Ms Donna McDade

Probably not.

Deputy Pearse Doherty

-----or are there additional costs beyond that?

Ms Donna McDade

We have put our kitchen and stairs into storage. We have designed the bedrooms slightly smaller so that we can reuse carpets. We lifted solid oak wooden floors, which are not designed to be lifted and put down again. My 79-year-old father and I routed every single piece of the wooden floor so we could reuse it. It is in storage. We have also kept our bathroom furniture and anything at all that we can potentially reuse. We are reusing materials when we should not have to. We have redesigned bedrooms so that we can refit wardrobes in them again. People should not have to do this. I am fortunate to come from a construction background and members of my family are able to do it for me. That is not going to be the case for the vast majority of homeowners. They are not going to have the support network that I have.

As it stands, because the enhanced scheme was only enacted late on Monday evening, we still do not even know what our overall budget is going to be. It is very difficult to forecast that. We initially borrowed only €30,000 from the credit union. Our house was demolished in mid-February and we did not get our first payment until the end of May, three and a half months later. You cannot not pay people for three and a half months and expect them to do this on the basis of goodwill. That is just not plausible. We borrowed €30,000 to get the rebuild started and within a matter of weeks, we had to get it topped up by another €20,000. We have borrowed €50,000. Finances were exhausted at that stage. I do not know if any of the members have built a home but I did not realise money would go so quickly. I borrowed another €12,000 from my parents and an additional €4,000 last week. Otherwise, we would have had to stop the contract. Stopping the contract and having workers down tools would cost, on average, €350 per day, including what we are paying in rent, storage, the loan and the interest accrued on that. It is in my interest to beg, borrow and steal from my family members. Otherwise, we will have to down tools and work will stop. We will not get contractors to come back on site if they have two days' work now and a few days' work in a couple of weeks' time. It is just not feasible. As I said, six months into our build, we have put €66,000 into the project.

Deputy Pearse Doherty

Obviously, Ms McDade is not fortunate because all of this has been foisted on her due to the light-touch or no-touch regulations in place. She is very much a victim in this. However, in trying to deal with this, has mentioned that she is quite fortunate to be in a position to be able to get a loan, which is a high-interest loan. We all support the credit unions but it is a high-interest loan compared with a mortgage loan, which could have half that rate of interest.

Ms Donna McDade

Exactly. It is fortunate that my husband and I are both working full time, we were able to secure the loan from the credit union and we are in a financial position to be able to afford to pay it back.

Deputy Pearse Doherty

Ms McDade is operating under the old scheme.

Ms Donna McDade

Yes.

Deputy Pearse Doherty

There will be changes as a result of the introduction of the revised scheme which will allow for stage payments. However, a 10% retention on each of the stage payments is going to be problematic again. Perhaps Ms Shovlin will address this issue. Anybody who is involved in this area knows many others in a similar position. It is important to put on the record that while we have four people affected here, we do not know how many others are in this position. The banks are dealing with what is going to be a tsunami of these cases. The witnesses are leading the field and the banks are trying to find their way but the problem is that the banks are going to have to deal with thousands of people. Ms Shovlin made the point that there needs to be a bespoke solution for those who have homes built with defective blocks. We all know owners of these homes who have gone through stage 1 of the process and full demolition is required but they may be of pension age. How are they going to get loans of €20,000 or €30,000 from the credit union? Ms McDade knows the cost of her rebuild will be €12,000 more than the €420,000 grant. For many others, the costs are going to be €40,000 and €50,000 higher than the grant. How does a pensioner get a loan for that when he or she is relying on the State pension?

Ms Sarah Shovlin

It costs €500 to get onto the scheme. To the members, €500 is probably nothing but to many people at home it is a lot of money. They are already going to the credit unions or somewhere else to get the €500. Under the new scheme, they then have to get a builder to produce a builder's report. Is that free? Probably not. Is a builder going to wait six months to get paid? Definitely not. Homeowners then have to apply for planning permission to have their houses demolished. That costs more money. They also have to get planning permission for the rebuild, even if it is the exact same house. That costs more money and an architect has to be paid. I could easily see a homeowner having a bill of €5,000 within three to six months of trying to work with the new scheme. How does anybody fund that if the banks are not an option?

We keep coming back to the point that, at the end of the day, these are people's homes but they are also the banks' assets. It is in the interest of the banks that this scheme works. We know it is not 100%. As Ms McDade said, grants are capped at €420,000. Engineers' fees and the cost of storage and accommodation must come out of that. The Government is very good at saying it is providing another grant for accommodation. That comes off the €420,000 so before participants start, they are down to having €380,000 to build a house. In my case, I have made my house smaller. I was right out of the starting blocks in 2020. In 2021, I dashed ahead, trying to get things done. I asked the architect to make the house smaller so that I might have a chance to get it finished. The new scheme does not allow for penalty-free downsizing. For members who do know what that means, if my house is 250 sq. m and I do not have as many kids as I thought I would, or whatever the case may be, and decide to rebuild a 230 sq. m house, the grant is payable on what I rebuild. The Government says the scheme is like for like. That is not like for like. Like for like is paying me the grant for the house that I worked hard to get and build. I will use that money to finish my house. I will not be here crying at the committee, with my bank or with everybody else because I cannot make this work. I do not know how many times we need to say it, but it is not working.

Deputy Pearse Doherty

The key point in that regard is that if you build a smaller house, you do not benefit financially. You just do not have to-----

Ms Donna McDade

Beg, borrow and steal.

Deputy Pearse Doherty

-----go to the credit union to pay the shortfall in the Government scheme.

I have met the banks, the Banking and Payments Federation Ireland, BPFI, and the Central Bank on this issue and I have argued strongly that there needs to be a bespoke scheme. I commend the focus group on the amazing work it has done on behalf of all the people who are going to follow the members of the group on this journey. Hopefully, it will be easier for them because of the group's work.

