Brian Cowen (Laois-Offaly, Fianna Fail)

The Seanad has agreed a Government-sponsored amendment to the Bill relating to section 19. The purpose of this section still ensures that all non-deposit taking firms engaged in retail lending are subject to regulation by the Financial Regulator and brought within the scope of its consumer protection code. However, the technical drafting of this provision presented significant legal and technical challenges in particular in the areas of the definition of credit and retail credit firms. The original definitions created the prospect that businesses involved in commercial and corporate finance transaction could be subject to the legal definitions and require to be authorised as retail credit firms.

As Deputies will be aware, the policy objective motivating the legislation related particularly to bringing within the ambit of the consumer protection powers of the Financial Regulator sub-prime lending and other retail lending carried out by non-deposit taking firms that are not currently subject to regulatory oversight other than in a limited way under the terms of the Consumer Credit Act 1995. In order to achieve this objective, credit is redefined as credit extended to individuals, including consumers. This captures the core business of the firms, which are subsequently defined as retail credit firms for the purpose of their regulation. This makes some definitions in the Bill redundant as they refer to forms of credit which are now excluded from the definition and they have therefore been deleted.

The approach taken ensures the Financial Regulator can focus on the activities that require attention without being required to spend time and resources on unnecessary oversight which had the potential to impact adversely on the availability of credit to businesses and the financing activities carried out in the international sector. I am satisfied these amendments provide an effective regulatory system for non-deposit lenders engaged in retail lending. They strike the right balance between the need for appropriate consumer safeguards in the area of retail lending and concerns regarding the inadvertent effect of the original approach on the business and financial sector.

My Department will continue to work with the Financial Regulator as this new regime is implemented to ensure an appropriate regulatory regime is in place.

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