Noel Ahern (Dublin North West, Fianna Fail)

The first and most important point I wish to make on behalf of the Tánaiste in responding to these issues is to highlight the importance of a well capitalised and soundly regulated banking system in underpinning the safety and security of savings, particularly in situations of financial uncertainty. Ireland has an excellent regulatory regime and a very solid banking system. The recently published IMF report on the Irish economy concluded that the Irish banking system is well capitalised, profitable and liquid. It also noted that the Central Bank is satisfied that major lenders here have adequate resources to cover a range of potential shocks.

As far as the effectiveness of the Irish regulatory system is concerned, the House will be aware that financial regulation here is based on a comprehensive and detailed EU template and conforms to international standards of best practice. The IMF report to which I refer explicitly acknowledged the strengthening of the financial regulatory and supervisory system in Ireland in recent years. In terms of the response to the change in financial market conditions, the Financial Regulator has said on a number of occasions that it has increased its ongoing dialogue focusing on recent financial market developments with other regulators and regulated entities in Ireland.

Major progress has been made in strengthening consumer protection in the financial area. The consumer director of the Financial Regulator has an explicit mandate to protect the interests of consumers. The introduction of the consumer protection code represents significant progress in that regard. The Tánaiste has already announced his intention to bring forward legislative proposals during the current Dáil session to ensure that all consumer lending, including what is described as sub-prime lending, will be subject to the consumer protection code. The debate on that legislation will present an opportunity to discuss this matter and to reign in those cowboys, if they exist, to which the Deputy refers.

In reviewing recent events affecting Northern Rock, it is important to state that the branch structure under which it operates in Ireland places responsibility for the overall prudential supervision of the bank with the UK authorities under EU law.

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