Kieran O'Donnell (Limerick East, Fine Gael)

I wish to make a couple of observations on this section. On prudential measures, the Minister makes the point that these institutions are non-deposit takers. However, the subprime market is high risk. The Bill refers to the competency and organisational approach of the various institutions in the subprime market. Inherent in this should be the requirement to have sound financial backup. Those who do not have this backup will take more risks. Some of these institutions are currently lending at rates of upwards of 9% making it impossible for people to repay the loans.

It is critical that any institution operating in the subprime market is of good financial standing. The only way the Government and regulator can ensure this is the case is to put in place prudential measures. I do not believe it is possible to operate regulation in respect of non-deposit institutions without putting in place the required prudential measures.

I note that subprime lenders wishing to operate here will be required to apply for a licence within three months of the enactment of this legislation. How long will they be permitted to continue if they have not been granted a licence? Could it be for one year? These are important points.

The Minister spoke about retail credit firms and stated that the consumer protection code applies only to people with a turnover of up to €3 million. A business which starts out with a relatively low turnover could, within a relatively short period, increase its turnover to, say, €2.9 million and remain covered by the consumer protection code. However, if that turnover increases to €3.1 million the person will no longer be covered. Perhaps the Minister will consider looking at this again with a view to raising that limit.

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