John Gerard Hanafin (Fianna Fail)

I, too, welcome the Minister of State, Deputy Noel Ahern. The Markets in Financial Instruments and Miscellaneous Provisions Bill 2007 gives us an opportunity to speak about the Irish financial sector.

The first matter of note is the current controversy regarding sub-prime lending. Prime lending is a misnomer; the reality is there is prudent or normal lending and anything other than that is imprudent. If one is trying to securitise billions of euro worth of assets such as mortgages that are below prudent lending, one is hardly going to call it that, so it is called sub-prime lending. It is a question of trust.

People trust something that is prime but in Ireland lending has been prudent for many years. This area has been properly regulated and overseen by the Central Bank which ensures lenders do not exceed the amount a borrower can afford. It also insists that stress tests are built in to all borrowing, ensuring that in the event of one person in a family not having a job or if interest rates go up by 1% or 2% the loan can still be repaid. We must ensure the Financial Regulator is on the lookout for mis-selling, which in effect is what is involved in sub-prime lending.

I commend the Irish market on the manner in which it handled the Northern Rock problem. It reminded me of somebody whose computer would not work who brought in an engineer, programmer and anybody else who could help but ultimately it was discovered that nobody had switched on the computer. In the UK there were queues outside the banks and the BBC showed these queues getting longer every day. It was obvious people did not have trust in the system. It is necessary for people to have trust and to believe in the system.

To continue the analogy, in Ireland somebody cleverly put back on the switch. People were asked for their withdrawal slips and told to come back at 3 p.m. for their money. Hence the queues were done away with and we did not experience the same problem here. I congratulate the Financial Regulator who worked in harmony with the Central Bank, unlike in the UK where the situation was allowed to develop because the regulator was in competition with the Bank of England and it was almost too late when the latter stepped in to underwrite the full amount owed by Northern Rock.

Senator Quinn made some relevant points about the Irish Financial Services Centre but the Irish financial retail sector is in very good shape. The Bill is important in terms of a single European market in financial services. It is specific in its aim to attain harmonisation and modernisation of the EU-wide legislative framework for investment firms, thus promoting greater cross-border competition and the competitiveness of the EU financial sector overall. It will make it easier and cheaper for customers, including retail customers, to buy and sell shares across a single market.

I accept that as more foreign banks, institutions and lenders move to this country, we will need to have confidence in them. Knowing there is an EU-wide directive to ensure the financial instruments being sold are regulated properly will give us that trust and create that confidence.

I also welcome other elements of the Bill, including the provisions which allow the National Treasury Management Agency to lend. This is a very positive aspect, for example, for the Post Office savings bank, and will allow the agency to offer fixed rate loans to State bodies. Why should the retail banks or foreign banks profit from the guarantees that are inherent in the repayment capacity of State bodies when the NTMA can benefit from this? The same applies to foreign currency transactions, for which I would also welcome this measure.

The reinsurance directive forms part of the European Union's continuing financial services plan, which aims to create the Single Market. The directive establishes a regulatory framework for reinsurance activities in the EU. No formalised framework existed for reinsurance within the EU and member states had been free to decide separately whether to regulate reinsurance. This is the putting forward by the EU of a common framework for reinsurance across the EU, which is welcome.

We have signed up to the EU and have our input. Free movement of goods and capital is part of the central tenet of the EU, from which we have benefited hugely. It does not make sense to try to draw back when we are all in favour of the benefits the EU can bring. We must apply the directives that ensure a common playing field throughout the Union.

The issue of ministerial pensions is an easy one — in reality, we all live in hope. We may be supporting a measure that will benefit some of us at a later stage. Nonetheless, it is correct that Ministers would be properly dealt with and that their pensions are brought into line. It does not make sense that if a person does not apply before a certain date, he or she would lose out. It is entirely appropriate that the six month limit regarding severance should be brought into line.

With regard to the Credit Union Act, I am very much in favour of the extension of the limits. It is an ideal opportunity to broaden the capacity of the credit unions, which they are well able to shoulder. I support the development of credit unions to ensure they continue to provide for the social and financial needs of the communities they serve. The increased lending limits for credit unions approved by the registrar will allow their lending to grow and develop with appropriate regulatory safeguards. This amendment is to be recommended and approved.

The Bill contains many minor provisions, including the amendment to the Freedom of Information Act with regard to the performance of duties of members of the board or staff of Ordnance Survey Ireland. I am glad we have taken the opportunity to incorporate this amendment in the Bill, which I commend to the House.