At the launch of the Central Bank of Ireland's annual report on April 30th, Governor Patrick Honohan (pictured above) was asked for an update on the talks being brokered by the regulator between secured and unsecured lenders on agreeing a framework for dealing with the debts of those in arrears with multiple lenders.

Honohan said they seemed to be progressing well, much to his surprise. At the outset, he thought there was little or no chance of agreement being reached between the banks, credit unions and credit card groups.

Lo and behold, on Wednesday, the Central Bank announced that agreement has been reached on a three-month pilot scheme starting in June for 750 borrowers.

A range of treatments have been agreed to deal with people depending on their level of indebtedness. It is seen as a key piece of the jigsaw to deal with mortgage arrears and household debts.

Up to now, dealing with a person’s debts has been a bit of a bun fight with the banks always seeking to protect their security on property and other assets.

Customers were often accessing funds from their credit cards or credit unions to keep the wolf from the door. Sometimes, these repayments were being prioritised over paying the bank.

So it makes sense for the lenders to co-operate with each other in reaching a solution for a borrower, rather than having them availing of potentially costly insolvency or bankruptcy proceedings.

There could be a fly in the ointment. The Irish League of Credit Unions, which represents 383 institutions in the Republic, has yet to recommend it to its members.

The Central Bank is confident that the main credit unions will participate, although it accepts that there will be some outliers.

Getting agreement on the scheme is a feather in the cap for Fiona Muldoon, the Central Bank's director of credit institutions and insurance supervision who chaired the talks. It might prove to be timely if she has ambitions to replace Matthew Elderfield as financial regulator when he returns home to the UK to take up a position with Lloyd's Banking Group later this year.