Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank Deputy Doherty for bringing this Bill to the House and for the debate that has taken place as a result. We all share a deep concern about the issue of the high mortgage repayments currently being faced by mortgage holders, and the stress and hardship that this causes to families. I do not think any side of the House has a monopoly on this, as the concern is shared by all sides and views have been put forward on the matter by Deputies on all sides. The Minister has made it clear that a penal banking levy in the budget or powers for the Central Banks to regulate interest rates will be considered if action is not taken by the banks on this issue in the coming weeks. It is important not to have a debate in a vacuum, and that is the context of this evening's debate.

However, the setting of interest rates is a complex issue and any move to administratively control interest rates, as proposed in this Bill, should not be undertaken lightly, given the long-term negative impacts for borrowers, the viability of the banks, and the good of the economy and country at large, as well as the many citizens who want access to mortgages now and in the future. As such, the Government is opposing this Bill for the reasons that have been outlined in the debate.

Increased competition in the banking sector is where we want to get to, as this will exert pressure on the banks to reduce mortgage repayments. The influence of competition in reducing interest rates represents the best value for the consumer, the economy and the country as a whole in the long term. This has been recognised in the most recent ESRI report today, as well as the Central Bank report. The Government has been active in encouraging competition in order to achieve this aim and to give customers more choice. In this context, I also understand that the competition and consumer protection commission is planning to provide better information to consumers to encourage switching.

The Government is also opposing the Bill because it has already taken action. The significance that the Government places on this issue was highlighted in May when the Minister for Finance called in the senior management of the six main mortgage providers to discuss the issue and put forward his views. He also requested that the Central Bank provide him with a report on standard variable rates, which has since been published. The banks now need to act on this matter, and we will be closely watching, expecting action. Action at this stage such as that suggested in this Bill would be previous, as there have already been moves by some banks to reduce rates. We are awaiting additional progress on this issue from the other banks but there is no reason not to expect further developments in the near future. We have made clear what options the Minister for Finance has available to him at budget time should insufficient progress have been made. It would not be sensible, therefore, in the middle of this process, when the Government has set out a clear path to follow, to intervene until the full impact, scale and nature of the moves by the banks as a result of their engagement with the Minister can be gauged. It would certainly be the best solution if banks were to make the commercial decision themselves to reduce rates.

In addition, the Government is opposing this Bill as it contains significant flaws which could, for example, result in only certain mortgages being included under its scope. Furthermore, as it is restricted to covered institutions only, there are a considerable number of borrowers whose situation would not be addressed. The Government has also taken into consideration the fact that the Central Bank does not want the power to regulate interest rates. Deputy Doherty spoke of his days in the Seanad and the fact that people did not listen to regulators, but the Central Bank has clearly said it does not want the power to regulate interest rates. The Central Bank was asked if it wanted the power to regulate interest rates, and it does not. The Governor of the Central Bank has outlined his view that the introduction of administrative control on interest rates would be bad for the country and he re-emphasised that ensuring official policy does not inadvertently deter competition and entry of banks to the market is vital for the long-term health of the economy. The Governor is not a biased participant in this but is giving his clear advice, based on his expertise, to the Government and the citizens of this country, and some weight should be attached to his comments.

Well-capitalised banks operating more competitively will, in the end, offer lower rates and better service to borrowers. The Central Bank report also makes clear that banks should not exploit the lack of competition. It is on that basis that the Minister engaged with the six main lenders, and we expect to see action in the coming weeks. The Minister has made it clear what will happen and what options are open to him should such action not occur. The Minister has committed to reviewing progress on the issue of reductions in mortgage repayments over the coming weeks and a follow-up set of meetings with each of the six banks will take place in September in advance of the budget.

A number of Deputies raised the issue of the sale of loan books to unregulated firms. These will be protected by the Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 when it is enacted. As Deputies know, this is currently working its way through the Oireachtas, and we look forward to further discussion on that Bill on Report Stage, which I believe has been set for 17 June.

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