Gay Mitchell (Dublin South Central, Fine Gael)
Link to this: Individually | In context

Question 182: To ask the Minister for Finance if he is satisfied that as interest rates rise, the financial institutions are not taking the opportunity to increase their margins. [4158/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I have no statutory function in setting the interest rates offered by credit institutions — they are based on commercial criteria in the light of market conditions. Since 1992, the Irish banking market has been open to competition from credit institutions authorised in any EU/EEA Member State. Hence, new entrants to the market from abroad are competing with domestic banks for business in, for example, the market for personal deposits.

The September 2005 Competition Authority report on banking focused on two markets — personal current accounts and SME lending. It suggested measures aimed at promoting more active competition, but found no evidence of deliberate anti-competitive actions by banks. The Authority recommended action to make switching of accounts easier, and this is now in place.

The Financial Integration Monitor, published by the European Commission to assess major trends in the pan-European market, indicates that the cross border competition inherent in the single market has contributed to convergence in interest rates, which is particularly evident in relation to the highly competitive mortgage market in Ireland.

My function as the Minister for Finance is to provide an appropriate and robust legislative framework for regulation of the financial services sector. I am satisfied that, since the establishment of the Financial Regulator and the Financial Services Ombudsman, with a particular focus on the consumer, we have such a framework in place.

The Financial Regulator has drawn attention to the need for consumers to choose the right type of loan for their needs. The Consumer Credit Act 1995 obliges credit providers to include specific information on the cost of all credit agreements. Furthermore, the Financial Regulator's Consumer Protection Code requires that financial service providers, in all their dealings with customers, act fairly and honestly in the best interests of customers and make full disclosure of all relevant material information, including all charges.