Pádraic McCormack (Galway West, Fine Gael)
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Question 75: To ask the Minister for Finance if he is satisfied with the response from financial institutions to the shortfall on endowment mortgages compared to the projections at the time of sale. [29882/04]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Recent publicity in relation to endowment mortgages has focused on the possibility that a significant number of holders of such mortgages will have a shortfall of funds when the mortgage reaches the end of its normal term. These products inherently require customers to take some risk; they are exposed to market fluctuations, just like any market-based life assurance investments. The fact that a person 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 a substantial volume of legislation in place in relation to 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 in relation to 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 the Irish Financial Services Regulatory Authority, or IFSRA, and considerably strengthened the regulatory environment, including an enhanced structure for dealing with consumers' complaints about financial institutions.

IFSRA is already studying the situation, having commenced a survey earlier this year, 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. I will continue to review the adequacy of the legislative framework as the information developed by IFSRA becomes available.