I move:
That Seanad Éireann:
- notes that Irish lending and credit institutions are increasingly appointing receivers over mortgaged property, either through the power of appointment contained in the mortgage deed or under the provisions of the Land and Conveyancing Law Reform Act 2009;
- notes that the rules that apply to credit and lending institutions under the Central Bank consumer protection code do not set out any specific provisions in relation to the appointment of receivers, nor are any guidelines for the appointment or conduct of receivers contained in the Mortgage Arrears Resolution Process;
- further notes that there are no provisions in relation to the appointment or conduct of receivers in agreements covered by the consumer credit legislation, namely the Consumer Credit Act 1995 and the European Communities (Consumer Credit Agreements) Regulations 2010 (SI 281/2010);
- expresses concern at the absence of robust statutory regulations to set minimum qualifications for eligibility to act as a receiver, to govern the licensing of receivers and to establish acceptable norms of conduct and behaviour;
- notes with concern that no provisions exist in the Rules of the Superior Courts or the Circuit Court Rules to guide the Courts when making an order appointing a receiver over a property so as to delineate the powers of the receiver or to provide for rules of conduct for any receiver when acting on foot of any such Court order;
- calls for an investigation into the recently reported allegations of oppressive and bullying tactics of a receiver in County Kildare;
- welcomes and acknowledges the reported comments of the Taoiseach on 22 April 2015, wherein he stated that the Government would consider introducing regulations to govern the appointment of receivers;
- resolves to protect mortgage debtors and the public from oppressive behaviour and conduct by unscrupulous receivers;
and calls on the Minister for Justice and Equality to:
- acknowledge that the present lack of regulation in the law exposes indebted mortgagors to oppressive and wrongful conduct by receivers;
- further acknowledge that the present lack of any statutory code of conduct or licensing regime leaves the public at risk of abuse by unscrupulous Receivers;
- develop and introduce robust statutory regulations governing the conduct of receivers appointed under the Land and Conveyancing Reform Act 2009;
- amend the Rules of the Superior Courts and the Circuit Court Rules to include new provisions regulating the conduct of receivers appointed by the Courts; and
- liaise with the Minister for Finance with a view to directing the Central Bank to introduce new rules for lending and credit institutions regarding the appointment and conduct of receivers.
I welcome the Minister of State at the Department of Justice and Equality, Deputy Aodhán Ó Ríordáin. The subject matter of this motion impacts on many people around Ireland who are currently indebted and at risk of having property seized by the bank on the appointment of a receiver. The purpose of the motion is to call on the Government, through the Minister of State's good offices, to act to curb the abuses and bullying which have been visited on members of the public by receivers appointed to seize property. I hope the motion will enjoy support across the House, particularly in light of comments made by the Taoiseach, reported on 22 April, that the Government will "look at regulating in this area." Ordinary members of the public have been subjected to disgraceful behaviour and intimidation by receivers and this is a matter which requires an urgent commitment to introduce regulations.
Colleagues will be aware that the banks are moving with gusto to repossess properties. It has been reported that the rate at which homes are being repossessed has increased by more than 500% since last year. Banks have a variety of options open to them to recover money and or property from a debtor where he or she is in default of payment terms in a loan. One such method is to recover the real property which is secured under the loan by the appointment of a receiver.
The motion deals with property receivers. Property receivers are often referred to as "fixed charge receivers". This title highlights the fact that they are appointed over fixed assets only. In this jurisdiction property receivers are appointed by the courts under the provisions of section 108 of the Land and Conveyancing Reform Act 2009 or under the terms of a mortgage deed. In the United Kingdom the industry reacted to the lack of standards by some individuals when undertaking a fixed charge or statutory receivership appointment. Those working in the area formed the Association of Property and Fixed Charge Receivers, NARA, in 1995. NARA states that it was formed "by a group of professionals from the property, legal and insolvency disciplines, who were often engaged in receivership appointments." In the United Kingdom, it was the people working as receivers who sought to root out the bad practices and the heavy handed tactics which had crept into the area. It was not the Government or the consumer protection regulators which were the first to act.
In April the Joint Committee on Finance, Public Expenditure and Reform was informed that one bank, AIB, had moved to repossess more than 5,700 homes in mortgage arrears by the end of last year. The striking aspect of these moves by the bank was the use of receivers. Of the 1,548 legal cases on buy-to-let properties, some 819 receivers had been appointed by the end of last year with 428 civil bills issued. Another 460 receivers were appointed by the bank between January and March 2015. While the focus has been on buy-to-let properties, there is nothing in law to prevent a receiver being appointed over a residential property. In regard to the moves by AIB we can expect other banks to follow the same course of action in the near future.
The problem in Ireland is largely one arising from the lack of regulation. Unfortunately, in a civilised society we cannot necessarily leave good conduct and prudential judgment to the better angels of human nature. I have spoken with solicitors and barristers practising in the area of debt and insolvency and they have told me that the problem is much more widespread than reported in the media. There is a thuggish and disreputable element which is content to exploit the lacuna in consumer protection legislation regarding the conduct of receivers.
