Oireachtas committee echoes FLAC's call to take debts out of the courts

16 February 2010

Legal rights organisation FLAC today welcomed a report from an Oireachtas committee that calls for urgent new measures to tackle overindebtedness.

The report from the Joint Committee on Social and Family Affairs on 'High Levels of Indebtedness in Irish Society' was launched today at 2pm in Leinster House. FLAC had contributed to the committee's research on the issue last year, following the organisation's concerns that urgent action was needed to reform how legal system deals with debt.

"The report acknowledges that while life has changed hugely over the last ten years, our legal system has not," said FLAC Director General Noeline Blackwell. "This Committee has noted the need for an alternative system for handling debt outside the courts, as did the Law Reform Commission last year. FLAC has been calling for such a change for many years. There is a real consensus now around the need to update the law and the mechanisms for handling our overindebtedness crisis."

FLAC welcomed specific measures proposed in the report, such as requiring banks not to charge penalty interest rates and balancing consumer interests while acknowledging the need for banks to secure funding. "However, FLAC questions how far the state will go in putting the interests of banks before the interests of beleaguered borrowers," said Ms Blackwell.At the launch, she called on the Committee to bring back financial institutions to discuss the recommendations in the report.

"The current system is not adequate to deal with the kind of problems created by over-indebtedness. This report points squarely to the deficiency in regulation before June 2007 and the need for a non-judicial solution to the issue. The government has to deal with these issues urgently," commented Ms Blackwell.



Editors' notes:
1. FLAC (Free Legal Advice Centres) is an independent human rights organisation dedicated to the realisation of equal access to justice for all. It campaigns through advocacy, strategic litigation and authoritative analysis to contribute to the eradication of social and economic exclusion.
2. FLAC's submission to the Committee, from April 2009, is available online.
3. You can read more about FLAC's work on debt law reform online.
4. The Law Reform Commission published its consultation paper on Personal Debt Management and Debt Enforcement in September 2009 (see also FLAC comment)
5. FLAC recommended a complete overhaul of debt enforcement procedures in Ireland and the introduction of debt settlement legislation in a major report in 2003. That was followed in July 2009 by a second in-depth report which explored the debtor's perspective on the enforcement process. The organisation called for a greater range of remedies to assist those who are over-indebted.
6. You can read about FLAC's open letter to politicians calling for action on mortgage arrears from October 2009.