Presentation to Joint Committee on Finance, Public Expenditure and Reform

1. Presentation to Joint Committee on Finance, Public Expenditure and Reform National Executive Committee of all MABS staff 19th October 2011

2. MABS : Who or what is it ? • 52 Companies • 130 Money Advisers • MABS NDL – development & support • Voluntary Management Committees • CIB – support and funding conduit from Dept of Social Protection • Minister of Social Protection

3. MABS : Who are the clients ? • PEOPLE • Just like you and me …. • Who lost their job …. • Whose business failed …. • Who experienced illness …. • Or relationship break up …. • Who got caught in circumstances beyond their control …. • Who were on low income …. • Or a social welfare payment …. • Who are working class, middle class, formerly well to do ….

4. MABS Activity 2010 • Active Ongoing Indebted Clients 24,755 • New clients to service 21,653 • Helpline Calls 30,000 • Website hits 250,000

5. MABS : How are the clients? • Stressed • Emotional • Desperate • Sometimes …. Hopeless & Suicidal • How many of us are only a payday or two away from finding it difficult to meet our commitments …… • The staff are informed by their interaction with our clients over a period of 19 years and bring a flavour of this experience by the following sample case studies

6. MABS : Client Cases • Client A – Male, Daughter at College living at home, Child from a second relationship, Public sector employment, Sub-prime Mortgage • Monthly Income 2542.41 • Mortgage / Insurance (arrears 12878.87) 903.77 • Utilities 247.25 • Food / Housekeeping 524.41 • Child Maintenance 173.00 • Phone/Transport/Education/Clothing/Househ Maint 375.65 • Medical Costs 120.00 • Hair/Pocket Money/Family Outings/Cigs & Alc 274.95 • DEFICIT -76.62 • Secondary Debts 25839.52 • Outstanding Mortgage Balance • (26 years left to pay taking client to his 80th Birthday) 157,000 • Repossession order being sought

7. MABS : Client Cases Client B – Female, recently separated, 4 children, no mortgage owns the family home jointly with husband. Dissolved business. Client had signed some personal guarantees for the business as had her husband • Social Welfare income weekly 264.70 • Total income including maintenance/child bene etc. 458.70 • Total household expenditure 521.35 DEFICIT -62.65 • The guarantee holders are seeking judgement • Guaranteed debt 158,000 • Guarantee holder 1 is being paid E40 per month • Guarantee holder 2 is not being paid This family may lose their home but not because they are not paying their mortgage.

8. MABS : Client Cases CLIENT C – Married couple, former construction worker, Employer forced purchase of a lorry • Monthly welfare 1460.28 • Total expenditure 1439.00 • Outstanding Mortgage 100k • Home value 350k ? • Secondary debt including lorry (36,300) 83,200 • The payment time to deal with debts 325.5 years • To pay back at interest rate above .02% Never When this case went to Court the court struck a E15 repayment

9. MABS: Client Cases Client D – Married couple, 4 children, rural Ireland, new build house • House Value 1 m ….. 350k ????? • Outstanding mortgage (arrears 12k) 625k • Secondary Creditors – 14 372.5k • Monthly mortgage repayment 3500 pm • Income (mixture salary/ social welfare) 2706.60 • Expenditure 2523.00 • Disposable income 183.60 This client expressed suicidal ideation.

10. MABS : What does it have to offer? • Experienced, committed, trained staff, many with professional qualifications, all with well developed inter-personal skills • National Presence in communities near users • Infrastructure – offices, payment systems, protocols, standard procedures, controls • Reputation & relationships of trust with client, creditor, statutory & voluntary organisations • Tried & Tested Holistic approach leading to sustainable repayment – social dividend • A database which if adapted and anonomised could provide debt data from a representative sample of debtors in relation to employment status, welfare payments etc. and inform policy. • Experience of Settlement • European recognition as an example of best practice

11. What is Needed to Deal the Debt Problem ? • All debts, mortgage & consumer credit, must be dealt with together to achieve a workable solution. • Establish debt management agents to help people work towards sustainable repayments for the debtor and a realistic repayment stream into the financial system • Acknowledge that some mortgages are unsustainable and some consumer credit debt will not be repaid • Acknowledge that some people will need to be helped with re-housing • Put in place insolvency and settlement systems which all people to move forward to become socially & economically productive “after debt”. • Maintain appropriate access to credit for participants • Mediate settlements, minimise costs.

12. Learn from International Experience • The UK system of debt management, extensively referenced when the Law Reform Commission reported, is now being reviewed. • The UK has installed a Government funded Money Advice Service as Debt Services reviewed by the OFT were found to have many compliance and quality issues despite licensing and regulation. • The main failings of licensed private operators were in relation to transparency and competence levels of front line staff. • Sustainable holistic approaches result from a Money Adviser being able to empathise with the client situation. The failure of many UK voluntary debt arrangements has been attributed to the lack of face to face interactions with debtors.

13. MABS : Full Circle • MABS was set up as a response to Moneylending almost 20 years ago, people are being driven back to Moneylenders right now • We are in danger of sending those is debt round in ever decreasing circles through the lack of pragmatic response to the debt crisis • Doing too little now may lead to huge social and financial costs later …….

14. Thank you for your attention • Questions ?