1023. Deputy Barry Heneghan asked the Minister for Enterprise, Tourism and Employment whether his Department has examined the protection available to consumers who have paid deposits to building contractors that subsequently enter liquidation; whether consideration has been given to measures such as deposit protection schemes, mandatory client accounts, insurance-backed guarantees, or changes to the treatment of consumer claims in insolvency proceedings to reduce the financial losses suffered by householders; and if he will make a statement on the matter. [60360/26]

When a consumer pays a deposit to a contractor, including in the construction sector, this forms part of a legally binding contract. Under consumer law, traders are required to provide services with due skill and care and in line with what has been agreed. Where a trader fails to deliver the agreed service, consumers may be entitled to remedies, including a refund.

There are a number of practical safeguards available to consumers. Where payment is made by credit or debit card, consumers may be able to recover monies through the chargeback process where services are not delivered or a trader has ceased trading. In addition, the Small Claims procedure provides an accessible route for pursuing lower-value claims.

However, where a company ceases trading or enters insolvency, consumers who have paid deposits are treated as unsecured creditors under company law. This means that recovery of funds can be difficult in such circumstances. Nonetheless, consumers are advised to contact the liquidator in any situation where they are owed money by a trader who has become insolvent.

Officials in my Department have engaged with the Competition and Consumer Protection Commission (CCPC), the independent statutory body responsible for enforcing competition and consumer law under the remit of my Department.

The CCPC plays an important role in enforcing consumer protection law and promoting compliance by traders, as well as providing information to consumers on their rights and the options available to them. It does not, however, have a role in resolving individual claims or compensating consumers.

The State’s liquidation process is a well-established mechanism for the winding up of companies on both a voluntary and compulsory basis and can take the form of either a court-ordered insolvent liquidation, a voluntary solvent or an insolvent liquidation.

Under the Irish framework, the general order of priority means that consumers are generally ranked as unsecured creditors, thereby ranking behind secured creditors, such as Revenue (on behalf of the Exchequer), employees owed wages, and banks owed money on a secured loan. The stark reality of an insolvent liquidation, where the value of the company’s assets is less that its liabilities, is that invariably there will not be enough funds to satisfy all creditors’ demands leaving the consumer unable to recover their monies.

An appointed liquidator is independent in their role and the exercise of their duties. They have a statutory role to identify, take possession of and redistribute the assets to the creditors. To do so, the liquidator must realise the value of the assets for the benefit of the insolvency estate.

Limited liability is designed to encourage and foster honest enterprise by permitting individuals to engage in entrepreneurial activity while limiting personal exposure to financial loss in the event of commercial failure. However, the law demands that, in return for the privilege of limited liability, those availing of it act in good faith and abide by minimum requirements of governance, transparency and commercial probity.

Company law provides for robust compliance and enforcement mechanisms and sets out the clear legal duties that directors’ have in respect insolvency, as well as specific provisions in relation to reckless and fraudulent trading.

The Corporate Enforcement Authority (CEA), in particular, promotes high standards of corporate behaviour: It promotes compliance with company law; investigates instances of suspected breaches of company law; takes appropriate enforcement action in response to identified breaches of company law; supervises the activities of liquidators of insolvent companies; and operates a regime of restriction and disqualification in respect of directors of insolvent companies. Where a breach of company law has been established, the CEA will take action as appropriate.