Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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Question 80: To ask the Minister for Finance the steps which he is taking to address the cost of sub-prime mortgages; the discussions he has had with the Financial Regulator on the issue; and if he will make a statement on the matter. [17102/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The decision on the interest rate to be charged by lending institutions is a commercial decision for the financial institutions concerned. Individual institutions set rates based on their cost of funds, market conditions and commercial considerations. The Financial Regulator has no statutory role in the setting of interest rates by regulated entities.

The Government took steps in October 2007, via an amendment to the Central Bank Act, 1997, to provide for an appropriate system of authorisation and supervision by the Financial Regulator of retail credit firms engaged in specialist or so-called 'sub-prime lending'. Such lenders were 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 regime has been in place since 1 February 2008 and is being implemented by the Financial Regulator.

In addition, I am aware that the Financial Regulator has recently written to all mortgage lenders requesting them to impose charges only where they can be justified, having considered the individual consumer's circumstances and in line with the requirement of the Financial Regulator's Code of Conduct on Mortgage Arrears to handle arrears cases sympathetically and positively with the objective of assisting consumers in meeting their obligations.