More people in debt - but no corresponding rise in protection for them

7 March 2013

Two reports issued by the Central Bank this week highlight further concerns for those who are seriously over-indebted, according to legal rights group, FLAC.  The organisation says that the lack of protection for consumers is shown by today’s news of increased arrears in household mortgage debt and by the Central Bank’s survey of moneylending in Ireland flagged earlier this week.

 The Quarter Four 2012 mortgage arrears figures again show a sizeable increase in the number of households slipping into deeper arrears.   The Central Bank describes the increase from 91,358 accounts to 94,488 accounts in the 90+ day arrears category as “the slowest quarter-on-quarter rate of increase since these statistics were first collected in September 2009”.  However, the footnotes in their document show that the Bank has changed its figures for the previous quarter in that category, revising them upwards from 86,149 accounts to the newly published figure of 91,358.

 “Therefore the real increase in the 90 day plus arrears category is not 3.4% but a very significant figure of almost 10%” said Paul Joyce, FLAC Senior Policy Analyst. “In turn, compared with each of the figures originally given for Q3, each of the categories with more serious arrears have seen significant increases, with a 20% rise in the number of accounts moving into the two-year-plus arrears category.

 "These figures plainly demonstrate that the longer an account is in arrears, the greater the amount of those arrears.”

 "It is very disheartening to see the continued deterioration in arrears and what seems to be an attempt to downplay their significance” said FLAC Director General Noeline Blackwell. “It is clear that solutions are needed and are needed quickly, whether long-term forbearance measures such as split mortgages, mortgage-to-rent for those in unsustainable situations, or write-down of mortgages under the Personal Insolvency Act 2012.”

 Ms Blackwell remarked that these figures are released in a week where the Central Bank has also issued a press release on its latest review of licensed moneylenders. “While we welcome the fact that such a review has taken place, FLAC once again emphasises the need for the regulation of all actors in the areas of consumer credit and debt, including debt collectors, debt management companies and those who buy debt from regulated entities," she said.

 Mr Joyce noted that in its moneylending review, the Central Bank has criticised the practice of issuing customers with a number of loans simultaneously. "FLAC has called for this issue to be reformed since the Consumer Credit Act was enacted in 1996. Although that law prohibits top-up loans, there is no limit on the number of loans that a customer can take out and this can lead to severe financial stress" he said. "While it is positive that the Central Bank is finally acknowledging this issue, legislative change is now needed."

 Ms Blackwell concluded: “The evidence that we have in FLAC is that people want to pay their debts. It is crucial for all those households behind the Central Bank's statistics that they are given a way to do that. And crucially, they need to be adequately protected while they are dealing with their debt."



Editors’ notes:

  1. FLAC (Free Legal Advice Centres) is a human rights organisation which exists to promote equal access to justice for all. FLAC is an NGO that relies on a combination of statutory funding, contributions from the legal professions and donations from individuals and grant-making foundations to support its work. FLAC offers basic legal information through its telephone information line (1890 350 250) and free legal advice through its network of 80 volunteer evening advice centres. You can also access online information and details of our free, confidential advice centres at  FLAC also campaigns on a range of issues including personal debt, fairness in social welfare law, public interest law and civil legal aid.
  2. FLAC's recent releases on personal debt law reform are available at
  3. Central Bank press releases this week:
    1. Mortgage arrears figures Q4 2012.
    2. Moneylending survey.
  4. The Central Bank press release at footnote 1  notes that the Bank has revised its figures for Q3 2012 because of ‘a new collection system’ and ‘reclassification issues’.
  5. Of the 94,448 private residence households in mortgage arrears at the end of 2012, some 75,415 are in arrears for more than 6 months (180 days+). Note that the figures record the time the account has been in arrears, not the amount of those arrears.
  6. According to FLAC’s calculations, the average arrears for mortgage debt across all categories shown on these figures is more than €12,000 (twelve thousand euro). However, for those in arrears for over 6 months, the average amount of arrears is more than €21,000 (twenty one thousand euro). For those in arrears for 720 days or more, the figure is over €38,000 on average.