Our treatment of those who can’t pay their debts is misguided and destructive
Column: The Central Bank’s proposed framework for restructuring debts at least makes an attempt to see people as human beings
“If a publicly-funded body like Mabs was in the driving seat, the Government could not pretend it was unaware of the human cost of the austerity measures it is enforcing.” Photograph: Aidan Crawley
It is frightening to see that in relation to debt and insolvency, we are reaching for the same kind of “solutions” that got people into trouble in the first place. In other words, we are still looking at the bottom line, rather than at the individuals and families who are facing devastation.
You get a mortgage for a house, but you repossess a home. The people in turmoil due to debt don’t forget that, and neither do their friends and families, but who is looking out for their interests at a wider societal level?
The Central Bank announced a pilot programme this week designed to reach people who do not need the strictures of an insolvency programme, but who are in financial trouble nonetheless. In fairness, this proposed framework for restructuring debts owed to multiple lenders at least makes an attempt to see people as human beings rather than figures in a bookkeeping exercise.
At the time of writing, it is not yet clear who will be responsible for rolling out the Central Bank’s programme. There is one clear candidate: the Money Advice and Budgeting Service. But will Mabs be entrusted with it? The sidelining of Mabs in recent times is curious, to say the least.
For example, take personal insolvency practitioners, who are supposed to be drawn from the ranks of accountancy, financial advice and the law. These practitioners will have to be trained, which will no doubt be a moneyspinner for professional bodies. Is there not something questionable about training a private sector cadre to make money out of other people’s financial desperation?
Insolvency should always be a last resort. It is in everyone’s interest to secure a negotiated, voluntary solution. Mabs, founded 21 years ago, is the specialist in this area and has offices all around the country with trained personnel. It offers free, confidential and independent services. Why was it not entrusted with this?
Remember why Mabs was set up? People were falling into the clutches of moneylenders, and ending up in a vicious downward spiral with no hope of escape.
Over the years, Mabs became an intermediary trusted by all parties, while remaining independent of the banks and the major energy utility providers. It has a strong local and community ethos and treats people like human beings, not irritating statistics or reprehensible failures. There was never a greater need for an independent one-stop shop for people in financial difficulty of whatever kind, one that is citizen- rather than creditor-focused. Yet instead, the various “solutions” are becoming more and more fragmented. It seems to be Government policy to push debt and insolvency advice into the private sector, allegedly to reduce the cost to the public. The effect is to make debt and despair simply private matters.
Impact of cutbacks
If a publicly-funded body like Mabs was in the driving seat, the Government could not pretend it was unaware of the human cost of the austerity measures it is enforcing. Farming it out to the private sector makes it much easier to ignore the impact of cutbacks.
Delegating to the private sector is not the only way to lower public costs. For example, the money being given by banks to accountants just to provide independent financial advice to distressed mortgage holders could have been given to Mabs to provide a broader, more humane service. Even now, banks and other agencies could be levied to fund an expansion of Mabs.
Three words hover in the air: Combat Poverty Agency. Like Mabs, Combat Poverty was not afraid to tell the truth to the State, or to keep the focus on the human face of poverty. It was slowly silenced, disappearing into the maw of Government. Will Mabs follow?
If it does, it will be shameful. Some elements of Labour used to be firm Mabs supporters. With Labour in Government, we might have expected at least a discussion of our priorities as a society. Aside from Michael D Higgins’s occasional foray, and the interventions of individuals such as Róisín Shortall and Colm Keaveney, no such discussion has happened.
Who is concerned about the assault on the mental health and dignity of people who are close to being crushed by debt? Who will speak for the parents in their 40s, with teenagers facing into the Junior Cert and Leaving Cert in a few weeks’ time, desperately trying to keep from their children that their family home is at risk?
We treat these people as if they were guilty only of personal moral failure. We ignore the systems failures and the rotten societal priorities that landed many of them in this mess. There is a huge imbalance of power between creditors and debtors. Yet how come the “won’t pay” brigade, the big boys, are often allowed to walk away, while the “can’t pay” brigade are shamed and humiliated?
We used to talk more about whether we wanted to be an economy or a society when we had our illusory boom. In these terrible times, we seem to have bowed our heads and accepted that only the economy matters. It is desperately misguided, sad, and destructive.