Seán Barrett (Dún Laoghaire, Fine Gael)
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Question 83: To ask the Minister for Finance his views regarding the high and rising levels of household debt. [21860/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As the Deputy may be aware, within the implementation of the overall legislative and policy framework for financial services, household 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 Financial Regulator's statutory mandate to protect the interests of consumers of financial services.

It is important that growth in private sector credit and the increase in household indebtedness in Ireland over recent years are seen in the context of the strong economic performance, the achievement of record employment levels, sustained increases in after-tax incomes and low levels of interest rates in historic terms following Ireland's entry into EMU. Also, increases in household debt over recent years need to be seen against the background of the very significant increase in household assets over the same period. Furthermore, according to the most recent CBFSAI statistics, growth in private sector credit in the economy continues to moderate.

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 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 prioritised the provision of information for consumers about the potential risk of excessive debt and has also drawn attention to the need for consumers to choose the right type of loan for their needs while developing 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.

In conclusion, I endorse the requirement consistently highlighted by my predecessor 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.