# The Personal Insolvency Act (just a stick to beat the banks with)



## Dr.Debt (7 Mar 2013)

In recent days we are being told that the Central Bank is currently facilitating a series of meetings involving the main banks and the Credit unions, in an effort to draw up some guidelines and "house rules" on how to deal with mortgage arrears and also how to deal with secured debt Vs unsecured debt in cases where there are multiple creditors involved. This is all being done in advance of the Personal Insolvency Act, being launched shortly. If agreement is reached between the institutions, it seems that all the banks will enter the new framework singing from the same song sheet (at least that appears to be the general idea)

It seems that the Personal Insolvency Act is being used as the big stick to terrorise the financial institutions into accelerating efforts in dealing with their individual distressed loan books. The PIA is being heralded as a costly inefficient process that should be avoided at all costs.

I wonder what Tom Murray and all his followers at the ACCA will think of this. They have been licking their lips at the thought of lucrative revenues form the new act for some time. In recent days they have been proposing 
ways to keep all the work in the immediate family and have openly requested the minister to confine the work to those with the requisite experience and qualifications. The reality is that there is hardly anyone with the necessary skills and qualifications in this country to do the work and I can see very little evidence to support a view that a practicing ACCA accountant will be more qualified or experienced to do the work than say a Quantity Surveyor, a Bank Manager or an Architect. Some commentators in the UK have said recently that the best profile of person for this job is someone with good communication skills,high levels of emotional intelligence, effective negotiation skills and one who has well rounded knowledge in banking, finance and law. Expert accounting knowledge is not seen as a prime requirement in most cases arising. I dont think the ACCA does itself much credit with this particular theme. I know some Accountants who would be a good fit for this job. I also know some who would be a complete disaster. Equally there will be some Solicitors who will be suitable and others who wont. Some QFAs will be suitable and some wont. It's the personal qualities, background, experience and skillset of each individual that will qualify them or not. The legislation deals with this correctly.


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## Dermot (7 Mar 2013)

Dr.Debt said:


> In recent days we are being told that the Central Bank is currently facilitating a series of meetings involving the main banks and the Credit unions, in an effort to draw up some guidelines and "house rules" on how to deal with mortgage arrears and also how to deal with secured debt Vs unsecured debt in cases where there are multiple creditors involved. This is all being done in advance of the Personal Insolvency Act, being launched shortly. If agreement is reached between the institutions, it seems that all the banks will enter the new framework singing from the same song sheet (at least that seems to be the general idea)
> 
> If landlords were having such a meeting about Rents there would be people and representatives of Quangos on every Radio station saying that this type of behaviour was in breach of Competition rules.


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## Marianne (7 Mar 2013)

I'd agree that Personal Insolvency Practitioners should be people with appropriate skills and experience, regardless of what profession they're in.  

The Institute of Bankers in Ireland are running  which would seem like a sensible start, as a bare minimum.


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## wbbs (7 Mar 2013)

I was going to sign up for that course last week but realistically I don't think there are any jobs to be got in this area,  I do think the big firms will just hoover up anything that is there and people like me, who in my opinion are ideally suited based on Dr. Debt's criteria  won't get a look in!


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## MrEarl (7 Mar 2013)

Hello,

It seems to me that there is so little progress, with regards to the Insolvency Legislation that very little will happen during 2013 - just one example of the lack of progress, is the failure to yet even identify who should be a personal insolvency practioneer (not alone establish a register, approval system etc).

With due respect, I do not see how this piece of legislation can be considered a stick to beat the Banks with, given everything aside from the option of Bankruptcy requires consent of a certain percentage of a person's creditors - with the Banks likely to almost always represent the majority vote etc.

All well intended, but a very slow burner and unlikely to address the problems with wide spread negative equity, homeloan and buy to let arrears etc ....

Kind regards

Mr. Earl.
ps - for what it's worth, I also suspect that the level of fees to be charged for the work a Personal Insolvency Practioneer will be expected to do, will be quite low and hence, it will be very hard earned money for all but large firms using cheap staff such as trainee accountants, to do much of the paperwork.


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## wbbs (7 Mar 2013)

I imagine though the stick comparison relates to the proposed system being a disadvantage for banks as if a debtor has some funds to offer then at least if the banks deal with the problem themselves and come up with a workable solution they will benefit by getting any available cash as there will be no fee to PIPs.


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## Importer (7 Mar 2013)

@ Mr Earl. The PIA is a stick because the banks have been warned (by the Government) time and time again that they must engage with the Act or it will be revisited. My interpretation of "revisited" means that the section dealing with the veto will be revisited. So, while its true that the banks will have a right of veto in many cases, they will need to thread carefully in their use of the veto. If it becomes apparent that the veto is an obstacle to getting the overall problem solved, then the veto will need to be re-thought and presumably removed or weakened.

So the Government is putting it up to the banks to come up with a set of guidelines 
for engaging with distressed borrowers now BEFORE the matter reverts to the PIA for a solution. The PIA stick is being waved and whilst the veto is available, the banks know well that they cant overplay that card. Any bank that uses the veto to overthrow a reasonable proposal will become unstuck sooner rather than later.


