David McCarthy on Galway Bay FM, 27th Sept, 2012

Question:  I am struggling financially and have been watching with interest the Personal Insolvency Bill.  I have not seen any media coverage on this recently and I am wondering do you know where this is at currently?

Answer:  Unfortunately this bill is taking far longer to go through the process in the Dail than was originally expected.  The latest update is that it should be passed early in the New Year however any further delays could be possible.  I am concerned that the involvement of the banks in determining the final draft of this bill may prove the legislation to be far less attractive than it was originally envisaged. 

Question: Can you explain what this initiative recently announced by the banks is, in relation to accountants providing advice to people in difficulty with their mortgages?

Answer:  The banks announced recently that they will pay for a once off consultation with an accountant for customers who have renegotiated their mortgage terms with their bank.  Whichever authorised accountant you consult with is not in a position to offer you advice but rather their only role is to explain the revised loan agreement that you are about to sign.  I would consider this a PR exercise by the banks and of little value to their customers.

Question: I have a mortgage which is on a variable rate with Bank of Ireland and I see they have recently increased the interest rate.  When there has been no change in the European Central Bank rate can you explain why they are able to do this?

Answer:  Unfortunately banks have the discretion to change the interest rates on variable mortgages at will.  We have seen a considerable increase in rates on these loans over the last 18 months, as our banks attempt to recoup lost income in other areas.  Traditionally the interest rate on variable mortgages only changed when the market rate was altered but recent actions by the banks have altered this policy.

Like many customers of the banks who have borrowings with them, variable rate mortgage holders are easy ‘targets’.