from Pillar to Post A Series of Papers on issues arising in new and existing consumer debt cases in light of the Covid 19 pandemic Paper One: Setting the Context: a critical examination of data relating to consumer debt, welfare, labour market and the economy SERIES OF PAPERS from Pillar to Post A Series of Papers on issues arising in new and existing consumer debt cases in light of the Covid 19 pandemic Free Legal Advice Centres, June 2021 TITLES OF THE SERIES OF PAPERS —Paper One— 1 Setting the Context: a critical examination of data relating to consumer debt, welfare, labour market and the economy —Paper Two— ten yearS and Counting: Conclusions from a decade of attempting to resolve family home mortgage arrears in ireland —Paper Three— aSSeSSing Current reSearCh data on the payment breaks on credit agreements offered by credit institutions as a result of the Covid 19 pandemic —Paper Four— a review of the debt reSolution meChaniSmS and the Support ServiCeS: with final reCommendationS for reform flac: From Pillar to Post — Paper One CONTENTS Contents foreword: Eilis Barry Chief Executive, FlaC 3 about flaC 4 about the authors: Paul Joyce and Dr Stuart Stamp 5 introduction to the series of papers 6 paper one Setting the Context: a critical examination of data relating to 2 consumer debt, welfare, labour market and the economy 8 1.1 Pre-Pandemic Household Over-Indebtedness 8 1.2 Over-indebtedness during the pandemic 18 1.3 Data on wage supports, the Pandemic Unemployment Payment (PUP) and rates of unemployment 23 1.4 Potential redundancies and the risk to household finances 26 1.5 Vulnerable Sectors 28 1.6 Summary 30 flac: From Pillar to Post — Paper One Foreword —Foreword— Eilis Barry, Chief Executive, FlaC s a human rights organisation with a core partments of Finance and Justice, the Central object ive of access to justice, FlaC has Bank, the Insolvency Service of Ireland, the Com- aen ga ged in advocacy, research, cam - petition and Consumer Protection Com mission, paign ing, policy analysis and the provision of the legal aid Board, the Courts Service and the second-tier legal advice and training to money Citizens Information Board (the body responsible advice staff in Ireland on consumer credit, debt for MaBS) to have regard in the performance of and financial services for over twenty-five years. their functions to the need to promote equality of a rights-based approach to supporting people opportunity, eliminate dis crimination and pro- experiencing financial difficulties has been and mote human rights.1 Providers of financial ser- continues to be the hallmark of our work in this vices have a considerable advantage over area. By this we mean that in a marketised econ- con sumers in terms of power and resources and omy that is heavily depen d ent on the provision it is therefore incumbent on these state bodies to and the use of financial servic es, consumers ensure that redress mechanisms are available availing of financial products – particularly credit where rights are infringed. Entitlement to com- 3 – must be properly informed and protected and prehensive infor mation, legal advice and, where must be supported when circum stances outside necessary, legal rep resentation, are therefore key their control cause a change in financial capacity. components of these obligations. The Covid 19 pandemic has suddenly and radi- In summary, what is required is a rights-based cally altered the financial circumstances of thou- approach; one that aims to assist individual con- sands of individuals and households with latest sumers to make fully informed choices in relation figures revealing over 300,000 still in receipt of to their options and to protect consumers from the Covid PUP Social Welfare payment. as vac- unfair treatment, particularly when they have cines are rolled out and we emerge from the pan- acted in good faith. Critically, such an approach demic, we believe it is a crucial time to put the also seeks to identify and highlight the underly- issues of debt, both old and recent, under the mi- ing conditions that give rise to situations of in- croscope and importantly, to ask what is the plan justice and inequality of opportunity and income. to deal with the serious issue of unmanageable The ongoing process of campaigning for law re- debt and all that goes with it including social ex- form is therefore a core part of FlaC’s work in clusion. this area. Financial services are at the heart of how our economy and society functions, and With the government indicating that Covid in- how they are provided and supervised affects come supports will need to be phased out and the everyone. Central Bank suggesting that up to 100,000 job losses might be on the way, FlaC’s Senior Policy analyst, Paul Joyce, in collaboration