Eamon Ryan (Dublin South, Green Party)
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Question 122: To ask the Minister for Finance his views on recent figures on consumer debt which show a higher ratio of debt to income than ever before; and if he will make a statement on the matter. [12189/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am aware of the concerns expressed by a number of commentators about 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, relating to the prudential supervision of financial institutions and the protection of the consumers of those firms.

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 carefully consider 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 their 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 about 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 instance, 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.