My impression is that the banks' view is that homeowners are paying their mortgages and they do not want to know about it. The banks just want people to keep on paying their mortgages and to tell them when the houses are rebuilt. The fact that the banks have to consent to the demolition is significant. I hope the committee will hear from the banks on this issue. By allowing the homeowners to demolish bank assets, as the houses would be seen in the banks' eyes, they have to be certain that the assets can be restored. That puts a duty on them to be able to ensure that homeowners have the bridging finance and other finance that might result from the shortfalls in the scheme. I do not know how many members of the group were at the meeting with the BPFI and the banks. It was great that meeting was facilitated.

Is the penny dropping with the banking sector that it also has a problem, that the normal rules of lending are not going to work here, as Ms Shovlin mentioned, and that it needs to provide a bespoke product for the thousands of people who have to demolish and rebuild their homes?

Mr. Patrick Sharkey

As an example, the decision of AIB Group to establish a four-person team to address AIB and EBS customers was a positive step. One of the issues of concern that came out of our meeting with the Banking and Payments Federation of Ireland was that we were bringing up the whole issue of unambiguously restoring the value of our homes in terms of completely removing the damage clause. A comment from one of the banks was that it is quite relaxed in regard to the value of the asset. That is all well and good for a single mortgage and a single home on a bank balance sheet but this is our life's work, these are the homes that we have worked hard for and where we are trying to bring up our families. For us, there is nothing more important than restoring our home to full value and to know that, post-remediation, if we want to remortgage our home to get an improved interest rate, we can do so.

We need this to be joined up and we need to have joined-up thinking. In my introduction, I referenced that through no fault of my own, my mortgage is with a vulture fund, so I will need to refinance and will need to get my situation restored. I need somebody somewhere to tell me that they regard this work as fully restoring my house as a mortgageable property. A mortgage is not simply to pay for a house and a person takes out one mortgage. Ultimately, in a functioning market, if another mortgage provider has a better interest rate, people should be able to remortgage and get a cheaper rate. That is denied to us. There could also be issues in regard to loan-to-value mortgages in terms of reduced or more beneficial interest rates that we may not get because our homes do not have that full value restored.

To answer the question, I think the penny is dropping but the need to fully address what it is in our terms and conditions is not as simple as a demolition sign-off. It is about restoring our homes to full mortgageable condition. That is where the independence of the engineer’s certification and placing the science at the centre of all of this have to be at the centre of each and every remediation.

Deputy Pearse Doherty

I have some final questions as I know that other colleagues want to come in. With regard to the lenders having a bespoke product, would it be fair to say that bridging finance will still be required under the new scheme? The retainer of 10% is going to cause huge problems in Donegal and elsewhere. The witnesses were 100% right to make the point that it is going to cause a serious problem if people cannot pay the contractors on time, or pay the individuals who are carrying out the work, if it is not a contract job. Would it be fair to say that the ask is that there should be bridging finance at 0% from the lender?

Mr. Patrick Sharkey

Absolutely.

Deputy Pearse Doherty

What about the residual amount or the shortfall? While it is a separate discussion, and my party is adamant that we need to have a proper scheme that covers 100%, we are dealing with what we have right now. In regard to those shortfalls of €10,000, €20,000 and €40,000, how do the banks deal with that? What is the proposal that the banks need to look at in that regard? For example, a pensioner who needs a house demolished may have a shortfall of €10,000 or €20,000 that they cannot afford, and although it may be a larger house, they are not allowed to do no-penalty downsizing, which makes no sense whatsoever.

Mr. Patrick Sharkey

We acknowledge that banks are commercial entities and they will point out that this is not their fault either. One of the things our group has spent a bit of time examining is that where there is a societal or social need, the Government has a track record, through the Strategic Banking Corporation of Ireland and other initiatives, of providing funding for people in need through fresh start mortgages and so on. Where homeowners, including pensioners, are facing a shortfall, we are pointing out that the Government has got involved in providing facilities and finance where there is a social or societal need. To answer the question of how we bridge the gap, or how banks and our financial group bridge the gap for older people, we do not know. Ultimately, it is a big problem.

Deputy Pearse Doherty

Some of those homes may no longer even be mortgaged so there is no relationship with the bank, yet they will still have to find bridging finance and residual funds.

On another question, have the banks any concerns that the foundations are not being dealt with, given the asset is being restored through the grant scheme but it is being built on foundations that are not being restored?

Mr. Patrick Sharkey

We believe they have serious concerns.

Deputy Pearse Doherty

Have they indicated any way forward in this regard? Are they still satisfied to work on this basis or have they indicated anything to the Redress Focus Group?

Mr. Patrick Sharkey

The guidelines came out on Monday evening. We are only a day down the track from that and we believe they are still examining this. We have had some feedback in regard to concerns about the foundations. At the end of the day, I believe our interests are aligned in regard to restoring the value, in particular in regard to the local management. We have had meetings with AIB Group and Bank of Ireland local management and they are very conscious of the need to restore to mortgageable condition what is ultimately about one quarter of the housing stock in our region. Their local business is reliant on transacting on these houses, so they are very attuned to this. We await a meeting with Permanent TSB locally on this matter.

Ms Sarah Shovlin

It is important to say that the banks will tell us they are very much reliant on the professionals, who are the engineers, and the engineers are saying it is not good enough to build on those foundations. Regulation I.S. EN 12620 states that if people do not repair their homes completely, there will be residual non-compliant material left within the home. What engineer is going to say that such a house is of standard construction? Is the insurance company going to insure it? These are all questions that we should not have to answer. These are questions that the people in government should have thought about as part of the scheme. The banks and insurance companies of Ireland need to work together to find solutions.

Deputy Pearse Doherty

I did not get the chance to mention EBS, which I think was in complete dereliction of its duty not to inform the witnesses and other customers that they were in default of their mortgage and, therefore, their mortgage could be called in. It is very clear in the terms and conditions that “if a building or structure of the mortgaged property is demolished or damaged so as to materially affect the value of the security created by the mortgage or these conditions, or the mortgagor surrenders his or her interest in the mortgaged property”, and so on. That is very serious and, in my view, there should be a role for the Central Bank in terms of consumer protection because it has not happened. The banks would be only too happy to get rid of that clause but the clause is there and it is between both parties. It pulls the banks into this because they cannot just pretend this is not happening and they have to ensure that their asset is restored to the proper value, and that it is actually restored. I would not get a mortgage today if the engineer was saying I could not build on the foundations of my house. There is no way a bank would give me a mortgage to build on those foundations. That is where the banks come into this.

