Micheál Martin (Cork South Central, Fianna Fail)
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Question 16: To ask the Minister for Finance if he has considered or will consider changes to competition law to deal with what the Financial Regulator recently referred to as the dysfunctional nature of the banking market and which he cited as one of the main factors preventing ECB mortgage interest rate cuts being passed on. [38310/11]

Michael Noonan (Limerick City, Fine Gael)
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Neither the Central Bank nor I, as Minister for Finance, have a statutory role in the setting of interest rates charged or paid by financial institutions in Ireland regulated by the Central Bank. In a recent letter to the Taoiseach, the Deputy Governor of the Central Bank stated that the power to exercise close regulatory control over retail interest rates is not sought by the Central Bank at this time. The Deputy Governor goes on to point out the difficulties which would result from Central Bank powers to set interest rates. These include a reduction in the availability of credit particularly to less secure customers, a chilling effect on entry of sound competitors in the market and an impediment to progress towards the re-establishment of bank management practices that could ensure a healthy and free standing banking system no longer dependent on the Government for bail outs.

Based on the advice received from the Central Bank I have no plans to recommend to Government that they introduce legislation to compel lenders to reduce their standard variable rates. However, I will keep the matter under review.