Noel Harrington (Cork South West, Fine Gael) | Oireachtas source

I thank Deputy McGrath for introducing this Private Members' Bill and I welcome the opportunity to speak on it. There is a problem with high standard variable interest rates, which are punitive on bank customers. The problem has to be resolved and a solution found. The Bill has been brought forward as a measure of good faith to force the banks, through the Central Bank or whatever mechanism, to reduce interest rates under certain conditions. That sounds like a very simple method of forcing the Central Bank, which is answerable to the Department, to interfere with the setting of standard variable interest rates but I believe competition in the market will deliver what the consumers wish for in this instance. It is a mistake to force the Central Bank which has stated that it is unwilling to interfere in the setting of interest rates to do this, and there are many reasons for that. When the economy went south, many of the banks left, including Bank of Scotland, and competition became less of an issue in the Irish banking sector. We have a few large players here who are dictating the market. I am concerned that if we force banks to lower interest rates in one sector, there is an inevitability in the current market that they will get it somewhere else. For example, they may get it in the commercial sector or other areas of operations in the banking sector. That may cost businesses and commercial activity unduly, and make it uncompetitive to obtain funding to get the economy back on track.

Our economy is set to grow in the coming years by between 3% and 3.5% per annum. That is an attractive area in that international banks would look at Ireland as a potential jurisdiction for entering the market. That fact must be considered. It is not happening quickly enough, but I believe it is being considered. There is significant potential to attract other financial institutions to this country to participate in what is a very attractive market. If consumers were given that choice, I believe they would respond positively.

Contrary to what has been alleged, it is not that a hands-off approach is being taken or that we do not realise the full extent of the problem. The Minister has met with the banks on several occasions. He is considering what they said, and their report, and he will react accordingly. I presume he will meet them again before the budget is announced in October but interfering, against the advice of the Central Bank, with a centralised banking area in terms of standard variable rate mortgages is a dangerous concept and also in terms of precedent. We have interfered in regulatory authorities in the past and it has not served us well.

I assume Deputy McGrath would also believe that competition will deliver here. It may be too slow, but I suggest that a growing economy would deliver the competition this market deserves. I welcome the Bill but I believe it is trying to create a solution in the wrong direction.

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