Dáil Éireann Debate, Wednesday - 20 November 2013
78. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which any efforts are being made to address the damage to credit ratings in the small business sector with particular reference to situations where household mortgage arrears have begun to affect business in this context; and if he will make a statement on the matter. [49803/13]
View answerIn June 2013 the Central Bank set quarterly institution-specific performance targets for covered banks to move distressed SME borrowers on to longer-term solutions. The targets set reflect the banks’ capacity, processes and systems. I should stress that the Credit Review process remains available to any SMEs whose credit has been reduced or withdrawn by the pillar banks as well as when credit is refused by them. The recent Credit Review Office report shows that the Office upheld the credit appeal in 150 cases or 55% of cases decided. The upheld appeals have resulted in €18.5 million in credit being made available to SMEs and farms, protecting 1,521 jobs. In the recent Budget, I increased the CRO appeals threshold from €500,000 to €3 million and I would strongly encourage SMEs refused credit to seek a review by the Office.
The Government recognises that SMEs are the lifeblood of the economy and will play a vital role in the recovery of employment growth in our country. It also recognises that businesses with legacy debts may be viable. One of the key priorities of the Programme for Government is to ensure that an adequate pool of credit is available to fund SMEs in the real economy during the restructuring and downsizing programme.
Regarding mortgage debt and personal debt, following on from the recommendations of the 2011 Inter-Departmental Report on Mortgage Arrears the Government has put in place a comprehensive strategy to address the problem. The main elements of this are:-
Innovative Personal Insolvency Reform: The Personal Insolvency Act, in place since the end of 2012, now provides accessible statutory insolvency frameworks to allow debtors and creditors reach arrangements to resolve unsustainable mortgage and personal debt positions. The Insolvency Service of Ireland, which was officially launched in April, is now in a position to process insolvency applications from debtors.
Comprehensive Advice and Guidance: In addition to existing arrangements, the Government has introduced a range of information and guidance resources to assist mortgage holders through what can be a difficult and stressful process. A dedicated website, www.keepingyourhome.ie, has been put in place to provide general public information on mortgages arrears issues. In addition, there is a Mortgage Arrears Information Helpline, which was established under the aegis of the Citizens Information Board, to provide more tailored information to individual callers. Finally, a panel of accountants has been put in place to provide “one to one” independent advice to borrowers who have been provided a long term forbearance resolution offer by their lender in respect of a mortgage on their primary home. All of these information services are provided at no direct charge to the users of the service.
Keeping families in their homes: As a social housing response, a “mortgage to rent” scheme is now in place on a nationwide basis. This option is available to households who have unsustainable mortgages and who would qualify for social housing support. Provided they meet this and other appropriate criteria, this allows families, in the context of an agreed resolution to an unsustainable mortgage, to remain in their home.
Mortgage Arrears Resolution Strategies: The implementation of sustainable mortgage arrears solutions by individual banks for their distressed customers, with Central Bank oversight, is a key element of the overall framework to address the mortgage arrears problem. The Central Bank Mortgage Arrears Resolution Targets (MART) initiative announced last March, sets time bound and measurable targets for the main banks requiring them to systematically address their mortgage arrears book. In particular, the Central Bank is requiring the main mortgage lenders to propose sustainable solutions to 20% of mortgages that are in arrears (of over 90 days) by end June 2013, to 30% by the end of September 2013, to 50% by the end of December 2013 and to 70% by end March 2014. In addition, the Central Bank has also set targets to require these banks to conclude sustainable agreements with 15% of the relevant mortgage arrears cases by end 2013 and with 25% by end March 2014. Also, the Central Bank is implementing a pilot initiative for the restructuring of multiple personal debt situations to test the viability of a negotiated approach where there is more than one lender involved.
