Cyprian Brady (Dublin Central, Fianna Fail)

I welcome the opportunity to speak on the introduction of this extremely important guarantee scheme. Why is this scheme needed? Members on all sides of the House will agree that two and a half weeks ago the banking and whole economic system was on the brink of an abyss. Decisive, clear and swift action had to be taken. The Government must be congratulated on its decisive action in bringing forward the budget and introducing the bank guarantee scheme. Across the world, other countries have taken a lead from Ireland, which has a relatively small open economy in the context of global economics.

The primary purpose of the scheme is to restore and maintain stability in our banking system. We must protect against what has been referred to by all commentators as a serious disturbance in the economy. Ultimately, the scheme will ensure banks are open for the business of lending mortgages to young people and first-time buyers, loans and support to small businesses which create employment and day-to-day services for bank customers.

I agree with Deputy John Perry that, for the past 15 years, there has been a trend whereby banks have done everything to keep the customer out of the branch and having direct access to the people behind the counter. Initially, the trend to keep the customer at arm's length started with wages and salaries paid directly into the banks which was followed by the move to telephone and Internet banking. The guarantee will be a sea change as to how banks do their business.

The conditions and requirements that banks will now find themselves under are very stringent. The Minister stated that if a guarantee is activated, expenditure will ultimately be recouped from the institution covered by the scheme. That again is in the interest of the customer and the taxpayer.

The scheme looks to promote sustainable lending practices that support the appropriate availability of credit and favour enterprise in the economy, especially trading activities that contribute to the export of goods and services. This is crucial because Ireland must maintain job creation and be in a position to attract inward investment. As a small country, Ireland has always punched above its weight in attracting foreign direct investment. This legislation will ensure that this continues to happen. This is important for Ireland, particularly in the current international economic climate.

The strict terms and conditions that have been imposed on the operation of the scheme are crucial. The Minister has repeatedly pointed out that the public interest is paramount. This has come across in the details we have been given. The controls will ensure that no institution or shareholder will be unfairly advantaged. There has been much talk about the unfair advantage that some banks and building societies have had access to over the past number of years. This scheme will tackle that and ensure that, in the public interest — the day-to-day customers of banks — no unfair advantage will be gained by any institution or shareholder.

The appointment of public interest representatives is an indication of how this scheme will protect the public. The Financial Regulator and the Department of Finance, despite the negative comments about them over the past few weeks, are hugely experienced in the whole area of domestic and international finance. They have significant expertise regarding the banking industry as a whole in Ireland and abroad. The confidence the scheme puts in the regulator and the Department of Finance is well earned. Their regulation and scrutiny of the various institutions over the years will be strengthened by this legislation.

The Minister has assured us there will be a constant review of the scheme at least every six months. The flexibility built into the scheme will allow the Minister, the Financial Regulator and the Department to adjust the scheme and its conditions to whatever market conditions prevail at the time. This is crucial because over the past several months there have been fluctuations in banks' share prices almost hourly. Constant vigilance must be maintained, which is what the legislation proposes.

I particularly welcome the fact that the scheme will promote the highest standards of corporate social responsibility in the banking system. We are immune to banks and building societies having a responsibility to their local communities. The International Financial Services Centre is based in the Dublin Central constituency. It is made up of banks from all over the world doing billions of euro of business every day. There is a certain sense of corporate social responsibility in that area. However, that does not extend to the wider banking system. The scheme ensures and forces all banks and financial institutions to take their corporate social responsibilities seriously through constant monitoring of how they do business, lend and borrow money and pay remuneration. I particularly welcome the section dealing with remuneration and how instances where individuals are retiring or moving on are handled. This area will be subject to scrutiny.

We have heard claims that the scheme is a bonus, a helping hand, to the banks. Members can be sure the banks will not welcome outside scrutiny. They will not welcome the public interest representatives having access to their books and the power and ability to ask questions at board and senior management level. They do realise, however, that although the global events are outside their control, they will have to change. This is a sea change in terms of how Irish banks and financial institutions will do their business.

The flexibility built into the scheme to deal with issues as they arise is very important. The power to appoint people to a position to report directly back to the Financial Regulator, the Department, the Minister and, ultimately, this House will ensure the scheme's purpose — to protect customers who use banks and financial institutions on a daily basis — will be achieved.

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