Anthony Lawlor (Kildare North, Fine Gael) | Oireachtas source

I welcome this legislation and the debate on it enables us to discuss openly and transparently the issues people have in repaying their mortgages, whether they be on a variable, fixed or tracker rate, although the Bill only deals with variable rate mortgages. I would view the Bill as a tool to control interests rates. Sadly, this legislation is 15 years too late. If it had been enacted 15 years ago, even though Deputy Michael McGrath was not a Member of the House at the time, and if the Deputy had suggested this proposal in some form, we might not have ended up in the situation in which we are in. It might not have come to pass that banks loaned money to people who did not have the potential to pay back their loans. We had an opportunity in those days to ensure banks charged an interest rate that borrowers had the capacity to pay, rather than them selling 100% mortgages and other schemes that were available at the time. That is something we should have done in the past.

I am always wary of politicians stepping into an area where the Central Bank has a role. The Central Bank has sufficient legislation in this area. I have always believed the Central Bank and those involved in it should be vigilant with regard to banks and the interest rates they charge. The Minister has met the six major lending agencies in the recent past. The Taoiseach has said that if there is a need for legislation coming from the Central Bank there is no problem with it being introduced. The Minister said that if there is not some give by the banks voluntarily on this issue that during the budgetary process a levy can be put on the banks to curtail the current excessive interest rates.

There are many variables in the proposed legislation and I do not like variables. For example, there is a reference to "lenders' reasonable profit expectations". It seems that would be a decision by an individual as to what would be an expected profit. There does not seem to be a cross-European guide as to what profit a bank should make.

To increase competition within our banking sector, we must allow customers to be able to switch provider and to do so much more easily. That would drive down interest rates because there would be competition within the banking sector and it would allow customers not only to switch providers within Ireland but also within Europe. Borrowers should be allowed to switch to banks within Europe who can take them on and who charge a lower variable rate. The Competition and Consumer Protection Commission should examine whether banks are allowing their customers to switch provider and this should be possible across Europe. We come across cases where borrowers are paying different variable interest rates and if another bank is offering a lower rate, those borrowers should be allowed to switch to it. Perhaps legislation should be brought forward specifically to allow that to happen and make it easier for people to switch providers.

The Government is using a carrot approach in encouraging the banks voluntarily to reduce rates but there is the potential for it use a stick approach which could be either a budgetary levy imposed on the banks or if the Central Bank requests it such provision could be introduced without any difficulty.

I approve of certain points in Deputy Michael McGrath's proposed legislation but I cannot accept it as there is too much variability with respect to other points. I would rather if it included some fixed measures. I approve of the provision that we should examine the matter of allowing customers to be able to switch their mortgages and that would increase competition within the banking sector.

See this speech in context