Fine Gael Cork South West Deputy, Jim Daly, has slammed the opportunistic and populist approach taken by Fianna Fáil in proposing an independent Mortgage Resolution Office to act as an arbiter between banks and borrowers in coming to mortgage and debt resolution agreements.

Mr Daly said: "The showboating from Fianna Fáil in proposing that an appeal board should decide what amount of money banks should be repaid from distressed borrowers who cannot meet outstanding loans is unrealistic, unviable and a potentially toxic idea.

"The notion that anyone could expect a financial institution to lend money to potential borrowers and at the same time absolve them of any say in how money is recovered, should that loan become impaired, is absolutely farcical.

-- Advertisement --

"Minister Shatter and this Government have gone to great lengths to put in place a new personal insolvency and debt resolution regime which will assist homeowners in working out the debts they cannot pay while remaining in the family home. A range of measures have been put in place to allow people to deal with debts from €20,000 up to €3,000,000.

"By allowing a third party to determine how much money, if any, the bank should be allowed to recover, as proposed by Fianna Fáil, the whole concept of the mortgage model would completely collapse, leaving lending institutions with little or no interest lending larger sums.

"The purpose of the new Insolvency Service put in place by the Government is to encourage lenders and borrowers to come to a reasonable solution and allow through a Personal Insolvency Practitioner (PIP). The PIP will be appointed by the debtors, giving him/her maximum control and ultimately the voice that Fianna Fáil is seeking.

"Insolvency agreements are also subject to court approval, allowing the courts to act as an independent check. Where agreement is not reached, recourse to the courts is always an option, with bankruptcy being the ultimate appeal mechanism of the debtor. Furthermore, the State cannot impose a settlement on parties to a private contract involving the provision of goods or capital."

(CD)