Urgent action on personal insolvency
Sir, – The Government should indeed move fast to introduce the personal insolvency legislation (Opinion, December 5th) Such legislation will be welcomed by people who took out mortgages on properties in cases where the loans were sanctioned by the banks based on proper calculations of ability to repay but changing circumstances since then have created difficulties in making repayments.
But some people applied for loans which were sanctioned by the banks when it should have been clearly evident to the bank at the time of application that there was little or no hope of the loan(s) ever being repaid. This was reckless lending, in which the banks ignored standard banking practice and allowed carelessness in loan approvals. The personal insolvency legislation square peg won’t fit that hole, nor should people be forced to take that route just because they have no other alternative.
The tort of reckless lending is not defined in Irish law as a wrong.
Creating that definition, either in a statutory instrument or in an amendment to existing legislation could be done very quickly and would enable two-sided discussions with the banks to take place. The judiciary, in cases of reckless lending, can continue to say that loans were foolhardy or that banks were intent on lending money without proper analysis or that they made foolhardy decisions, but no judgments will ever be made in favour of the borrower without legislation to define reckless lending.
Everyone deserves a second chance. The personal insolvency legislation is one size, and it does not fit all. We need more sizes.
Let’s get the legislation in place to define reckless lending and let the judges judge! – Yours, etc,