Trevor Sargent (Dublin North, Green Party)
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Question 21: To ask the Minister for Finance the reason mortgage lenders are exempted from regulation under the Consumer Credit Act 1995. [7070/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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All financial service providers that provide loans secured on a person's principal private residence are subject to the provisions of Part 9 of the Consumer Credit Act. This is as a result of an amendment to the Act made last year, following consideration of a recommendation of the 1999 McDowell report. The Consumer Credit Act is the principal source of protection to personal borrowers. The Act subjects all lenders who provide finance on the security of the family home to a range of obligations. These include: provision of a written loan agreement; quoting the APR and any other fees that will be charged; a requirement to warn the borrower about the risk of losing his or her home; and an obligation to put mortgage protection insurance in place. Apart from the special case of the family home, the Act does not apply where a loan is given for a commercial purpose.

There is no statutory oversight of interest rates, except for the special case of moneylenders who come within the scope of Part 8 of the Consumer Credit Act. This special category of lender typically provides short-term loans to poor credit risks at very high APRs. Such lenders are required to hold a moneylender's licence and the financial regulator can refuse to grant such a licence on the grounds that the cost of credit is excessive. The requirement to hold such a licence, and the corresponding oversight of interest rates, only applies to this specialist category of lender.

The financial regulator has power under the Consumer Credit Act to give directions to a mortgage lender in relation to misleading advertising, as well as to prosecute for breaches of the Act. In addition, under the legislation establishing the regulator, its consumer director has responsibility for monitoring the provision of financial services to consumers generally and the power to require a provider of such services to furnish information relevant to any inquiry or study that the director chooses to undertake.