with Dr Stu- art Stamp, exam ines the existing and potential consumer debt prob lem in this new series of pa- pers. Written from a debtor advocacy perspective, the objective of this series is ultimately to raise the question, what next? How will we prepare for 1 Irish Human Rights and Equality Commission act 2014, the real cost of Covid and what is the strategy to s.42. IHREC have also developed a guidance note that sets confront it? an important context here is the out questions that should be considered by public bodies in considering responses to Covid-19. See: obligation on public bodies with responsibilities https://www.ihrec.ie/app/uploads/2020/08/Guidance- in the areas of credit and debt, including the De- Note-on-COVID-19-and-the-Public-Sector-Equality-and- Human-Right-Duty-002.pdf flac: From Pillar to Post — Paper One About FLAC — About FLAC — FlaC (Free legal advice Centres) was founded in flaC reports in the areas of debt and credit: 1969 and is one of Ireland’s oldest civil society or- ganisations. It is a voluntary, independent, legal and human rights organisation which for the last an end based on means AN END fifty years has been promoting access to justice. a Report on how the legal BASED ON MEANS? FlaC works in a number of ways, it: system in Ireland treats uncontested debt cases Operates a telephone information and referral A report on how the legal system in the ¢ with an examination of al- Republic of Ireland treats uncontested consumer debt cases with an examination of alternatives and proposals for reform. line where approximately 12,000 people per ternatives and proposals annum receive basic legal information. for reform (May 2003) Paul Joyce ¢ Runs a nationwide network of legal advice clinics in 71 locations around the country where volunteer lawyers provide basic free legal advice to approximately 12,000 people to no one’s Credit per annum. The Debtor’s experience of Instalment and Committal TO NO ONE’S CREDIT 4 ¢ Is an independent law centre that takes cases Orders in the Irish legal THE DEBTOR’S EXPERIENCE OF INSTALMENT AND COMMITTAL ORDERS IN THE IRISH LEGAL SYSTEM in the public interest, mainly in the areas of system (June 2009) homelessness, housing, discrimination and disability. ¢ Operates a legal clinic for members of the Roma Community. redressing the imbalance ¢ Has established a dedicated legal service for a study of legal protections Travellers. available for consumers of ¢ Operates the public interest law project PIla credit and other financial that provides a pro bono referral scheme that services in Ireland facilitates social justice organisations receiv- (March 2014) ing legal assistance from private practitioners acting pro bono. ¢ Engages in research and advocates for policy For more of FlaC’s work in the area of debt law and law reform in areas of law that most af- reform visit https://www.flac.ie/priorityareas/debt- fect the marginalised and disadvantaged. law-reform/ FlaC’s vision is of a society where everyone can access fair and accountable mechanisms to as- sert and vindicate their rights. FlaC makes policy For more of FlaC’s work in the area of con- recommendations to a variety of bodies includ- sumer credit law reform visit ing international human rights bodies, drawing https://www.flac.ie/priorityareas/consumer-credit- on its legal expertise and providing a social inclu- law-reform/ sion perspective. flac: From Pillar to Post — Paper One About the Authors — About the Authors — paul Joyce, bl, works as Senior Policy analyst with Free legal ad- vice Centres (FlaC). He is the author of both of FlaC major reports on debt and the legal system in Ireland, ‘an End based on Means’ published in May 2003 and ‘To No One’s Credit’ published in July 2009, and numerous policy reports and submissions. He is a former member of the Financial Services Ombudsman’s Council and served as a member of the government-appointed Expert Group on Mort- gage arrears and Personal Debt in 2010. Paul is also co-author, with Dr Stuart Stamp, of FlaC’s report, ‘Redressing the Imbalance’, a study of the legal protections available for consumers of credit and other financial services in Ireland, published in March 2014. On be- half of FlaC, he has provided technical legal support and training to staff of the Money advice and Budgeting Service (MaBS) for over two decades. He also has extensive experience in the area of em- ployment rights. Paul is a law graduate of University College Dublin (UCD) and the King’s Inns. 5 dr. Stuart Stamp is an Independent Social Researcher and Re- search associate of the Department of applied Social Studies at Maynooth University. His main areas of interest are personal over- indebtedness and financial exclusion from an inequality and human rights perspective.