On another issue, I note the Redress Focus Group had a meeting with the Minister for Finance and he has made very positive comments in response to me on the floor of the Dáil.

Mr. Sharkey's loan was sold to a vulture fund. Many others have been sold, although perhaps not to vulture funds. For example, some have been sold by Ulster Bank to main street lenders. I have asked the committee to put a question to all of the banks, as I believe something is happening, or has at least happened, in a selective way. I am referring to an examination of the asset values of properties or collateral that were held by certain banks before they were sold on to others and how the people who hold the homeowners' loans today received write-downs because they were affected by mica. It is important that this situation be clarified. Permanent TSB or a vulture fund may have bought an Ulster Bank loan portfolio and received a write-down because some of the properties may have had mica, given the concentration of Ulster Bank loans in Donegal. Have the witnesses had discussions with the banks about whether they sold or bought loan portfolios that had reduced values as a result of potential defective blocks?

Mr. Patrick Sharkey

I will provide an example of a couple in their late 50s or early 60s who were with National Irish Bank and whose mortgage transferred fully to a vulture fund. They were impacted. These transactions date back a fair number of years. Hand on heart, when my mortgage was transferred in 2019, I probably knew that I had defective blocks but I did not want to acknowledge it. I suppose what I am saying is that some of these mortgages may have been transferred with an acknowledgement of their reduced value and others may not have been but there is no clarity on any of it.

Deputy Pearse Doherty

I thank the witnesses.

Deputy Rose Conway-Walsh

I thank the witnesses for attending. This is an important meeting. I come from County Mayo where many people are in a similar situation. It is clear that the scheme cannot work without the co-operation of the banks and their recognition that this is an abnormal situation. Trying to fit it into a normal bracket will never work.

I am concerned. I have just come from Taoiseach's Questions and one of the questions I put to him was on whether this was a 100% redress scheme. He is still saying it is. I thank Ms McDade for the breakdown and the good example she provided. I will give the witnesses an example from Mayo. The cost of someone's demolition and rebuild is €296,000 under the new scheme, or €2,045 per sq. m. The person's house is 94.54 sq. m, and €2,045 by 94.54 is €193,334. That person is still €103,000 short. The individual bought the house from Mayo County Council with a council loan but the council is refusing.

The witnesses are trapped with the financial institutions with which they are working. As has been mentioned, they cannot swap over to get a favourable rate or so on. They are wholly dependent on the Government not just to liaise with the banks, but to get a result for them with the banks and the BPFI. When I asked the Taoiseach about the engagement with the BPFI, he stated that it was continuing. In the witnesses' experience, has there been any formal movement at all since they went to the banks on day one?

Ms Donna McDade

None whatsoever. March 2023 was the last straw for me. I asked what the point was of contacting Permanent TSB anymore. I effectively got the same response from it then as when I first contacted it, namely, that I fell under the remit of forbearance even though I was not struggling with my mortgage payments. I have always said that I wanted help from the bank and I outlined a number of scenarios. It never even offered to negotiate. It was always "subject to the normal lending criteria" and a "mortgage break", which would have been a cost to me. The bank was even so "nice" as to work it all out over the remaining term of my mortgage so that it would "only merely" cost me an additional €15 per month. The bank has never come forward with anything. It has never even negotiated. It has always just been "mortgage break" and "lending subject to normal criteria".

Deputy Rose Conway-Walsh

In the witnesses' opinions, are the banks making extra money off the backs of the people impacted by pyrite and mica?

Ms Donna McDade

Yes.

Ms Sarah Shovlin

They would like to, but I do not know if people are able to engage with and borrow from them.

Since joining the focus group and having tried to meet the banks, the BPFI and the Central Bank, we have written several letters. The first letter that came back from most establishments claimed the issue had nothing to do with them and we needed to go to the Department of Housing, Local Government and Heritage. Only through our repeated engagement with those entities did they meet us at the table. I do not know if I speak for everyone in our group but I feel that there is a certain amount of hope from having had those meetings. Maybe it is just because I am naïve as someone who does not do this every day. I would like to see the four banks that we met stepping up, hurrying up – we cannot wait any longer – and showing us what products they will create. At that point, we may be able to answer the Deputy's question in a more positive manner.

Mr. Seán McCabe

Deputy Doherty touched on the question of the Central Bank as well. We have written to the Central Bank, which has agreed to a meeting in a supervisory capacity, but we feel that it needs to do more and lead the way.

Ms Donna McDade

It always just refers us back to our own banks and says that the individual banks have specific supports in place for defective blocks owners when they do not and when they have not done anything for two years.

Mr. Patrick Sharkey

We received an emailed commitment from the Central Bank to meet us in its consumer protection capacity. That was a fair number of weeks ago, though. We have been following up and asking. We are homeowners who have worthless homes. Many of them are literally falling down. We cannot think of many more issues that could be more serious in terms of the Central Bank's consumer protection mandate. Couple that with how, factually speaking, there are thousands of mortgages that are repayable on demand in this country, and the Central Bank not only has a role in customer protection, but also in the financial reporting by banks. That thousands of mortgages are effectively unsecured is a major issue. I cannot understand why we are here up to two months later and the meeting with our group has not yet taken place.

Mr. Seán McCabe

Further to that, there are three major banks in this country. It is not a multilayered banking system as in other countries. We acknowledge that there are other institutions that are equally important and we need to engage with, but surely in this day and age, the three major banks can get around the table and engage with us. We are volunteers and are happy to engage.

