Ruairi Quinn (Dublin South East, Labour)
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Question 321: To ask the Minister for Finance if his attention has been drawn to the fact that persons who go into arrears on their credit cards can be charged interest rates which can be set at will by the credit lender and some companies can charge punitive interest rates which can be as high as 26% APR; if his proposals to strengthen the Financial Regulator will ensure credit card customers are made aware of the risks of such punitive interest rates; and if he will make a statement on the matter. [38354/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am concerned about the problems of credit card arrears raised by the Deputy. Individual institutions set rates based on their cost of funds, market conditions and commercial considerations which in turn determine the interest rates charged to customers on various products.

The Financial Regulator has no statutory role in the setting of interest rates by regulated entities. However, the Financial Regulator provides a cost comparison of credit cards with up-to-date information on the providers APR, fees etc, on the website www.itsyourmoney.ie. On this same website there is a downloadable publication entitled "Credit Cards – What you should know" which includes details on how to keep credit card costs down. Also, the Financial Regulator has produced all its information booklets in hard copy. These booklets can be sent out on request or are available from its information centre in Dame Street. While the regularly updated cost comparisons are only available on-line, its website is accessible for free from all libraries in the country, in its information centre and from its lo-call helpline.

In relation to requirements on credit card companies, the consumer protection code applies to all regulated entities which would include credit card providers. The Code has some specific provisions in relation to loans (Chapter 4, rule 1 and 2) that apply to credit facilities. These are that: a regulated entity must not offer unsolicited pre-approved credit facilities; and a regulated entity may only increase a consumer's credit card limit following a request from the consumer. In addition the Consumer Protection Code requires that a regulated entity must: act honestly, fairly and professionally in the best interests of its customers and the integrity of the market; and act with due skill, care and diligence in the best interests of its customers.

The Code has specific requirements in relation to charges stating that consumers must be provided with details of all charges, prior to a service being provided and where such charges cannot be ascertained the entity must advise the consumer that such charges will be levied as part of the transaction.

The Code also has specific suitability requirements which require that a regulated entity ensures that any product or service offered to a consumer is suitable for that consumer.