Thursday 12 December 2019

Personal insolvency law hasn't lived up to promise

Six 'specialist judges' were assigned to the Circuit Court to deal with 'waves' of expected insolvencies. Picture posed: Thinkstock
Six 'specialist judges' were assigned to the Circuit Court to deal with 'waves' of expected insolvencies. Picture posed: Thinkstock

WAS Justice Minister Alan Shatter's landmark and long-awaited personal-insolvency legislation – which was more than two years in the making – designed to fail?

It is a harsh question to ask so early in the lifetime of the Personal Insolvency Act 2012, which gave birth to the Insolvency Service of Ireland (ISI). But it is, in the face of the powerful veto enjoyed by credit unions and banks – and the low level of uptake of debt deals – a necessary question.

Lorcan O'Connor, director of the ISI, has put a brave face on the agency's statistical report for the first three months of this year. He said that the agency, which has 89 staff, is dealing with more than €300m worth of debt.

The headline figures are, at first glance, decent. But if you drill down, you find that only four debtors have availed of creditor-approved personal insolvency arrangements, which include both secured and unsecured debts. Set against the backdrop of some 140,000 homeowners in mortgage arrears, this is a statistical irrelevance. The ISI states that more than 500 cases are "in process". Yet only 70 protective certificates, a form of personal examinership, have been issued by the courts.

Six 'specialist judges' were assigned to the Circuit Court to deal with 'waves' of expected insolvencies. The waves have not yet come ashore. But due to intransigence and the lack of enforcement options against banks and credit unions there are ominous clouds hanging over the Irish economy.

Earlier this week, the Central Bank sought to launch a new initiative to get banks and other lenders to deal with all the debts of households – and not just mortgage borrowings.

The initiative was immediately shunned by credit unions, which are unsecured lenders. The ISI is to be commended for its efforts to bring transparency and fairness to an ad hoc, opaque area of law. But many people do not qualify for its minimum living guidelines; still less can they afford fees of up to €3,000 for a personal insolvency practitioner and they have no meaningful right of appeal where veto-wielding creditors reject proposals.

As creditors and debtors engage in an unsustainable stand-off, the first resort for many debtors is what was once the last resort of bankruptcy. The time has come to revisit this landmark law before it becomes a legislative white elephant.

HIQA findings remind us care homes must be above reproach

WE must welcome the publication of Health Information & Quality Authority (HIQA) reports into disability services, including designated centres for people with disabilities. HIQA began inspecting these homes last autumn and the first 12 reports have now emerged. While these are not disturbing, in the way that some inspections of nursing homes were, there are anomalies that certainly need to be addressed.

Without trying to over-dramatise the situation, the inspectors found in one such home in Co Westmeath that the guidelines in place "were not sufficient to ensure residents' finances were adequately protected or to ensure there was transparency in relation to the use of residents' money".

A weekly charge was set aside in a tenancy agreement to be used to cover such expenses as food provisions, electricity and phone bills. "However," says the report, "some of the weekly charge was also being used to cover staff costs, such as meals while on duty and outings" – something which was not made clear in the tenancy agreement and something some residents were unaware that they were paying for.

The HIQA report says this was "particularly worrying in relation to more dependent residents, who did not have a good awareness of their finances". On the other hand, it found that staff supported residents in the running of the house and that overall there was a warm and hospitable atmosphere. It is clear from the report that this seems to have been more a failure of communications, rather than malpractice.

However, it is also clear that in dealing with people with disabilities it is of paramount importance that issues such as their personal finances are fully explained, so that there is no room for ambiguity in these matters.

Irish Independent

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