Brian Cowen (Laois-Offaly, Fianna Fail)

I am aware of the reports referred to by the Deputy. The sub-prime market exists to provide finance to those who have difficulty accessing mainstream credit, usually owing to an adverse credit history or difficulties proving income. Consequently, interest on such loans is normally higher than in the case of mainstream credit, as the lender must allow for a greater degree of credit risk. As the Deputy may be aware, the level of lending in the sub-prime market is currently extremely small.

Sub-prime lenders are regulated in Ireland in respect of their lending activities under the Consumer Credit Act 1995. The Act makes detailed provision for the form and content of the various loan agreements and advertising of consumer credit. The Financial Regulator has powers of investigation, review and enforcement regarding matters covered by the Act. The Act also provides for a procedure whereby lenders not otherwise authorised by the Financial Regulator may be prescribed as a credit institution by the consumer director of the Financial Regulator for the purposes of compliance with the Consumer Credit Act 1995. If so prescribed, the lender in question is then required, under section 149 of the Act, to notify the Financial Regulator for approval of the non-interest charges and arrangement fees that it imposes on its customers. Failure to notify the consumer director in the Office of the Financial Regulator of new charges or changes to existing charges is now an offence.

The Deputy may wish to note that, as part of its consumer protection remit, the Financial Regulator continuously monitors new and developing financial products in the marketplace. In view of my role as Minister for Finance, I will give full consideration to any recommendation from the Financial Regulator that may require a legislative response.

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