Deputy Rose Conway-Walsh

I wish to ask about the valuation of the houses. When a bank comes out to value a house that people have applied to demolish, it might value it at €300,000 even though it is worth nothing but if the people want to use their own valuer to value it, the bank will say that they must pay to have that done. Could the witnesses speak to the conflict between €0 and €300,000 and why they believe the banks are doing this? On the one hand, a bank is saying that a home is worthless and, on the other, it is saying that the home is worth €300,000.

Ms Sarah Shovlin

No one from the bank came out to valuate our property before we demolished it. I believe Ms McDade mentioned she had had a meeting.

Ms Donna McDade

It was when I first engaged.

When we first got the report from our engineer back in July 2021 that our house was recommended for demolition, I sought an appointment with Permanent TSB at a local level, in its Letterkenny branch. At that branch, they had placed a market value of €320,000 on our property, but also within that meeting it became valueless because we had the engineer's report deeming that the property had to be demolished. Ever since then, I have been dealing with a senior manager in Cork and nobody has ever visited. Nobody has ever come to look. I have sent him on pictures and photographic evidence, and you are just met with, "Oh yes, we are really sorry about this, but there is a Government scheme in place, go and engage with that." That has been the response.

Deputy Bernard Durkan took the Chair.

Mr. Seán McCabe

Currently, as the property stands, the only value is site value. The property is worth zero. It is not mortgageable, so in reality, you are looking at site value. That is where we are with this.

Mr. Patrick Sharkey

It is only the homeowner who is eligible for the grant scheme, not a bank in a repossession. The presence of the scheme in itself does not preserve their security. It is the homeowner who preserves the security, so they really need to work with us to make the scheme work.

Deputy Rose Conway-Walsh

Exactly. I want to cover another couple of things about the independent engineers that I have raised with the Taoiseach as well, and I know we have discussed this a bit, to ensure nobody is coerced into partial remediation. I put that question to him, but again, he did not answer that. That would be one of the concerns for the Mayo homeowners as well, in that we are very clear that all of the homes in Mayo need complete demolition. Will the witnesses please speak to how we are going to ensure that does not happen?

Mr. Seán McCabe

There needs to be a very clear appeals process, and we need to have assurances from the Department of Housing, Local Government and Heritage that the engineers are fully impartial. It would be very interesting to hear the inner workings of that. The general consensus throughout the county to date and at the minute is that the majority of engineers do not want to stand over anything that was only partially remediated. In fact, that has been my own personal and family experience. I would be very interested to hear how this is going to come about, the inner workings of it, because there is a general concern that people will be coerced into taking a partial remediation. There need to be clear guidelines in place.

I know from reading the regulations, and we have only had a day or so to digest quite a meaty document, that there is an appeals process in place, but they need to be very clear on that and to give the public reassurances around that.

Deputy Rose Conway-Walsh

I am concerned as well that, where people in very restricted financial situations are desperate to get their homes in some kind of liveable position, that is where the coercion will take place. People who are fortunate enough to be able to afford it may be able to do the full amount, but if there is a link with somebody's financial circumstances, some people may be either blocked out of the scheme altogether or may go for a partial scheme. Are we going to have different tiers with regard to how people are treated within the scheme?

Mr. Patrick Sharkey

Absolutely. What our group is trying to emphasise here today is that, certainly where a mortgage exists on a property, there is a default damage clause caused by the presence of defective material. What we see here, in those scenarios outlined by the Deputy, is that the homeowner is effectively continuing with this default position because the damaged materials still exist in the property. This is a scheme of €2.2 billion-plus, and at an absolute minimum what we should be expecting here in terms of value for money is that, effectively, our homes are restored to full, unambiguous, mortgageable condition and value. When a bank lends money, it has very many controls in place with regard to making sure its security is protected. Effectively, the money is already loaned here, but we need - we are almost acting for our banks here - and we are demanding and fully expect our homes to be fully put back in mortgageable condition again.

Deputy Rose Conway-Walsh

Okay. I have to ask the witnesses, if they do not mind - it is not directly bank-related - but have any of them applied for the Sustainable Energy Authority of Ireland, SEAI scheme?

Ms Donna McDade

We are in the process of doing that as well. We were advised to do it through the one-stop shop. There are outlays that you have to accrue before you get anything back. I had to pay €500 to try to get a building energy rating, BER on a property that no longer exists, which is quite a complicated process, and then pay €2,200 just to get onto that one-stop shop. That is the guts of €3,000 for which I am out of pocket on top of everything else that we are out of pocket for. Add that on to my €66,000 and I am already out. I am just shy of €70,000 into this so far.

Deputy Rose Conway-Walsh

Is Ms McDade coming up against a problem with the meter point reference number, MPRN? There are a lot of people excluded because-----

Ms Donna McDade

Initially, we had to move out of our property last August because it was structurally unsafe. We were initially told that we would not be eligible for any of the grants, so it was not on my radar. My house was demolished in February, and then it was announced we could apply for the SEAI energy grants. It was through the one-stop shop consultant who advised us and then through a BER technician that we were able to get a recommendation on what the probable BER rating would have been on our property at that time. We were certified as C, and that was based on when the property was built, which was 2006, the heating system, windows and so on.

Deputy Rose Conway-Walsh

I am asking Ms McDade this because there is a particular problem where people have availed of the SEAI grant before, maybe years ago and during the scheme's original days, and that is attached to the MPRN. Now they are being refused for the scheme this time around because they have already availed of it. They are treating that as normal as well. Even though there is a promise of a specialised grant through SEAI, homeowners in Mayo are finding they are being turned away because it works out, after all, that it is not specialised. It is business as usual. Have any of the witnesses come across that?

Ms Sarah Shovlin

We are in a similar situation. We had applied for an air-to-water grant several years ago, which we installed. It was not great, considering there were holes in the wall and the heat was going out of the house, but anyway. We are able to apply for some SEAI grants, but not anything that we had before. We are looking at some different options for making the house energy efficient, but we cannot apply for the same grant twice is what we are being told. It is also an issue.

