Oireachtas Joint and Select Committees

Wednesday, 10 June 2015

Committee of Inquiry into the Banking Crisis

Nexus Phase

Ms Mary O'Dea:

Well, let me say in relation to my period in the ... of the regulator from 2003 right up to 2008 before I took on the position of acting chief executive, my role in law was as consumer director and that was my statutory function. And at that stage, precisely what we did do was look very closely at credit risk. So we looked at areas where we thought that there was problems; the build-up of credit was one. And seeing that, we built into our consumer protection code the concept of suitability in lending which didn't exist anywhere at the time. And that included affordability, so we introduced the concept of affordability. We also banned pre-approved credit cards. Prior to that, 42,000 customers a month were getting some ... a letter in their door saying you have been pre-approved for extra credit. We banned those completely. We also introduced requirements in respect of consumer protection loans so that if you consolidated, you know, your car loan and holiday loan and all of that into one, the provider was then obliged to tell you precisely how much extra this cost. So we introduced that requirement and we issued a number of warnings in relation to credit. You recall in 2006 when the SSIAs matured, a lot of people were getting large sums of money then. We were the only people who said, "Please use your money to pay down debt", and pointed out to consumers that this might be a good idea rather than use it for a different type of investment product.

So in my role as consumer director, I believe that's a principle that I followed a lot. Having said that, I would also say that reflecting back now and listening to all of the various groups internationally saying what went wrong in the crisis, I do think that sometimes we make matters much more complex than they need to be. And that's why I was thinking to myself that we can boil it down to be a lot more simple. And I think that a lot of what we were doing on the ... in the prudential area was looking at extremely complex models rather than focusing on these more simple issues.