Banks likely to retain significant power under new debt rules

The Government today held a press conference to announce that it has approved the new Personal Insolvency Bill, which is scheduled to be published on Friday, June 29th.

At their joint press conference, the Taoiseach Enda Kenny and Tanaiste Eamonn Gilmore did not deny that banks are likely to retain substantial veto powers over client proposals under the terms of the new bill.

Mr. Gilmore also announced that a new mortgage advice service, one that is independent of the existing Money Advice and Budgeting Service (MABS) would be established under the control of the office of the Minister for Social Protection.

Mr. Kenny stated that Government is due to meet with banks in respect to what they plan to make available in terms of the various mortgage solutions. There are roughly 77,000 mortgage holders who are 90 days or more behind on their monthly repayments.

While there was little of anything new given away at today’s press conference, it does appear that the new personal insolvency legislation will shift some control in favour of the consumer but with banks likely to retain significant power.

In one of the more telling revelations of the press conference, when asked by Charlie Weston of the Irish Independent if banks will “…have a veto on arrangements.”, Mr. Kenny provided little detail. However, he did say that the actual document (the Personal Insolvency Bill) was a major document as was the legislation contained within and that all would be revealed this coming Friday.

The change in law, once it is finally in place is unlikely to present any financial giveaways. It shouldn’t! However, if the new laws are to provide a balanced solution to those most indebted, it is really important that it provides a genuine mechanism for balance between banks and consumers. Too much either way will create an unfavourable situation that may be more destructive than it will be constructive.

Roll on Friday!

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