Trevor Sargent (Dublin North, Green Party)
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Question 148: To ask the Minister for Finance the measures he intends to introduce that would help reduce the levels of personal debt currently found in the economy here. [33200/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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As the Deputy will be aware, within the implementation of the overall legislative framework, private sector credit growth and debt levels are, in the first instance, a matter for the Central Bank and Financial Services Authority of Ireland. This follows from its role as part of the European System of Central Banks and its functions, as the Financial Regulator, in relation to the prudential supervision of financial institutions and the protection of the consumers of those firms.

As far as looking after the interests of the individual borrower and the individual investor is concerned, the function of Government is to provide an appropriate legislative framework for regulation of the financial services sector — one that is both comprehensive and robust. I am satisfied that, on foot of the progress made over recent years, especially in establishing the Financial Regulator with a particular focus on the interests of the consumer, we have such a framework in place.

The Financial Regulator has developed a number of specific initiatives to help consumers make informed choices in terms of their 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.

The Financial Regulator earlier in the year introduced a technical prudential measure requiring financial institutions to put more capital aside for higher LTV (Loan to Value) loans. This reinforces the message consistently conveyed to lending institutions by the Regulator that mortgage lending policies and practices should be prudent and responsible.

A high proportion of private sector indebtedness in Ireland relates to borrowing for house-purchase which, in turn, involves the acquisition of an asset for the households. In the same way, borrowing by the business sector generally underpins investment, and the creation of business assets yielding future income. It therefore reflects the strong performance of the economy and confidence in Ireland's economic prospects.

Whilst the pattern of mortgage growth and associated debt levels in the economy are supported by a range of fundamental factors such as growing employment, rising real incomes and favourable demographics, the Central Bank has highlighted the need for borrowers and lenders to factor into their financial decision-making the prospective impact of potential changes in the future economic and financial environment, including the impact of higher interest rates. I fully support the vigilance of the Central Bank and the Financial Regulator on the issue of personal credit and mortgage debt and in reminding both borrowers and lenders of the need for responsible behaviour.