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## MrEarl (8 Mar 2013)

Hi Importer,

While, what you say, makes a lot of sense .... I must say that despite my feeiling that you will ultimately prove correct, it could take several years even from *now* to see the legalities and system work correctly, here in Ireland.

I'm sorry but simply put, nothing happens quickly in Ireland, everyone blows hot wind but ultimately negotiates behind the sceenes etc.  As such, I don't see much, if any, progress in this area during 2013 (sorry )

As an extension to the above comments and keeping in mind, previous "Irish soulultions, to Irish problems" ...... I seriously do not see how this piece of legislation, provides a stick to beat the Irish Banks.  At best, I see it as a threat, which may be later delivered upon 

Regards

Mr. Earl.





Regards

Mr. Earl.


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## Bronte (8 Mar 2013)

MrEarl said:


> It seems to me that there is so little progress, with regards to the Insolvency Legislation that very little will happen during 2013 - just one example of the lack of progress, is the failure to yet even identify who should be a personal insolvency practioneer (not alone establish a register, approval system etc).
> 
> .


 
Some politician on the radio this week mentioned it would be up and running by 'early' summer.  Not a hope. 

As for the legislation being a stick to the banks, as far as I'm concerned the bankers wrote it and have nothing to fear from it.


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## Bronte (2 Sep 2013)

I called it right in March. The bankers wrote it. Noonen should be thoroughly ashamed of himself.  And MrEarl got it right too.


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## demoivre (2 Sep 2013)

Bronte said:


> Some politician on the radio this week mentioned it would be up and running by 'early' summer.  Not a hope.
> 
> As for the legislation being a stick to the banks, as far as I'm concerned the bankers wrote it and have nothing to fear from it.



Banks have something to fear from Bankruptcy because they could end up getting nothing on monies owed to them.


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## Bronte (2 Sep 2013)

demoivre said:


> Banks have something to fear from Bankruptcy because they could end up getting nothing on monies owed to them.


 
But if you've no money to give there is nothing to fear.  Either you have it or you don't?


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## tvman (3 Sep 2013)

demoivre said:


> Banks have something to fear from Bankruptcy because they could end up getting nothing on monies owed to them.



On The Today Show on RTE this morning, the RTE business editor (I think) said that if banks don't play ball with borrowers either by agreeing to an insolvency c
scheme or doing a deal borrowers then borrowers will just go bankrupt and the banks will get nothing.

If you go bankrupt - your creditors get (essentially) all your assets.

Sometimes it's hard not to despair at the quality of financial/economic reporting in Ireland.


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## Cantalia (3 Sep 2013)

Dr. Debt, re your opening post, I would offer that family law solicitors who negotiate maintenance payments and financial settlements to separating and divorcing couples are amongst the best placed to do this job. They are also all now trained in collaborative dispute resolution.


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## Cantalia (3 Sep 2013)

+1 Bronte. What's the big deal about a court declaring you Bankrupt if you are. This is five years later lads, denial lasted about 2 years tops, everyone who is bankrupt has made peace with that fact now. I can see plenty people doing a UK bankruptcy in the future.


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## Jim2007 (3 Sep 2013)

Bronte said:


> I called it right in March. The bankers wrote it. Noonen should be thoroughly ashamed of himself.  And MrEarl got it right too.





Importer said:


> My interpretation of "revisited" means that the section dealing with the veto will be revisited. So, while its true that the banks will have a right of veto in many cases, they will need to thread carefully in their use of the veto. If it becomes apparent that the veto is an obstacle to getting the overall problem solved, then the veto will need to be re-thought and presumably removed or weakened.
> 
> So the Government is putting it up to the banks to come up with a set of guidelines
> for engaging with distressed borrowers now BEFORE the matter reverts to the PIA for a solution.





MrEarl said:


> I seriously do not see how this piece of legislation, provides a stick to beat the Irish Banks.  At best, I see it as a threat, which may be later delivered upon



In Switzerland we have a lot of banks, but the only people we call bankers are the people who actually own that bank, all the rest are employees!  In Ireland the bankers are the tax payers and they are very powerful - they elect all the politicians - there is no widespread support for major write offs among the public and consequently the politicians are not going to make it happen unless that situation changes and there is general support for write offs.

And there is the Basel III issue which will start to raise it's head next year or the year after at the latest.  The last thing any politician wants to do is support an unpopular drive for general write offs and then turn around have to tell the taxpayer that because of the write offs, they now need to recapitalize the banks once again and by the way he is no the hook for it...

So yes the bank staff are acting in the best interests of the bankers - the taxpayers who have made it clear that they are not willing to see their capital flittered away without a good fight!  So in that sense a bankruptcy is better than a write off because at least that way The bank staff/The Minister/The Politician will be able to say to the banker (the taxpayer) that yes we did try to protect your hard earned cash but unfortunately.....

So unless there is general support from the public and a willingness to foot the bill, I fail to see how The bank staff/The Minister/The Politician can be expected to engage in any serious write offs...


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## Time (3 Sep 2013)

So if you want to go bankrupt you first have to go through the charade of PIPs and vetoes etc. The only ones laughing here are the PIPs.


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