Published on 

Speech by Taoiseach Enda Kenny T.D., on Action on Mortgage Debt, Government Press Centre, Government Buildings

Tuesday, 26th June 2012 

Good afternoon,

The Tanaiste and I have asked you here this afternoon to outline the Government’s response to the mortgage debt crisis and to report that Cabinet has today approved the text of the Personal Insolvency Bill.

We live in significant times.

There is probably no time, since the Land War, when the Irish people have felt so stressed, so anxious about their home and their family’s future security.

I am in no doubt of the enormity of this matter in people’s minds and the vulnerable position it places families in.

Three months ago, this Government published a progress report on implementation of the Programme for Government.

At that time, we acknowledged the need for faster progress on this issue.

This is why we established a special Cabinet Committee on Mortgage Arrears which has worked intensively to develop this strategy:

It is based on a number of principles:

Firstly, we need to help struggling families who find themselves under unsustainable levels of debt. We have to give them some options whereby they can make a fresh start in their lives.

Secondly, it aims to assist those who can’t pay, not those who won’t pay.

It would not be fair or equitable to provide relief to those who are able to pay, but won’t.

Thirdly, we need faster progress. In particular, the banks must be incentivised to resolve issues with their customers, not put them on the long finger.

At the heart of the strategy is a radical overhaul of Ireland’s regime for personal debt insolvency.

Today, the Government approved the Personal Insolvency Bill.

On Friday, the Minister for Justice and Equality will publish this Bill and provide a detailed briefing on it.

It will provide the clarity on the policy framework for bankruptcy and debt settlement which will deliver more certainty for borrowers and lenders alike about the consequences of non-payment and failure to reach agreement.

The new regime will give a greater balance to the rights of the borrower and the lender and incentivise both parties to come to an agreed solution. The majority of these agreements should be bilateral agreements, and shouldn’t require formal use of bankruptcy.

The legislation will also include the introduction of new innovative non-judicial debt settlement systems that can be availed of in certain circumstances instead of the formal bankruptcy process.

For individuals who are insolvent without any reasonable prospect of being able to repay their debts, the new legislation will allow them to rehabilitate their financial situation by being discharged from bankruptcy, subject to certain conditions, after 3 years in place of the current 12 years.

The Bill is legally complex and introduces a number of new concepts into Irish law. Its publication will be a major Programme for Government accomplishment.

Later this evening, the Government Economic Management Council will meet with the main banks to brief them on our strategy and to discuss their approach to mortgage arrears.

The Government is fulfilling its responsibilities to develop new options for people in debt distress. The banks must show the country that they can help resolve the crisis that is partly of their creation.

In particular, we will be pressing them to accelerate the roll-out of loan modification products for customers in arrears. This should be based on the proposals they have recently submitted to the Financial Regulator in response to the Keane Report.

The banks have an opportunity, and an incentive, to make significant progress on loan modification before the Personal Insolvency legislation is operational later in the year.

We expect to see a material change in people’s experience dealing with the banks on their debt difficulties in the coming months and expect to see swift action in rolling out their new tools to manage arrears on their mortgage books.

On Thursday, the Minister for Housing Jan O’Sullivan will outline her ongoing work to roll out the Mortgage to Rent Scheme and other initiatives aimed at keeping people in their home where possible.

This summer, a new Mortgage Information and Advice Service will seek to provide the necessary supports to assist people in mortgage distress. It will involve the rolling out of advice and assistance services across a number of platforms, such as through websites, telephone lines, and through one on one contacts. I expect this Service to be in place when the Personal Insolvency legislation is enacted.


It should be said that none of the tools and schemes outlined will solve the mortgage problem by themselves or indeed be appropriate for everyone.

We are not promising easy answers or soft options. The legacy of debt distress and mortgage arrears will not disappear overnight.

What we are offering is a fair and reasonable process to allow families deal with the problem of unsustainable mortgage debt.

I look forward to a comprehensive Oireachtas debate on this bill following its publication on Friday.

I now invite the Tanaiste to address you.