Dismay at failure to reform ‘deeply flawed’ state advice scheme on mortgage arrears

17 December 2013

Flac Report009

Legal rights group FLAC today expressed its dismay at news that a state scheme providing mortgage arrears advice will continue relatively unchanged, despite the fact that it has not delivered the promised assistance to people in mortgage arrears.

Following an internal review conducted over the autumn, the a committee chaired by the Department for Social Protection has proposed only minimal changes to the Independent Financial Advice Service of the Mortgage Arrears Information and Advice Service. In reaction, FLAC has said that it was extraordinary that even where the government recognised that the current advice scheme wasn’t working, they weren’t prepared to change it.

According to FLAC Director General Noeline Blackwell, “it is both frustrating and disappointing for borrowers that no effective steps are being taken to amend a scheme that is too limited and is only available to borrowers when it is too late to make a real difference.” She expressed FLAC’s concern that this means government promises made back in March 2013 - to ‘even up the exchange’ between borrowers and lenders - have been forgotten.

Commented Ms Blackwell, “The scheme as it stands is deeply flawed and it seems there are no real plans to change it. Advisors will only be able to explain the terms of a lender’s offer to the borrower, not say whether it is good, bad or indifferent. And borrowers will still only get that explanation when the lender makes a long-term offer – exactly when they have no more room to negotiate.                                                                              

She said that FLAC had contributed to the review and, like many others who worked with those in mortgage arrears, it had proposed a scheme that worked with borrowers while they were actually in negotiation with the banks rather than when the negotiations had concluded. 

FLAC is also disappointed with a number of other aspects of the review, including its finalisation prior to discussions with stakeholders – a discussion which apparently is now due to take place in January 2013.




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. It also campaigns on a range of issues including personal debt, fairness in social welfare law, public interest law and civil legal aid.
  2. FLAC made its submission on a state advice scheme for people in mortgage arrears in June 2013.
  3. FLAC's recent releases on personal debt law reform are available in FLAC's news archive.
  4. In October FLAC published a guide for people in mortgage arrears to take them through the mechanisms available up to insolvency. The guide is free to download from the FLAC website as a PDF
  5. The press release issued by the Department of Social Protection on the MAIAS review is available online
  6. You can read about the government’s original plans for a full suite of support options to even the exchange between borrowers and lenders back in March 2013 here