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 Header Item Written Answers Nos. 187-206
 Header Item Financial Services Regulation
 Header Item Debt Resolution Pilot Scheme

Tuesday, 21 May 2013

Dáil Éireann Debate
Vol. 804 No. 1

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Written Answers Nos. 187-206

Financial Services Regulation

 187. Deputy Joe McHugh Information on Joe McHugh Zoom on Joe McHugh asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if he will outline his views of mis-selling of payment protection insurance and linked products by all lenders (details supplied); if he will consider moving the statute of limitations that applies in this respect; and if he will make a statement on the matter. [24077/13]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I have been advised by the Central Bank that it is conducting an on-going investigation into the sale of Payment Protection Insurance (PPI) by firms from July 2007. Ten firms are currently undertaking reviews of their Payment Protection Insurance (PPI) sales. At the request of the Bank, the firms previously informed all their customers included in the PPI sales review of their intention to provide updates to them as the review progresses. The firms have commenced writing to their customers who purchased PPI in July 2007 to inform them of the outcome of the review as it relates to their situation. Approximately 13,000 customers will receive letters shortly. The Central Bank is advising customers who receive a letter and have any questions, to contact their bank or credit institution directly.

  Throughout 2013, firms will continue to conduct the review and will directly contact all other PPI customers included in the review with the outcome of the on-going review. The Central Bank will continue to require firms to take an orderly, co-ordinated and consistent approach to the review and will monitor progress on an on-going basis with the firms involved, and with the independent third party overseers who were appointed at the request of the Central Bank.

  The Central Bank issued an update of its on-going investigation into the sales of Payment Protection Insurance which is available on the Central Bank’s website: www.Centralbank.ie. I, as Minister for Finance, do not have the primary role in relation to amending the law on the “Statue of Limitations”. This is a matter which has broader legal application and as such would fall for consideration by my colleague the Minister for Justice and Equality.

  Questions Nos. 188 to 192, inclusive, answered with Question No. 117.

  Questions Nos. 193 to 202, inclusive, answered with Question No. 87.

  Questions Nos. 203 to 205, inclusive, answered with Question No. 73.

Debt Resolution Pilot Scheme

 206. Deputy Pearse Doherty Information on Pearse Doherty Zoom on Pearse Doherty asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if he will outline the way so-called service providers will be accredited or appointed by the Central Bank of Ireland under the pilot scheme for consumer multi-debt restructuring; his views on newspaper reporting that a single British service provider might be engaged by the CBI; and if he will make a statement on the matter. [24111/13]

 263. Deputy Brendan Griffin Information on Brendan Griffin Zoom on Brendan Griffin asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan if he envisages a central role for the Money Advice and Budgeting Service in the recently announced Central Bank pilot debt settlement model, if he will clarify if a foreign agency is being considered for this role; and if he will make a statement on the matter.  [24236/13]

 277. Deputy Michael Healy-Rae Information on Michael Healy-Rae Zoom on Michael Healy-Rae asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his views on correspondence (details supplied) regarding a pilot debt settlement scheme; and if he will make a statement on the matter. [24281/13]

 290. Deputy Michael McGrath Information on Michael McGrath Zoom on Michael McGrath asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan in relation to the pilot scheme for the restructuring of secured and unsecured distressed consumer debt across multiple lenders announced recently by the Central Bank of Ireland, if the Central Bank of Ireland intends appointing any bodies or organisations to negotiate on behalf of borrowers; and if he envisages that the Money Advice and Budget Service will have a role in that regard; and if he will make a statement on the matter. [24346/13]

 292. Deputy Róisín Shortall Information on Róisín Shortall Zoom on Róisín Shortall asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan his views on recent media reports that state that serious consideration is being given by the Central Bank of Ireland to use a UK based company (details supplied) to facilitate the pilot approach to the Central Bank of Ireland framework for resolution of multiple debts; if he will clarify this point outlining the reason this group is being considered at this time in view of the fact that they have no previous experience or involvement in the Irish market and therefore no experience of dealing with the unprecedented problems facing distressed Irish borrowers at the present time; the reason the Money Advice and Budgeting Service with a proven track record in the Irish market and a strong local community based presence, has been overlooked in this regard; and if he will make a statement on the matter.  [24354/13]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I propose to take Questions Nos. 206, 263, 277, 290 and 292 together.

The Deputies will be aware that the Central Bank has announced its intention to operate a pilot scheme for the restructuring of secured and unsecured distressed consumer debt across multiple lenders. The aim of the pilot framework is to achieve sustainable and fair outcomes without the need for the borrower to enter the statutory insolvency process. It is focused on enhancing cooperation between lenders of secured and unsecured debt in order to resolve distressed debt in a holistic manner at an early stage.

The Central Bank’s framework establishes a series of principles to be applied in debt restructuring solutions for borrowers. In particular it outlines a ‘Resolution Waterfall’ which sets out a series of debt affordability scenarios. Treatments will be applied to the borrower’s debts in order to establish the most appropriate and affordable modification that sets the borrower on a sustainable footing for the remaining period of the loans.

The framework will be implemented on a pilot basis by participating lenders to 750 borrowers who are experiencing significant financial difficulty repaying the mortgage on the family home and who also have other unsecured debt. The pilot scheme will run for three months from the end of June and will conclude with a thorough review of all results to evaluate the effectiveness of the framework in dealing with such cases and to determine next steps.

To be eligible for the framework, a borrower must be co-operating with their lenders, as defined in the Code of Conduct on Mortgage Arrears (CCMA). It will apply to borrowers experiencing financial difficulty but who have taken reasonable steps to maximise income and curtail expenditure. All existing protections afforded by the Central Bank’s Consumer Protection Code and the CCMA will continue to apply to participating borrowers. The Framework will not include borrowers with buy-to-let or business related debts.

The Central Bank has advised that it has been agreed among the lender participants to use an independent third party service provider as the most appropriate way to engage with borrowers, whose consent to participate in the pilot will be sought. Discussions are underway to determine the most appropriate provider and no decision on this matter has yet been made. However due to the short timelines involved, an important consideration in the decision making process will be the ability of the provider to provide an effective and efficient service at short notice.


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