Dinny McGinley (Donegal South West, Fine Gael) | Oireachtas source

I assure the House that this Government will continue to work hard to create an environment conducive to the entry of new entrants to the banking market in Ireland. To ensure there is a level playing field for potential new entrants to the Irish market so that they can compete, this Government has clarified to the markets that we do not want or plan to support the State-supported banks beyond what is absolutely necessary. The industry-wide credit register will allow for the appropriate measure of risk in lending, allowing incumbent and new lenders to lend with full visibility of the risk of that lending. The switching codes for bank customers enhance competition and force banks to work hard to retain their customers. We have encouraged risk sharing partnerships to encourage new lending, such as the AIB-European Investment Bank lending initiative. The Government actively supports potential new entrants and will be open to all inquiries on that front. Competition for banking services is evolving and the Government will continue to lead the debate at EU level on the mechanisms to promote alternative sources of financing.

The Minister for Finance last night outlined the measures taken by this Government to improve access to credit. It was clear that no single measure would provide the silver bullet and so in budget 2014, the Minister for Finance announced a number of new measures to add to and to leverage existing measures, all with the shared goal of improving access to finance for SMEs.

A key announcement in budget 2014 was a comprehensive communication strategy which over the coming months will be rolled out and will raise the level of awareness among SMEs and entrepreneurs of the full suite of developmental business supports available to them. To improve the framework of credit supports available to SMEs, the Minister also announced a subsidised financial training programme for small businesses. This programme will be carried out in conjunction with the Skillnets management works programme and is designed to improve the financial capability of SMEs. Approximately 1,000 SMEs will benefit from this programme in 2014.

As the economy recovers, the Government expects increased demand for the Credit Review Office services which fulfils an important role in assisting borrowers who have been refused credit by the banks. The limit for loan applications that can be appealed to the Credit Review Office was, therefore, raised from €0.5 million to €3 million to facilitate requests from a broader range of SMEs and a larger team of reviewers is now in place. The Credit Review Office is available to assist businesses which have been refused credit and it is currently overturning 55% of the refusal decisions referred to it. Anyone who has been refused credit by the banks should avail of the services of the office.

We will continue our engagement with SMEs to ensure we are making the changes that they need to see in order to grow. The Government's engagement with SMEs comes not only from the views of various representative bodies, but also through the direct access afforded by the credit demand surveys. They use direct and comprehensive contact with SMEs throughout Ireland and across the various sectors of the economy.

In June, the Government announced its decision to establish the Ireland Strategic Investment Fund which will absorb the National Pensions Reserve Fund and activate the NPRF's €6.4 billion of resources, making it available for investment on a commercial basis to support economic activity and employment in Ireland. The Minister for Finance anticipates the enabling legislation will be enacted early next year. Using the Ireland Strategic Investment Fund, we will maximise our resources to enhance growth in the Irish economy and improve key infrastructure to maintain Ireland's attractiveness as a place to do business and to create employment.

Already, in the lifetime of this Government, the NPRF has established funds that support both strategic projects and a number that support SME financing that collectively involve commitments of €375 million. The role of a strategic investment bank over and above the contribution expected from the Ireland Strategic Investment Fund will be informed by the requirements of the economy once the Government's key immediate objectives for the repair of the banking system have been completed.

The rise in people using moneylenders could be a cause for concern taken out of context. However, the Government is conscious that increases in unemployment and reductions in income have impacted on credit worthiness and collateral values, making it more difficult for individuals to obtain loans from conventional sources. In some circumstances, these individuals may turn to moneylenders and it is important that regulators can provide the necessary protections for those consumers.

It should be clear that this Government does not in any way take this issue lightly. This Government has worked hard to introduce measures to ensure that viable businesses, in particular SMEs, have access to credit from a broader range of sources. We will always maintain an open dialogue with SMEs to ensure that their voice is heard and that the correct and most effective solutions are being implemented. The Government is committed to ensuring that an adequate supply of finance is available to meet the requirements of SMEs and households as the economy recovers.

See this speech in context