Brian Cowen (Laois-Offaly, Fianna Fail)

All financial service providers that provide loans secured on a person's principal private residence are subject to the provisions of Part IX of the Consumer Credit Act. This is as a result of an amendment to the Act made last year, following consideration of a recommendation in the 1999 McDowell report.

The Consumer Credit Act is the principal source of protection to personal borrowers. The Act subjects all lenders who provide finance on the security of the family home to a range of obligations. These include: provision of a written loan agreement, quoting the APR and any other fees that will be charged; a requirement to warn the borrower about the risk of losing their home; and an obligation to put mortgage protection insurance in place. Apart from the special case of the family home, the Act does not apply where a loan is given for a commercial purpose.

There is no statutory oversight of interest rates except for the special case of moneylenders who come within the scope of Part VIII of the Consumer Credit Act. This special category of lender typically provides short-term loans to poor credit risks at very high APRs. Such lenders are required to hold a moneylender's licence and the financial regulator can refuse to grant such a licence on the grounds that the cost of credit is excessive. The requirement to hold such a licence and the corresponding oversight of interest rates only applies to this specialist category of lender.

The financial regulator already has the power under the Consumer Credit Act to give directions to a mortgage lender about misleading advertising as well as to prosecute for breaches of the Act. In addition, under the legislation establishing the regulator, its consumer director has responsibility for monitoring the provision of financial services to consumers generally and has the power to require a provider of such services to furnish information relevant to any inquiry or study that the director chooses to undertake.

I am at present consulting the Financial Services Ombudsman Council about the financial service providers not regulated by the financial regulator that should be brought within the scope of the Financial Services Ombudsman, when the ombudsman commences operations on 1 April. The ombudsman has extensive powers to provide redress to consumers who have been unfairly treated by a financial service provider. Subject to the views of the council, I can see merit in including those mortgage lenders who provide loans secured on a person's principal residence.

Criminal activity, including money-laundering, by financial service providers or any other persons is governed by criminal justice legislation. This is enforced by the Garda Síochána and the Criminal Assets Bureau. All entities whose primary business is lending are subject to the know your customer, reporting and other obligations under money-laundering legislation. Their professional advisers, such as accountants and solicitors, are also subject to these reporting requirements. All companies are subject to the enhanced company law regime that has been put in place in recent years, including the oversight role of the Director of Corporate Enforcement. The financial regulator's role regarding compliance by regulated institutions with money laundering, tax and company law is purely supportive.

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