Dan Boyle (Cork South Central, Green Party)
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Question 247: To ask the Minister for Finance if he intends to request IFSRA to investigate the continuing rise in personal credit along the lines of the investigation proposed by the Irish League of Credit Unions; if he intends to take action to prevent the debt-income ratio from continuing to rise; if he intends to bring in further regulations to prevent financial institutions from granting excessive personal credit; and if he will make a statement on the matter. [13388/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am aware of the concerns expressed by a number of commentators on the continued increase in credit growth, particularly to the household sector, and the possible effects of increasing indebtedness upon borrowers.

The growth of credit and the associated increase in indebtedness are a matter for the Central Bank and Financial Services Authority of Ireland, taking into account its role as a part of the European system of central banks and its functions, as the Irish Financial Services Regulatory Authority, regarding the prudential supervision of financial institutions and the protection of the consumers of those firms.

As regards the views of the Irish League of Credit Unions, the financial regulator has already drawn attention to the need for consumers to choose the right type of loan for their needs and in particular to consider carefully the long-term effects of consolidating personal debt into existing mortgages. Separately, mortgage lenders were requested to review their practices and to stress test every would-be borrower's ability to meet his credit obligations in the event of more challenging times.

The provision of consumer credit in Ireland is regulated by the Consumer Credit Act 1995, which is administered by the financial regulator. This Act obliges credit providers to include specific information in all credit agreements in order to ensure that a consumer, when making credit decisions, has access to the fullest possible information regarding the agreement being entered into and the impact that servicing a loan will have on the consumer's household budget.

In addition, the Central Bank and the financial regulator have sought to raise the level of awareness of both borrowers and lenders of the importance of prudent borrowing and responsible lending. For example, the financial regulator, with its statutory consumer mandate, has developed a number of specific initiatives to help consumers make informed choices in terms of the financial products they choose, the amount of risk they take on and the cost of financial products. These initiatives have been developed through the framework of the financial regulator's "It's Your Money" campaign and have involved publishing consumer guides on credit products, fact sheets, cost surveys on personal loans, all of which are intended to assist borrowers in making the most appropriate credit decisions given their circumstances.