Bernard Durkan (Kildare North, Fine Gael)
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Question 50: To ask the Tánaiste and Minister for Finance the extent to which he and his EU colleagues are satisfied that sufficient controls exist here and throughout the European Union to deter sub-prime lending or system manipulation with particular reference to the need to protect the integrity of national and European financial systems, the re-stabilisation of the financial markets, the banking systems and the interests of the consumer; the extent to which concerns were raised in this regard over the past five years and prior to the most recent indicators at European level; and if he will make a statement on the matter. [7706/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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At the outset, I would point out to the Deputy that the Government have taken steps last October in Section 19 of the Markets in Financial Instruments and Miscellaneous Provisions Act 2007, which amended Part V of the Central Bank Act 1997, to provide for an appropriate system of authorisation and supervision of retail credit firms engaged in specialist or so-called sub-prime lending and home reversion providers not previously subject to financial regulation in respect of lending activities. The primary purpose of this amendment was to extend to customers of these firms the benefit of the consumer protections provided for in the Financial Regulator's Consumer Protection Code. This regulatory system came into effect on 1 February last.

Non-traditional or specialist mortgages, sometimes referred to as sub-prime mortgages, are estimated to account for about 1% to 2 % of the Irish mortgage market, compared to about 15 % in the US. In Ireland, these products have provided a new mortgage mechanism for customers who might previously have experienced difficulty obtaining a mortgage from a mainstream lender because, for example, of the nature of their work, they are new to Ireland, or they have impaired credit histories. It is important to note that specialist lenders have provided access to credit for these individuals and households who are then in a position to build up or restore a credit record in order to re-finance with mainstream commercial financial service providers. The CBFSAI in its Financial Stability Report 2007 found that the Irish banking sector has a minimal level of involvement in the Irish residential mortgage market for these non-traditional customers. The Report states that the Irish market is characterised by limited mainstream banks' involvement in the market, the relatively very small size of the market and generally modest average loan-to-value ratios.

At the EU level, there is a co-ordinated response to financial stability arrangements and the ability of authorities to respond to market developments, largely set out in the set of common principles and a roadmap of further actions published at the conclusion of the ECOFIN Ministers' meeting on 9 October, 2007. Ireland is participating fully in this work to ensure there is an effective EU-wide system to maintain financial stability taking into account the important cross-border linkages that now exist in EU financial markets.

I am satisfied that the steps taken at national level and the work underway at EU level represent an appropriate response to the need to safeguard financial stability.