Brian Cowen (Laois-Offaly, Fianna Fail)

Current levels of credit debt could become a cause of concern if they continue. However, I do not believe the current levels of indebtedness represent a substantial risk to the economy. It is to be expected that consumers seek to make use of the continuing levels of interest rates, which are historically low. Nevertheless, I fully support the vigilance of the Central Bank and the Financial Regulator on the issue of personal credit and mortgage debt, in reminding borrowers and lenders of the need for responsible behaviour. The high proportion of household indebtedness in Ireland relates to borrowing for house purchases which, in turn, involves the acquisition of an asset for such households. In the same way, borrowing by the business sector, which generally underpins investment, and the creation of business assets, which yield future income, reflect the strong performance of the economy and confidence in our economic prospects.

As far as overall economic and financial stability is concerned, an overall measure of credit encompasses both public and private sector credit and debt levels. The Minister for Finance has a key role in this regard in ensuring prudent management of the budget and overall sustainability of the public finances. In this context, our fiscal performance is among the best in the developed world, with Government indebtedness the second lowest in the euro area. Responsible budgetary policy has made a significant contribution to economic performance overall and to the achievement of record employment levels.

With regard to the issue of what legal protection consumers get in the face of increases in the cost of credit, the provision of consumer credit in Ireland is effectively regulated by the Consumer Credit Act 1995, which is administered by the financial regulator. It obliges credit providers to include specific information in all credit agreements with regard to such matters as the total cost of credit, the amount of each repayment instalment, the number of instalments and so forth. The purpose of obliging credit providers to provide this information is to ensure that consumers, when making credit decisions, are armed with full information about any credit agreement they are entering into and, most importantly, the impact that servicing a loan will have on the consumer's household budget.

On the issue of Ireland's private sector debt to income ratio, I fully support the vigilance of the Central Bank and the financial regulator with regard to personal credit and mortgage debt. House mortgage finance represents approximately 83% of the outstanding stock of personal debt. Accordingly, a high proportion of private sector indebtedness in Ireland relates to borrowing for house purchase, which in turn involves the acquisition of an asset for the households concerned. In the same way, borrowing by the business sector generally underpins investment and the creation of business assets, yielding future income.

As far as looking after the interests of the individual borrower and investor is concerned, the function of government is to provide an appropriate legislative framework for regulation of the financial services sector that is both comprehensive and robust. Within the implementation of the overall legislative framework, private sector credit debt and growth levels are, in the first instance, a matter for the Central Bank and Financial Services Authority of Ireland. This follows from its role as part of the European system of central banks and its functions as the financial regulator in the prudential supervision of financial institutions and the protection of the customers of those firms. In this regard, I fully support the vigilance of the Central Bank and the financial regulator regarding these matters.

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