Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 60: To ask the Minister for Finance the action he proposes to take in response to the endowment policy scandal; and if he will make a statement on the matter. [30294/04]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Irish Financial Services Regulatory Authority, IFSRA, is currently studying the position on endowment loan shortfalls, having commenced a survey earlier this year to determine whether and to what extent there will be difficulties for customers. It would be inappropriate to reach any conclusions on this issue in advance of IFSRA's consideration of the outcome of the survey.

There are currently no reliable data on the overall numbers of cases where there may be a shortfall. However, endowment loan approvals in the past five years represent just 3% of the overall mortgage market, although it has been considerably higher in the past. Since 1989, a total of 90,000 endowment loans were approved, which is roughly 10% of total loan approvals since 1989.

Recent publicity on endowment mortgages has focused on the possibility that a significant number of holders of such mortgages will have a shortfall of funds when their mortgages reach the end of their normal term. These products inherently require customers to take some risk. They are exposed to market fluctuations, just like any market-based life assurance investment. The fact that an endowment mortgage holder does not gain as much as expected is not in itself an indication of any inappropriate practices on the part of the bank or insurance company concerned.

There is already a substantial volume of legislation in place on these products. For example, the Consumer Credit Act 1995 requires that all endowment loan application forms must contain a prominent notice to the effect that there is no guarantee that the proceeds of the insurance policy will be sufficient to repay the loan in full when it becomes due. The Act also obliges the provision of ongoing information on the performance of the policy, as do the Life Assurance (Provision of Information) Regulations 2001. The Central Bank and Financial Services Authority of Ireland Acts 2003 and 2004 established IFSRA and considerably strengthened the regulatory environment, including through the provision of an enhanced structure for dealing with consumers' complaints about financial institutions.

I will continue to review the adequacy of the legislative framework as the information developed by IFSRA becomes available.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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In his response the Minister has confirmed the endowment mortgage issue affects some 90,000 policyholders. Has he any information at this point on the number of people who believe they have been mis-sold a policy in this regard who have come forward as a result of the invitation or appeal to do so by the Consumer Director, Mary O'Dea? Is the Minister in a position to confirm that the cases presenting would be included in IFSRA's ongoing examination of the endowment loan shortfalls? I expect that they must be included.

Can the Minister indicate whether he has given any further consideration to measures, legislative or otherwise, that might be necessary to tighten up this area, given that there are undoubtedly people who are suffering and are continuing to suffer as a result of the shortfalls experienced? Does he believe this area should be more tightly regulated? Is there not a case for restrictions on the types of mortgages that can be sold to customers or consumers? Experience of the product indicates that this is a particular area which needs better protection for consumers and tightening of the regulations applying to the financial institutions.

The Minister implied in his reply that he is unlikely to take steps in advance of the IFSRA report. Will he confirm whether, following the report and having given it his full consideration, he will be open to considering the recommendations of IFSRA and to taking the substantive and appropriate steps necessary?

Brian Cowen (Laois-Offaly, Fianna Fail)
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I do not wish to anticipate the findings of IFSRA, which was set up to provide an enhanced regulatory and supervisory regime governing the financial services industry, primarily through the enactment of the Central Bank and Financial Services Authority of Ireland Act 2003. It is the competent authority in this area and it should be allowed to get on with its work. Having commenced a survey earlier this year, it is studying the situation to determine whether and to what extent there will be difficulties for customers. It would be premature at this stage to second-guess the outcome of the survey, the results of which will be used to establish the nature of any appropriate action to be taken. I will monitor the position as the information obtained by IFSRA becomes available.

While it is estimated that approximately 90,000 endowment mortgages were sold in Ireland since 1989, there are no reliable data as yet on the overall numbers of cases where there may be a shortfall. Obviously there may not be a shortfall in every case. We must await the outcome of the survey. The Deputy referred to the consumer director of IFSRA, Ms Mary O'Dea, who has encouraged people to come forward if they are worried about the possibility of having been missold an endowment mortgage. The advice at the moment is that people should complain in the first instance to the company from whom they bought the policy. Following the enactment of the Insurance Act 1989, a code of conduct for insurance intermediaries and guidelines were drawn up by the industry in consultation with the then Department of Industry and Commerce. The key requirements of the code were that the intermediaries should know the clients can give the best advice.

Dinny McGinley (Donegal South West, Fine Gael)
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Ceist 61——

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Gabh mo leithscéal, a Chathaoirligh, nach bhfuil seans agam——

Dinny McGinley (Donegal South West, Fine Gael)
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D'úsáid tú beagnach trí nóiméad ar do chéad cheist bhreise, a Theachta. Tá seacht nóiméad caite againn ar an gceist seo. Mar sin, caithfimid dul ar aghaidh.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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De ghnáth, bíonn seans beag ag gach Teachta an dara ceist bhreise a chur.

Dinny McGinley (Donegal South West, Fine Gael)
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Tá mé buartha faoi sin ach tá sé in am don chéad cheist eile.

Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Is mór an trua é sin.