We have the machine. We are not looking to buy a second machine. We have all the other paraphernalia that goes with it. The underfloor heating and all of that is no longer usable, so we are definitely being penalised from that perspective as well.

Deputy Rose Conway-Walsh

That is exactly the situation I am talking about, where people are being refused on that basis where it is like for like. While some of the piping infrastructure may be reutilised, they are locked out of applying again, and that really has to be rectified. It is something my colleague Deputy Eoin Ó Broin is following up on as well to get that anomaly cleared.

I have taken up quite a lot of time. I thank the witnesses for the valuable information they have submitted to the committee today in trying to deal with this once and for all. They have been very clear in their submissions on what has not been done and what needs to be done. It is a desperate situation where we are this many years down the line and we still find financial institutions are still treating them this way.

Ms Sarah Shovlin

I really hope this is not a fact-finding mission for the members and that everyone here today is taking actions. We have asked a lot of questions collectively, and if members do not know what those questions and actions are, come back to us. However, we are expecting actions from this meeting.

Deputy Rose Conway-Walsh

It is certainly not fact finding, and I can tell Ms Shovlin that as someone who has been dealing with the issue of pyrite in Mayo for about 12 years.

Ms Sarah Shovlin

I thank the Deputy.

Deputy Rose Conway-Walsh

It has been a long and arduous journey, as it has been for the witnesses.

An Leas-Chathaoirleach

I thank the Deputy. Unfortunately, the Cathaoirleach has another engagement, so he had to go away and, unfortunately, you are left with the Leas-Chathaoirleach for the duration of the rest of the meeting. We have three speakers, including yours truly, and we are scheduled for a short break of two or three minutes, if that is enough.

We will suspend the meeting for three minutes. Is that agreed? Agreed.

Sitting suspended at 3.10 p.m. and resumed at 3.16 p.m.

Deputy Damien English

I will not take up the committee's time for too long. Going back to Ms Shovlin's point, this is certainly beyond a fact-finding mission, but it has been a very worthwhile engagement. I hope, as a committee, we can make it worth the homeowners' while. The contributions from the witnesses have been very informative. The knowledge they have brought has been of immense value to us. I was probably much closer to this issue a number of years ago when I was in the Department with responsibility for housing at the early stages of the mica issue. Today has been very useful for me to get a much clearer update on it and on what has to be done.

I have a few comments. Mr. Sharkey stressed the need to follow the science. He is correct. We have to follow the science right to the end of this. The early work at the start of the process, which took far too long, was all about putting in place firm science and foundations to be able to get the scheme to a value of €2 billion or €3 billion to ensure that, even though it is not perfect, we will have a scheme we can always work with, adjust and change as the need is identified. Clearly, the witnesses have identified some changes or additions are needed. From the start, it was about following the science and getting the detail right. As painstaking as that was, it should prove worthwhile. That has to be followed so that, as the witnesses have said, homeowners are left with houses that are restored to their full value that they can remortgage or on which their children can draw down a mortgage in years to come. That is what it is meant to be about. It is about protecting and replacing family homes. It has gone beyond that and now takes in other properties as well. Our remit as a committee is to work with the group on that and to see it out.

I have a few comments and questions. I am disappointed the banks have not been more proactive on this. From an early stage, when we dealt with previous mica committees, and I know the witnesses are members of a subcommittee, we always had discussions that this scheme was also going to restore bank assets, technically. The witnesses referred to security. Effectively, until the mortgages are paid, these houses are assets of the banks. They have just as big an interest as the homeowners to get this scheme working and working well. They should be very proactive. The group's ask is very fair from what I can see from today's presentation. I will certainly go through it in more detail. I have not had the chance to go through all the detail and guidelines of the new scheme, but it is fair of the group to ask for 0% finance as opposed to the banks writing bigger cheques. The group is looking for a scheme that is workable and fair to everybody. As a committee, we can work with the witnesses on that. In feedback from the banks to the group, I have not heard the Central Bank being used as the reason they cannot help more. My own sense of it is we need to engage more with the Central Bank - I know the group is looking for a meeting with it - around allowing the banks to implement some of the solutions that have been suggested. It should be possible, but I think the Central Bank has a role in that.

The banks have a role in looking for that leniency with the rules. My question is mainly directed to Mr. McCabe. Have the banks blamed the rules, regulations or the Central Bank for their tardiness to come forward with solutions? At some stage, we need them all in the one room in order to try to get this rectified.

Ms McDade spoke about having to pay the extra credit union interest to try to carry this. I seek more explanation regarding the delay. When the decision was made to demolish her house, I would have assumed that at that stage clear arrangements would have been put in place to help her cover the cost of the building. That does not seem to be what is happening here at all. I ask her to comment on that.

There is a sense that the majority of work here will involve self-build. I understand the majority of work previously was self-build. I would have thought that a number of small builders would have been prepared to step in and carry out some of this work. Is there a finance issue blocking that happening? Are builders also being knocked back by the banks when they look for this to be bankrolled in order to be able to take on these houses as projects, complete the building work and then draw down finance at the end? In other State schemes, builders have stepped in successfully and have been in a position to carry the cost for a while. That does not seem to be happening here which is another market failure. That would point to an opportunity to us to work in conjunction with the banks, the Central Bank and Government to be able to address this if there is a market failure identified as well.

There is no point in rehearsing this. The witnesses have been through serious trauma for far too long. Deputy Conway-Walsh said that we have been on this road for far too long. The witnesses have had to live with this for far too long. We need to bring it to an end. This week's scheme should be seen as an enhancement and it is meant to be. In that respect, I understand from the Taoiseach's comments in the Dáil today that if there are enhancements and if Ms McDade would have been better off on this scheme, there is an opportunity for her to avail of that. That is my understanding, but I want to check it as well. Likewise, I understand that there is meant to be an allowance of an increase of up to 12% or 13% to deal with inflated costs since this was last costed last year. I stand to be corrected on that and I will also pursue that. That is also in there.

