Eamon Gilmore (Dún Laoghaire, Labour)
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Question 34: To ask the Tánaiste and Minister for Finance if he has reason to be concerned about the high level of personal indebtedness here; and if he will make a statement on the matter. [7725/08]

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 the Financial Services Authority of Ireland (CBFSAI). 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.

The CBFSAI reported in its December 2007 Monthly Statistics that demand for credit in 2007 was moderate compared to 2006 and previous years. The rate of increase in private-sector credit in December on a year-on-year basis at 17% was the lowest in five years, while borrowing by households for house purchase was subdued in 2007, compared with the previous two years.

It is important that the increase in personal indebtedness in Ireland over recent years is seen in the context of the strong economic performance, the achievement of record employment levels and sustained increases in after-tax incomes. Low levels of interest rates reflecting Ireland's membership of the eurozone, the household sector's overall net worth, and the prospect of the continuation of robust economic growth in the Irish economy by international standards support the sustainability of current levels of personal indebtedness. The strong state of Ireland's public finances and the overall balance sheet position of Irish households where there has been significant accumulation of assets over recent years also highlight the extent to which the Irish economy continues to be well-positioned to respond to changes in the overall financial environment. It is, of course, important to continue to enhance the competitiveness of the Irish economy through moderation in growth in pay costs, increases in productivity and through the continued adoption of prudent and responsible budgetary policies in order to ensure that Ireland's economic growth remains in line with its underlying potential.

As far as safeguarding the interests of individual borrowers is concerned, the function of Government is to provide an appropriate legislative framework for effective and efficient 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, through such measures as the establishment of the Financial Regulator with a statutory consumer protection mandate and the Financial Services Ombudsman we have such a framework in place in Ireland.

In this context, the introduction of the Financial Regulator's Consumer Protection Code last year represents a major step in promoting the interests of consumers. The Code places obligations on regulated entities that provide credit which includes the requirement to act in their customers' best interests to seek appropriate information about the consumer and ensure that the products and services provided are suitable to the consumer. They must also treat their customers fairly and have adequate procedures in place to handle complaints and arrears. These obligations are additional to the statutory prior information and warnings required under the Consumer Credit Act, 1995.

The Financial Regulator has also drawn attention to the need for consumers to choose the right type of loan for their needs and 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 include publishing consumer guides on credit products, fact sheets, cost surveys on personal loans and other retail financial products, all of which are intended to assist borrowers in making the most appropriate credit decisions given their circumstances.

In my role as Minister for Finance, I have consistently highlighted the need for responsible behaviour by both borrowers and lenders and in particular the need to factor into their financial decision making the effects of potential future changes in economic and financial conditions.

The Deputy may wish to note that anyone experiencing difficulty in repaying a loan of any kind should discuss the matter with the loan provider and seek appropriate advice without delay. The Money Advice and Budgeting Service (MABS) which falls under the remit of my colleague, the Minister for Social and Family Affairs, is a national, free, confidential and independent service for people in debt, or in danger of getting into debt. MABS offices, throughout the country, work with people in order to assist them with their financial planning and budgeting for the future.