Tommy Broughan (Dublin North East, Labour)
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Question 369: To ask the Minister for Finance the steps he has taken to warn and protect citizens who purchased endowment insurance mortgage products; the actions, including financial restitution, he is contemplating against companies which sold these products and misled the public; and if he will seek the appointment of inspectors to carry out an inquiry into this scandal. [10668/05]

Tommy Broughan (Dublin North East, Labour)
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Question 370: To ask the Minister for Finance the number and value of endowment insurance mortgage products which exist; and the estimate of likely shortfalls in mortgage repayments facing the holders of these products over coming years. [10669/05]

Tommy Broughan (Dublin North East, Labour)
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Question 371: To ask the Minister for Finance the position with regard to legislation on and the regulation of endowment insurance mortgage products. [10670/05]

Tommy Broughan (Dublin North East, Labour)
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Question 372: To ask the Minister for Finance if he will report on any investigation or inquiry which his Department carried out in relation to endowment insurance mortgage products over the past 25 years, especially since June 1997. [10671/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I propose to take Questions Nos. 369 to 372, inclusive, together.

The Consumer Director of the Irish Financial Services Regulatory Authority, the financial regulator, is encouraging people to complain in the first instance to the company from whom they bought the policy if they are concerned about the possibility of having been missold an endowment mortgage. The recently appointed Financial Services Ombudsman, whose office was established by the 2004 Act, is statutorily independent and is empowered to deal with complaints from customers of financial service providers. The ombudsman can deal with complaints related to conduct occurring up to six years before the complaint was made.

The financial regulator is studying the situation with regard to endowment loan shortfalls, having commenced a survey last 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 is no definitive information available to my Department on the overall numbers of cases where a shortfall may arise. Endowment loan approvals in the past five years represented 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, comprising 10% approximately of total loan approvals.

As regards the legal framework, there is a substantial volume of legislation in place relating to these financial products. 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. Key requirements of the code were that the intermediary should know the client and give best advice.

The Consumer Credit Act 1995, which commenced in May 1996, contains specific provisions in regard to endowment loans and in particular prescribes certain information which must be included in any application form or information document issued to consumers applying for such loans. For example, since the commencement of the Act 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 for payment".

The Act also obliges that in instances where the borrower may be required to increase premium payments on the insurance policy during the lifetime of the loan, any document approving the loan must contain a prominent statement of this possibility. Similarly, obligations apply where a policy is surrendered early resulting in a net loss to the consumer.

The Act also places an obligation upon insurers underwriting policies relating to endowment loans to issue a statement to the consumer every five years setting out not only the value of the policy at the time of issue but also a comparison of this valuation to the valuation at such date projected at the time the policy was first written and a revised estimate of the valuation at maturity.

In addition to the provisions of the Consumer Credit Act, the Life Assurance (Provision of Information) Regulations, which came into being in 2001, oblige insurers to provide policy holders, including holders of policies relating to endowment mortgages, with an annual written statement containing inter alia information on the current surrender or maturity value of the policy.

More recently, the Government has already considerably enhanced the 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, which established the Irish Financial Services Regulatory Authority.

The Central Bank and Financial Services Authority of Ireland Act 2004 complements the Act passed in 2003 and further enhances the financial regulator's powers and strengthens the regulatory environment. This Act provides for an enhanced structure for dealing with consumers who have complaints about financial institutions and also provides consumer and industry consultative panels for the financial regulator. The consumer panel will have an important role in ensuring that the regulator is correctly reflecting the interests of consumers in its protective — issue of codes of conduct — and educational — information pamphlets and so on — roles. These provisions will help the financial regulator to ensure that consumers have all necessary information to allow them to make considered and informed choices between different financial products including in relation to mortgages.