I will make a number of broader comments and ask a couple of questions. Ms Shovlin asked the a specific question. A number of weeks ago, Deputy Doherty requested that the witnesses appear before the committee. The Minister for Finance, Deputy Michael McGrath, has also dealt with this matter on the floor of the House. It is done with a desire to try to help find solutions and that is something we will help to take on.

Deputy Joe McHugh

I welcome members of the sub-committee of the Redress Focus Group. As I am not a member of this committee, I thank the Vice Chairman for allowing me to speak. I spoke briefly to the Chairman, Deputy McGuinness. I am delighted to hear that this committee is taking the subject area seriously. This issue has been in the public realm for over two decades but it has struggled to find a mechanism for it to be taken seriously. This committee is a mechanism. It is an authoritative voice in terms of representation nationally. I was listening to Deputy Jim O'Callaghan online on the way up. He suggested calling banking representatives before the committee. I echo that request. I am sure the members will not be against that idea. I think that would be important. While doing that, I acknowledge that representatives from the Banking & Payments Federation have met the group twice.

I tabled a parliamentary question asking for this to happen. The response stated that the Minister, Deputy Michael McGrath, and the Minister of State, Deputy Carroll MacNeill, would meet the sub-committee. I have been made aware that the Minister of State, Deputy Carroll MacNeill, was not part of that meeting, but I will speak to her and ask her to meet them as well. The members of redress focus group are very focused and constructive in the way they are going about their business. They have specific requests. They are not interested in getting public platitudes at a committee like this as is clear from the engagement today. As Ms Shovlin said, they are interested in action. That is the first thing that can happen.

Either Mr. McCabe or Mr. Sharkey mentioned that the Central Bank still had not met their group. The Central Bank is integral to this debacle for a grant subvention, the biggest in the history of the State. Mr. Sharkey suggested earlier that this was probably the biggest state subvention in the world. However, people in various situations are getting caught at entry. It is so complex and every single individual has a different set of circumstances, be it demographics, financial or situational in terms of where they are in their life cycle. This is so complex that the Central Bank should take this seriously.

It is a lot of Exchequer funding, but there is no point in having bucket loads of Exchequer funding if people are going to be precluded at the point of entry. That is the issue. My concern with the new scheme is the same as I had with the old scheme. People are in financial predicaments. I am thinking of one particular family where a mother is living in her house on her own. Her daughter is living beside her on her own. Both of their houses have mica and both need demolition. Ms McDade or Ms Shovlin spoke about the credit union. There is 7% or 8% finance in some banks and then there is finance in the credit union as well. It is impossible for many people to get access to the scheme.

I proposed the penalty-free downsizing as a possible fix for that particular issue. I know it was not met with unanimous support and some people had difficulty with it for various reasons. I would not have needed to have called for that penalty-free downsizing if there was proper access at the point of entry. I come back to the main call today by the committee for packages which are needed and which the banks need to promote. When I met the group, I referred to the Department of Agriculture, Food and Marine scheme for slotted houses which provided for zero-interest bridging loans. This is not about re-inventing the wheel. It is about bringing people together to work constructively on a cross-departmental basis.

I hope Ms Shovlin does not mind me quoting her. When I spoke to her briefly, she talked about institutionalised bureaucracy. That is all it is. We, as a governance structure are failing people in terms of our institutional bureaucracy where Departments are still working in silos. The responsibility for this issue should not just lie on the Department of Housing, Local Government and Heritage. That is one Department, but this spreads across many different Departments. It goes into the Department of Health in terms of the trauma which is compounded on a daily basis and which is intergenerational. It is a wider issue.

What happens here today can be a step towards trying to make this issue a serious issue and not just an issue where people can make sidebar comments like, "Well, sure it's only them up in Donegal in their big houses." Irrespective of the size of the house, every bad brick that went into those houses was the fault of somebody it was not the fault of the homeowners. I acknowledge that the new scheme is working to make it better. The jury is still out on whether it will work or not. My fear relates to bureaucracy with the processes involved.

The Redress Focus Group is also looking at the insurance companies. They either need to meet with the group itself or appear before this committee. If there are to be any formal hearings in that regard, this representative group, which has worked so constructively in a short period, should be central to any of those deliberations.

As Deputy English pointed out, this has gone on for too long. Even the words we use at this stage will fall on deaf ears. The words have been plentiful and the words have been strong. There has been plenty of compassion towards the issue. It is down to the business of trying to figure this out now. The group has made progress in a short period of time, in a matter of months.

In order to do justice to this we need to take this group very seriously. We need to ensure that there are meetings over time to ensure that those actions are carried out rather than the group coming here and being told its doing a good job by the likes of me. That is not good enough and I know that it is not what the group is about. It is up to us to do justice.

I am delighted to get an opportunity to speak here today, but I am equally delighted that this committee could be a mechanism for trying to co-ordinate and bring so many aspects of this very complex scheme together. Ultimately, we must consider the pensioner who has no intention of going to a bank to ask for a loan because they know they will not get a loan of €60,000 to €65,000, even under the new scheme, which becomes effectively an 80:20 scheme and has from €300,000 to €320,000. We must also consider the person who does not have that finance and the construction sector. If I am a small builder, why would I decide to do a house where there is going to be a bridging finance issue, a deficit? Suppliers do not give credit and are not in a position to give credit even from selling paint or timber because they have to keep the business moving as well. That is also going to be an issue. There are complex knock-on effects. In order to put confidence into the system, this group is asking today for some different packages from banks, 0% finance, for example. While saying that, I still have an issue with it because why should people have to pay €60,000 or 65,000 to bridge bridge a gap when they are already paying an outstanding mortgage and already dealing with a house that has dropped in value? There are so many other issues. For example, there is just one second home being included in the scheme. It is not good enough where there might be a full estate of 20 or 30 rental properties where people cannot apply to the scheme. There are still many outstanding issues, but I think the only way we can try to move this forward is by keeping communication channels open with the central governance authorities.

