Joe Costello (Dublin Central, Labour)
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Question 79: To ask the Tánaiste and Minister for Finance his views on recent increases in banks' headline borrowing rates, despite no increase in ECB rates, and their apparent reluctance to pass on future cuts in the ECB rates to borrowers; and if he will make a statement on the matter. [7748/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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My role as Minister for Finance is to ensure that there is an appropriate and robust legislative framework for the regulation of the financial services sector. I am satisfied that following the reform of the institutional framework for financial regulation, the establishment of the Financial Regulator with its statutory consumer protection mandate and the Financial Services Ombudsman and the subsequent achievements of these bodies we have such a framework in place.

Under this framework, I have no function in relation to the level of interest rates charged by financial institutions to their customers. As the Deputy will be aware, this is inherently a commercial matter for the financial institution concerned and will reflect a broad range of factors including the cost of funding, official interest rates, competitive market conditions and the risk profile of borrowers.

In this context, the Deputy may wish to note that when addressing the Oireachtas Joint Committee on Finance and the Public Service on 30 January, 2008, the Chief Executive Officer of the Financial Regulator pointed out that the cost of funds in the interbank market is increasing. However, as banks spread sources of funding, they will compete more actively in the market, also resulting in an increase in interest rates for depositors.

Interest rates in Ireland, in fact, remain low by historic standards. This reflects the current low level of official ECB rates. The Deputy may wish to note that increased competition in the Irish financial services sector over recent years, reflecting such factors as new entrants and the introduction of a switching code for both personal customers and now for the business sector, has benefited consumers in Ireland significantly through increased choice, new products, lower prices and better services.

The Financial Regulator regularly publishes surveys on its website www.itsyourmoney.ie comparing the costs of various financial products and services provided by various financial service providers in the State. These surveys provide consumers with the information they require to make informed choices as customers of financial institutions. The Deputy will appreciate that on account of such factors as differences in retail market structures, consumer preferences and charging structures, international cost comparisons must be interpreted carefully. However, comparative international information available for Ireland indicates that in overall terms the cost of personal or small business banking compare favourably with other developed countries.

The introduction of the Single Euro Payments Area (SEPA) from 28 January 2008 should also be a factor that promotes greater competition in the market for payment services across Europe, and, potentially, yield to Irish consumers the benefits of participating in a market with much larger economies of scale. SEPA will enable citizens, companies and other economic entities to make and receive payments in euros, within Europe, whether between or within national boundaries under the same basic conditions, rights and obligations, regardless of their location.