Irish Financial Review

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!

Ulster Bank debacle, was this mess really necessary?

The debacle at Ulster Bank which has prevented up to 100,000 customers from accessing their money has been unprecedented in its scale and duration.

How could it and its parent in the UK have caused such an information technology mess?

If this were 1986, perhaps one could have been a little more forgiving. Banking and technology were only developing the kind of inter-dependent relationship that it has evolved to today.

Even if this were the result of some system overload, perhaps on the back of some unique offer from the bank, perhaps we could have understood the root causes of this problem.

But this is 2012. The bank is reported to have been caught off guard by something as a minor as simple human error.

Could this be correct? Did Ulster Bank not have back-up files? Did they not have contingencies? After all, most families today almost universally make simple copies of digital photos and other important family files to protect against loss. Yet here is one of the largest banking groups in the world, its customers inconvenienced for up to a week or more simply because of this human error.

In an era where online banking is becoming more and more important and where Government is encouraging, even forcing us all to move online, event like this should not occur, they cannot occur. Our day-to-day lives rely on a functioning banking system, so does our economy.

If we are to believe the Ulster Bank group, can a large segment of society be really put on hold because of a little human error. Or worse, if this is as a result of deliberate actions, who is in charge of the security of the bank? We need to ensure that it is robust and secure, or at least certainly better than what the bank offers currently.

Personal Insolvency Bill…its about time

Good news, the Government has been reported in one of the national media as preparing to launch the final version of the new bill that will deal with personal insolvency.

It’s high time that this important piece of legislative work got published. It even more important (barring no last-minute legislative wrangling) that the legislation finally gets enacted into law.

Rising levels of debt and mortgage arrears means that the resulting financial reprieve for those most affected by the ongoing economic stagnation will assist those that most need it.

However, it is also important that banks are not left wrong footed in the new personal insolvency landscape. While there may be a deep-rooted anger at the role banking played in the economic meltdown and the ongoing austerity programmes, we all need to ensure that those that can pay do pay and those that appear to have genuinely lost their capacity for financial rehabilitation are dealt with humanely, through this new legislative process.

Later this week, we will all be the wiser.

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