Deputy Damien English

I take issue with the perception that engineers will, because of the State scheme, coerce people to accept sub-standard solutions. I would not agree with that. We should not be spreading fear among people that they will be forced to accept sub-standard solutions. Going back to the standards and knowing the people involved in reaching those standards, including people from Donegal who have experienced sub-standard homes themselves, we have to acknowledge that the system is there to protect the homeowner and to make sure the house is repaired. I cannot agree with the comment that someone will be coerced to accept a solution that might not be the best for their home. It would be wrong to give that impression. I would not stand over the fear that would cause. If I ever thought that was going to happen, I would be the first person in Donegal to prevent that. I know the work that has been done through the NSAI to get the standards right in the first place. I think the majority of engineers would feel under extreme pressure to find the right solution and will go to great lengths to do so. When we have a list of qualified engineers, I assume that is the work they will do.

I have a suggestion regarding the banks. We need a mica hub, for want of a better expression, where the main banks come together with the Central Bank and everybody else to find an easy way, a one-stop solution. If something similar is being looked at in relation to a lot of those loans that are now with investment funds, that need a solution to be able to re-finance or bring them back out of fund ownership, likewise a simple, straightforward mica hub is needed where all those decision makers are put together to be able to make quick decisions to move things forward on behalf of homeowners.

Deputy Rose Conway-Walsh

It is important to say that it is not the engineers themselves but the limitations they have to work to that is of concern to us. We are also concerned about the damage threshold in terms of how long people have to wait. People know that remedial action has to be taken on their house at some point but they are being told to wait until it gets bad enough. We need to make this scheme as fair as possible and I know Deputy English will agree with this. I know he worked on the original scheme many years ago. At that time we pointed out many of the things that we are discussing today that needed to be changed about the scheme, including the 100%, but those suggestions were not taken on board.

I would not in any way like the message to go out from this committee that it is the engineers' fault but it is the set-up of it. We do not want a situation where people are going to feel that they have to take a lesser option. We have a responsibility to make sure safeguards are in place from the beginning. This will allow people to replace their house so that they can securely go into the future in terms of the value of their home. It will allow them to sell their home if they need to, or get get insurance on it. I have concerns that because people are in different financial situations they would be restricted from getting the optimum benefit. This scheme is intended to replace their homes, to rebuild their homes, and anything less would not be acceptable. That is why the 100% is so important.

Ms Sarah Shovlin

I agree with Deputy English on his point about the engineers. I do not believe that they would coerce people either. However, I will say that many applications that had recommendations by their engineers have now gone to the Housing Agency. Page 33 of the new scheme that was launched in the last day or two refers to the application stage and the remedial option grant assessment stage. It states that one of the points that is going to drive the assessment and what option is included is the "resources, including financial resources, available or likely to be available to the Housing Agency". This is the point that we are concerned with.

Mr. Patrick Sharkey

To add to that, previously people selected from a list of independent engineers. Now the engineers are appointed by the Department of Housing, Local Government and Heritage. That is my understanding of it and there are concerns about this. I agree with Ms Shovlin. We are not suggesting in any way that they will not be impartial but we need assurances on this and I think that is a reasonable request

Deputy Damien English

It is a fair point but I think we are spreading a little bit of fear in this regard. I think qualified engineers, no matter who is paying them, are going to do their job right on this. I think we have to be fair to them. I need to read the new guidelines to be absolutely sure, but it would be unfair to spread fear. I take the point regarding the guidance on funding. We have to acknowledge that there are complications and difficulties in the schemes that are maddening to people. We have to work through those. There is now substantial funding set aside to see this out and more available if needs be. The issue referring to funding just means that the country has the money on a day-to-day basis now, unlike what might have happened back in 2010 or 2011. The money is available for the scheme and if more money is needed, the Housing Agency will recommend a certain amount of money to be set aside. As happened with the pyrite issue, the Housing Agency had to recommend money to be set aside and that was always matched. That reference is to do with the general state of public finances, as opposed to there being sufficient money for the scheme.

I am not as close to this issue as I was a number of years ago. At that time, people were forced to take sub-standard solutions because the State did not have the money. That is not the case now. I think the Government has stepped up on that one. Of course we can argue about the different parts of the scheme, but not the pot of money available.

Mr. Patrick Sharkey

I want to address what Deputy English said about confidence regarding contractors and their working capital. There is a capacity issue in the construction industry in all parts of Ireland.

We have to remember that in north County Donegal there is an added capacity issue because of this crisis we are facing. Not only do we need to have the confidence of the existing stock of contractors, we also effectively need to grow the construction industry in our region. When banks are looking at the defective security on their balance sheets they need to be mindful of the need for confidence in relation to the flow of funding. This is not just to get the engagement from the existing number of contractors in our area but to also grow the capacity and to grow the number of builders and contractors in our area. Maybe this is something that the committee take away today in terms of how we can support the construction industry to have confidence in this and to see this as an opportunity for their businesses.

An Leas-Chathaoirleach

I thank the representatives very much for coming before the committee and for giving their information. I dealt with something similar to this nigh on 40 years ago, when it was possible, without demolishment, to take the roofs off houses, as well as the walls, if necessary, and go right down to the base. We could have it fully reconstructed as it was, without any cost to the homeowner at all. That was because of the house builders' guarantee scheme. Everybody said it could not and would not be done, it would not work, and it would break down mid-way, but it did not. Whole schemes were dealt with in that fashion because there was a guarantee. I heard all the arguments that many of the houses were not guaranteed, etc. In fact, they were all guaranteed. When the lending agencies lend, by virtue of their lending, there is a presumption of guarantee. That is still in place. The only collateral the homeowner has available to them is the house, whether that is in an unfinished condition, half-finished, not finished at all or dangerous to inhabit. That is their collateral. It was not the homeowners who caused the problem. Some say corners were cut, but not me. My house was built in this fashion. I built my house in this fashion. I had the engineers, the architect and all the people responsible. Their activities were underwritten and guaranteed by the insurance companies. This was for everything, right from the laying of the first block and the sub-floors. This was for everything. We did not have a problem, fortunately. Thanks be to God, we did not have a problem. There was pyrite in the general area, which was dealt with. The issue had sprung up quietly and was suddenly in the ether before people knew about it. At that time, the insurance companies decided they were going to override 36% of the total cost. No such provision was needed at all. It was their responsibility to ensure that the product that they insured was ready, available and of value to the extent that it was insured for.

