The Irish Mortgage Holders Organisation (IMHO) has called for clarity on why the Government has not acted to address an apparent flaw in the personal insolvency legislation.

Speaking to RTÉ News, IMHO Chief Executive David Hall said that such an ambiguity could undermine the workings of personal insolvency legislation.

An article in yesterday's Sunday Times reported that a memo to the Department of Justice in April warned that an amendment was needed to address potential problems with the act.

A briefing note, prepared for Minister Frances Fitzgerald on her appointment, said a short technical bill was needed to correct "a potentially serious drafting ambiguity" in the 2012 Personal Insolvency Act.

Mr Hall said: "It seems to be an error, it makes reference to an ambiguity but it's an ambiguity that could undermine the entire legislation, as the memo to the minister states.

"It was put on the Cabinet's table on 1 April so it's quite concerning that we're now a number of months on without this being corrected.

"Maybe now that it hasn't been corrected it might give an opportunity to correct an entire act that has failed miserably in resolving the over-indebtedness for hundreds of thousands of people throughout the country."

Mr Hall said that the Attorney General had made recommendations for the insolvency legislation to be amended because it had effectively given a second veto to creditors.

That is, by allowing two insolvency arrangements, Debt Settlement Arrangements and Personal Insolvency Arrangements, this could be interpreted as creating an extra layer of bank veto.

Mr Hall added that the effects of a flaw of this nature would reduce confidence in the voting requirements for other pending arrangements.

He said that it is inexcusable that a correction has not been made given that the Cabinet has been aware of the flaw since the beginning of April.

Mr Hall said it appeared that up until 30 March no-one had been at a disadvantage as a result of the flaw, but he said there had been no clarification on whether anyone has been affected over the past three months.

He said that given the low number of arrangements that have been processed in that time it would not be difficult to correct in the event of the flaw having an effect.

Mr Hall added that the Department of Justice indicates an intention to bring forward some for of legislation in September but he is concerned about the effects of this ambiguity between now and then.