One case I have been informed of involved a family business in north County Dublin. That family business consisted of a warehouse and a workshop which shared a yard with the family home. At midnight a van, full of what can only be described as thugs, arrived, broke into the yard and surrounded the family home while the receiver and his agent arrived behind them in a car and entered the warehouse to seize property as demanded by the banks. The receiver had clearly co-ordinated his actions with his team of hired goons.
The family in question called on the Garda Síochána, only to be told that it was a personal debt matter and that it did not involve the criminal law. The team of heavies who arrived with the receiver were connected to a debt collection agency with links to a well-known Dublin criminal.
Another well-reported incident occurred recently at a property in Castledermot, County Kildare. In this incident, which was reported in the major national newspapers, a Kildare farmer, Mr. Paul O'Shea and his wife, were confronted by an outrageous display of intimidation. The receiver arrived at the family farm at about 2 a.m. reportedly with about 50 staff, some of whom were dressed with balaclavas and had German shepherd dogs. The mob arrived in ten large trucks, industrial loaders with tower lights, and a minibus. This cavalcade was also accompanied by three Garda vehicles.
I am sure that some Members might be tempted to take solace that the presence of gardaí was designed to ensure that the seizure of assets or property went off without any intimidation or violence. However, the very fact that such a convoy of men and machines arrived at a family farm in the middle of the night is, in itself, an act of intimidation and violence, and should raise serious concerns. It sets a sinister and disturbing precedent for intimidation tactics by receivers carrying out an order of the court. We are talking about people acting in a most unacceptable way with the indirect backing of the apparatus of State.
When informed of this incident, An Taoiseach stated: "Perhaps we should consider an amendment here which would regulate these court orders and ensure that they are carried out in more appropriate circumstances." He added: "We have evidence of extraordinary activity by personnel here. It is not right that people should arrive at 3 a.m. to do this." I wholeheartedly agree with An Taoiseach, but it seems to me that urgent action is needed. Not alone was there a regrettable act by way of a timeline commitment from the Taoiseach, but even the spirit of what he said seems not to have been reflected in the Government's amendment to my motion. Rather, it was abandoned. It is a rowing back and there is no sense of urgency. In fact, the Government amendment claims quite baldly that there is no compelling evidence that the sector requires the introduction of regulations to govern the conduct of receivers. How is that to be squared with the Taoiseach's apparent concern which was expressed recently?
There is a lack of robust protection for consumers in the law. Unlike the rules surrounding negotiations between banks and debtors over a mortgage or the detailed and extensive rules regarding consumer protection in lending contracts, the Central Bank has precious little to say regarding receivers or their conduct. For example, under the Central Bank's consumer protection code of 2012, a lender cannot phone or visit a person in connection with their loan, without their consent, between 9 p.m. and 9 a.m. on weekdays or at any time on a Sunday or public holiday. Furthermore, a lender is not permitted to call or visit a person at their place of work, unless all reasonable efforts to contact them elsewhere have failed. Despite the otherwise comprehensive nature of the code, there are no provisions regarding the manner in which a bank seeks to enforce the terms of a mortgage when appointing a receiver.
The Consumer Credit Act 1995, as amended, imposes extensive requirements as to the form and content of loan documentation, including documentation relating to mortgage loans, where a mortgagee is dealing with a consumer. It also imposes a duty on lending institutions to act fairly in commercial contracts, including mortgages with consumers, and prohibits misleading or aggressive practices. Again, however, there are no provisions relating to the appointment of receivers or their conduct, so what can be done?
Borrowers who are at the receiving end of a receiver require more robust protection both in the law governing the appointment of a receiver and in the court order governing the terms of their appointment. I insist that, despite what the Government's amendment says, the Government does have power to amend the law to provide for regulations, either under the Landlord and Conveyancing Reform Act or elsewhere in a piece of miscellaneous legislation.
These regulations to delineate the qualifications a receiver should have in order to allow their appointment, are nothing more than best practice in the UK. If a court order does not contain directions on how a receiver and his or her agents are to behave, we are effectively allowing them to act with impunity.
Under the Courts of Justice Act 1936, as amended, the rule-making authority of the rules committee is exercisable with the concurrence of the Minister for Justice and Equality. I ask that the Minister should request the rules committee of the Circuit and High Courts to craft new provisions surrounding the appointment of receivers. The result would hopefully be that such order, as is issued by the court, will delineate the rules surrounding the conduct of a receiver and his or her agents, as well as the usual particulars regarding the property to be seized.
Enhanced court rules would guide judges in shaping orders to be made where a bank petitioned a court to appoint a receiver in order that, for example, the receiver would only be able to call to a property during ordinary business hours. There should be no more late night calls and no more than two persons, in addition to the receiver, should attend a property, unless a particularly weighty reason is given to the court to allow more people to attend, for example, to remove contents from a building.