I know of the debate about the engineers etc., but to be fair, all the professionals were covered by insurance. Everybody was covered. I mention the overseeing of them and the responsibilities in dealing with them.

I will not go into the whole lot of them at this stage but, suffice to say, in a situation such as that the witnesses find themselves in, the biggest flaw I see is that they are depending on so many entities to deliver on their goods. We must remember they have nothing to go on except the collateral of their home, which may be good, may be bad or may be worth nothing in its present state. We need to look at the issue carefully in this committee. I agree we need to look at it carefully. We need to find out what role the banks, insurance companies and all the professional agencies played in divesting themselves of their responsibility. This would cost them nothing. There would be no reflection on them at all. They have insurance coverage. Some people said they would not stand over it and would not accept it. When you join the army, unfortunately, you have to play the game.

I hope this committee can in some way help to co-ordinate the kind of situation the witnesses have been talking about because it should not fall on them as individuals to try to work out a resolution to an issue that they have no function in at all. It was not a matter of their creation. I say that as someone who has dealt with countless cases of a similar nature. I have had to get involved and get down and dirty with the various responsible agencies during the course of construction. It is not as easy to do it way afterwards, but it can be done.

All I can say is that the Cathaoirleach would be well disposed towards it. Certainly, insofar as I can, I will take up the points that have been raised by the members and ascertain to what extent we can make a meaningful contribution in a practical and co-ordinated way to alleviate the difficulties the witnesses have outlined. This is because if we have to wait for the outcome of discussion and debate with each and every institution, by the time it comes back to the witnesses and this committee, we will not know where to go either. We want to avoid that and bring the issue to a conclusion.

Deputy Rose Conway-Walsh

I want to make the point that this is a very time-sensitive issue.

An Leas-Chathaoirleach

I know.

Deputy Rose Conway-Walsh

There are people within the system who have made applications, etc., and I do not want to open the discussion again. There are other issues that allow time, but this is really time-sensitive because the applications are already there. There is the issue of planning permission and the fact houses have already been demolished and so on.

An Leas-Chathaoirleach

I am aware of that. It is in that context that I am speaking about what the committee might be able to do. Otherwise, the witnesses would not be here. They are rightly here to have their grievances heard. If we cannot do something about it in the time that is available, then that is our failure. I think we all accept that. Does anybody else want to round off the discussion? I call Deputy McHugh.

Deputy Joe McHugh

I picked up on something one of the committee members said during the break. A big meeting is ongoing in the committee room next door. To set the context, it includes the Ministers for Finance and Public Expenditure, National Development Plan Delivery and Reform. The issue has dominated the Cabinet meetings over the last three weeks. The Comptroller and Auditor General has been pulled in. Grant Thornton is getting thousands of euro. The whole governance apparatus is now focused on one thing, which is the one thing that went wrong in the beginning. However, loads of things went wrong. I am not saying that it should not be looked at, but the only time governance works in this country is when something goes wrong. The sad reality is that something has gone wrong in Donegal, but how much wrong do we have to wait for? Do we have to wait until a house falls down? Do we have to wait until somebody is injured, maimed or killed? There will be a focus in this committee, just like in the committee next door, when something goes drastically wrong. That point goes back to the point Ms McDade made about institutional bureaucracy or institutional paralysis. We need to be working proactively before one of these houses falls down. While the scheme is out there, that does not mean the job has been finished. The message has to remain on the Government's agenda that while we have a scheme, the issue is not sorted. Somebody will be here in ten or 20 years' time discussing the same issue. It will not just be in Donegal, Mayo, Clare or Limerick; it will be in other counties as well. We have to be proactive and take this group seriously. I am delighted to hear the Leas-Chathaoirleach endorsing this committee as a possible vehicle for moving forward.

An Leas-Chathaoirleach

As nobody has indicated they would like to make further closing remarks, I will conclude. We thank the witnesses again for coming before the committee. We realise the time constraints. We are aware of all that. In fact, I have discussed this many times with Deputy McHugh as I have done previously with Deputy English. I maybe take a different attitude to the resolution that comes at any time.

I believe that the direct approach, in the shortest possible time, will always bring the most desirable resolution.

I thank the witnesses for attending and members for raising their questions. We will keep the witnesses informed. Our next meeting will be in about a week. It will be our last meeting before the summer break. As best we can, we will see what can be done and speak to the people who, apart from the witnesses, have an input into the matter.

Deputy Joe McHugh

The Leas-Chathaoirleach's clerk will keep him right-----

An Leas-Chathaoirleach

Goalkeeper.

Deputy Joe McHugh

-----but may I as a non-committee member make a proposal or is that off the reservation?

An Leas-Chathaoirleach

The Deputy is free to make a proposal. I am amenable to that.

Deputy Joe McHugh

Actually, I would be a seconder. I believe Deputy O'Callaghan may propose it. If I am not able to second it, I do not doubt that Deputy Conway-Walsh will. The proposal is that we write directly to the banking institutions, including the Central Bank and the insurance entities, which have not met anyone at this stage.

Mr. Patrick Sharkey

And perhaps the likes of Pepper and vulture funds.

Deputy Joe McHugh

The whole shebang.

An Leas-Chathaoirleach

Yes. I forgot something. The mortgages that are being sold on to vulture funds or whatever enjoy the same rules and regulations that apply to the original lender. That was only clarified a week or ten days ago - twice in a couple of days - by the Minister responsible. We have access to those concerned who may have a worthwhile input to make. They all need to know the urgency of this situation insofar as we can explain it to them. Is Deputy Doherty satisfied?

Deputy Pearse Doherty

I am always satisfied.

An Leas-Chathaoirleach

I know.

The joint committee adjourned at 3.52 p.m. until 1.30 p.m. on Wednesday, 12 July 2023.