State mortgage advice service to compete with private agency
A NEW state body to advise distressed mortgage holders will face competition from a non-profit advice body set up by lawyers and business people.
The new state mortgage advisory service, which is funded by the banks, is expected to begin work by the end of the summer. The state-funded Citizens Information Board will oversee the new body, which is expected to have 100 financial advisers on hand.
But the new service could be mired in controversy after it emerged that the Money Advice and Budgetary Service (MABS) will not have a role in the new mortgage advice service.
MABS is state-funded and has a reputation as a support service for those who are in debt.
Mortgage experts expressed surprise that MABS will not have a role in the new state mortgage advice body.
It is expected mortgage lenders will have to provide between €2.5m and €7.5m a year to fund the new service which will offer independent advice to those at risk of losing their homes.
Minister of State at the Department of Finance Brian Hayes told the Seanad earlier this month: "It has been decided that the statutory Citizens Information Board, CIB, will assume an overall co-ordinating role in the mortgage advice area owing to its remit for the provision of information, advice and advocacy to citizens seeking to access public services."
However, the new service will face competition from New Beginning.
New Beginning was established in late 2010 by businessman David Hall and barristers Ross Maguire and Vincent Martin. It now has around 70 solicitors and barristers offering their services for free, as well as several economists and business people.
The New Beginning insolvency service was well advanced and would be up and running in eight weeks' time, Mr Hall said.
There would be no charge for those facing legal proceedings or who have had a repossession action initiated against them. But the non-profit body would charge between €250 and €300 to others.
Consultants PriceWaterhouseCoopers (PWC) and IT specialists Salesforce.com have been helping organise the service.
Mr Hall criticised the Citizens Information Board and MABS, two bodies he said were not up to the job of representing homeowners in financial distress.
Ross Maguire said New Beginning wants to expand into representing the "tens of thousands" of homeowners in arrears before they come to the courts.
"We want to be able to go to the bank and say we are acting for Mr and Mrs Smith, but we are acting for 50,000 Mr and Mrs Smiths," Mr Maguire said in an interview.
The Government is also setting up a separate state insolvency service to administer out-of-court debt writedowns and bankruptcy arrangements.
This office will oversee personal insolvency trustees who will make proposals to banks on debt writeoffs.