Transcript Presentation to Joint Committee on Finance, Public

National Executive Committee of all MABS staff
19th October 2011
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
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 ….
MABS Activity 2010
 Active Ongoing Indebted Clients
24,755
 New clients to service
21,653
 Helpline Calls
30,000
 Website hits
250,000
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
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)
Repossession order being sought
157,000
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.
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
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.
MABS : What does it have to offer?
 Experienced, committed, trained staff, many with professional
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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
What is Needed to Deal the Debt
Problem ?
 All debts, mortgage & consumer credit, must be dealt with
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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 rehousing
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
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.
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 …….
Thank you for your attention
Questions ?