Jill Kerby was on Seán O'Rourke yesterday and her comments were repeated on The Late Debate, where I heard her make the following points. (She may have made other points, I didn't hear the SO'R interview)
I am not so keen on this...
It's not often I disagree with Jill. It's not often I agree with David Hall. He has savaged me personally on air on many occasions. He has often ranted and raved. But this is a great iniative and Jill has missed the point completely. She is wrong on all 5 reasons.
1 The IMHO is not regulated or surpervised. AIB should not deal with an unauthorised and unlicensed charity. They should deal with someone who is authorised and experienced.
The regulation of debt advice is meaningless. Fill in the complicated paperwork, pay for PI insurance, pass the QFA exams and you are fine.
I am not regulated, but I think my advice is usually good. MABS is not regulated and their advice is usually good.
2. There has always been an imbalance of power between the borrower and the lender. No one should take advice unless it it independent, impartial, fee based and experienced.
The IMHO is independent and impartial. People in mortgage arrears who are not engaging can not afford to pay someone €200 an hour for advice. None of the advice given on askaboutmoney is fee-based. Should people just avoid Askaboutmoney because we don't charge? Fee based advisors are important in some areas - investment, tax, pensions etc. But they are probably not relevant in cases of arrears on the family home. They might be relevant in cases of big commercial debt.
3 As far as I am concerned, AIB's fee is a commission and people should not deal with people who take a commission from the manufacturer of the product
If I had thought of the idea of approaching AIB to pay me to set up an organisation to advise people in financial difficulty, would people accuse me of not being independent and impartial? They probably would but they would be wrong. They would ignore completely the campaigns I have run on behalf of consumers over the years.
When I heard this, I had a slight "professional jealousy" of David Hall. He came up with a good idea and managed to persuade AIB to pay him to implement it. I have come up with lots of good ideas and have never managed to persuaded the lenders to implement them or change their policies in any way. Fair play to David Hall.
If I was approached to set up a similar organisation for the customers of, say KBC, I would charge KBC a fat fee for my time and expertise, and I would not apologise to anyone for it. Nor would it compromise me in the least.
I am surprised that David Hall is doing this for free.
4. AIB are giving IMHO €150k. They should make this, and more, available to customers for fee based advisors. The borrower could bring the advisor with them to the next meeting and discuss the options. Such an advisor would charge €200 an hour, so for two hours that would be €400 so €150,000 would pay for 375 cases. David Hall expects to deal with hundreds of cases a month.
Jill simply does not understand how debt advice works. I give most of my advice through askaboutmoney. On a very few occasions, I have helped people directly. It takes a lot more than 2 hours. It's not a meeting. It's an ongoing process which requires information gathering, meeting the client, putting a proposal together, chasing the lender, negotiating, assessing the offer, assessing the alternatives.
My concern about IMHO's initiative is that they expect to process around 300-400 cases a month for €25k. This can't be done. They will need more money if this happens.
At the press conference, I asked AIB would it not have been a better idea to give the money to MABS who have the debt advisors in place in 60 locations around the country. They said that they would work with anyone who would encourage the borrowers to engage with them.
5. Bankruptcy is often a solution and David Hall doesn't believe in bankruptcy.
David Hall has been very clear that bankruptcy is often a solution. He has made the argument, which Ross Maguire also makes, that when someone goes bankrupt, their unsecured debts and negative equity will be wiped out, and so may actually be in a better position to meet mortgage payments on a much reduced mortgage amount. I am not sure that this will happen in practice, but it's an interesting idea.