I propose to reply to the Deputy’s Questions Nos. 299 and 300 together.
As the Deputy is aware, under section 115A of the Personal Insolvency Act, if creditors refuse a reasonable personal insolvency proposal by a borrower to resolve his/her mortgage arrears, the borrower’s Personal Insolvency Practitioner (PIP) can apply to the Court for review. The Court has power to impose the proposal on creditors, if satisfied that it is fair and reasonable to all parties, thereby removing the so-called “bank veto”.
Furthermore, as the Deputy is aware, under the Abhaile Scheme, legal aid may be provided to an insolvent borrower to seek a personal insolvency review under s. 115A of the Personal Insolvency Acts, if the proposal refused by their creditors includes resolving the mortgage arrears on their home. Funding may also be provided for appeals by a borrower in s. 115A cases. A number of appeal cases have already been funded to the High Court, and a small number, to the Court of Appeal.
Where legal aid is certified under Abhaile in such cases, there is no charge to the borrower. Abhaile pays fixed fees to the personal insolvency practitioner (PIP), solicitor, junior counsel and where needed, senior counsel, representing the borrower.
The Legal Aid Board has already certified over 1,000 personal insolvency review cases for legal aid under Abhaile, and it is continuing to provide legal aid for personal insolvency reviews on this basis. I should add that in the year ending 30 June 2018, 64% of such cases were decided in favour of the borrower.
The Deputy’s questions refer to adjustments in the fees payable to professionals for Abhaile legal aid in such cases, which were notified by the Legal Aid Board at the end of January. I should clarify that there are no changes to the level of service which borrowers are expected to receive, or to the eligibility of borrowers for Abhaile support.
These are reasonable adjustments, which represent proper management of taxpayers’ money, while ensuring that the borrowers are fully legally protected.
It would be incorrect to suggest that these changes will have any negative effect on access of Abhaile clients to the necessary processes, including court processes, to get them to a solution. Nor will they adversely impact equality of arms between a borrower and their PIP, on the one hand, and an objecting creditor, on the other.
Firstly, as regards representation by counsel: a borrower will continue to be represented in s. 115A cases by a personal insolvency practitioner, a solicitor, and as needed, by junior and senior counsel.
The Board has indicated that barristers will not be approved automatically in every case. There is no other area of civil legal aid where that is the case – and it is obvious that it may not be always be necessary to approve counsel, for example, in a personal insolvency review case which is undefended.
However, the revised terms and conditions set out by the Legal Aid Board expressly indicate that in personal insolvency review cases, junior and (as needed) senior counsel will continue to be approved ‘where there are legal complexities that require the involvement of counsel’ and this is expressly explained as including where a creditor raises legal issues that need to be argued by a barrister in court. Counsel may also be approved on a case by case basis if there are exceptional circumstances, at the Board’s discretion.
Many personal insolvency review cases raise complex questions of law. I and my Department are fully aware of the nature of the cases brought and decided over the past three years. Indeed, in January this year, on the launch of the Abhaile second year Report, I specifically underlined the priority that I attach to the good work being done under Abhaile, and to ensuring that the personal insolvency review can function effectively.
More broadly, I would point out that under the changes announced by the Legal Aid Board the normal fees for a PIP or a solicitor for a defended personal insolvency court review are unchanged.
However, two reasonable changes are being introduced to the fees payable for all professionals. Firstly, the full fee will not be payable in undefended cases, where no creditor opposes the court review. Secondly, personal insolvency cases often involve parallel applications by both partners, where a couple has the same home mortgage. In practice, the vast majority of parallel applications are treated by the courts as one single case. There is no reason for taxpayers to cover two full fees in such cases, and they will be payable at a full fee for one spouse and a reduced (10%) fee for the second spouse, representing the actual extra work involved.
These are manifestly reasonable changes.
Finally, barristers’ fixed fees are being reduced, but only to bring them into line with fees payable in other areas of civil legal aid where complex legal or procedural issues also arise.
My Department and the Legal Aid Board will continue to keep this area under close review, to ensure that Abhaile borrowers continue to have the necessary level of representation before the courts in personal insolvency review cases. This reflects the Government’s commitment to supporting borrowers who are trying to resolve their home mortgage arrears in a manner which is fair and reasonable to all concerned, and to keeping people in their homes where at all possible.