Central Bank (Variable Rate Mortgages) Bill 2015: Second Stage [Private Members]

I move: "That the Bill be now read a Second Time."

I wish to share time with Deputies Ó Cuív, McConalogue and Sean Fleming.

This is one of the most important economic Bills the House will debate in the current Dáil term. I do not say this lightly, as the fact of the matter remains there are 300,000 standard variable rate mortgage customers who are being charged way over the odds at rates that we now know are double the levels of elsewhere in the eurozone. On tonight's "Six One News", we heard that the European Commission had come out against any intervention by the Central Bank in the variable rates that are being charged. It will not surprise many in Ireland that the European Commission is backing the banks and not ordinary mortgage holders, but it is the job of the Government, including the Minister for Finance, to protect those mortgage holders who are still being charged excessive variable rates. With every month that passes, they must come up with more interest than anyone else in Europe. We will outline the reasons this is not acceptable and how the matter can be addressed.

This issue has been firmly on the political agenda since the end of March, when we tabled a motion during Private Members' time on the subject. Since then, the campaign for mortgage fairness has gained momentum and I acknowledge the work of Mr. Brendan Burgess, Ms Sarah Hogan and other members of the campaign for their tireless efforts in this regard. The debate on the public airwaves and in the print media has galvanised public opinion and has been an example of the power of political campaigning. There is greater awareness than there was a few months ago of the extent to which variable rate mortgage customers are being ripped off in Ireland.

Let us remember the scale of what we are discussing. There are 300,000 residential mortgage customers with variable rate mortgages in this country. Collectively, they owe €40 billion. Overall, a 1% interest rate cut across the board would save families €400 million every year. A 2% rate cut would provide a stimulus of €800 million to the economy in a 12-month period. This aspect of the debate is often overlooked. With every passing month that families pay sky high interest rates, they have less money to spend in the domestic economy. Their plight should be as important to the Government as is its determination to make the banks profitable again.

I repeat the view that I expressed in March to the effect that the variable rates being charged by the banks are not justified based on their cost of funds. In his address to the Oireachtas finance committee, the Central Bank Governor, Professor Honohan, accepted:

A widening of mortgage interest rate spreads over policy rates also occurred in the United Kingdom and in many euro area countries after the crisis but spreads have begun to narrow in the UK and elsewhere. Until recently, bank competition has been too weak in Ireland to result in any substantial inroads on rates.

Like all Deputies, I have been inundated with a large volume of correspondence, including e-mails and telephone calls, from people who are directly affected by this issue. They feel a sheer sense of frustration because, as banks have enjoyed reduced funding costs and record amounts of cheap funding from the ECB, ordinary families have not been able to benefit from same.

The banks' response to our raising of this issue was first to deny the existence of a problem and then to drop a few crumbs from the table. Despite the fact that variable rates in Ireland are more than 2% higher than the euro area average, the only bank to offer a straight cut in its variable rate has been AIB. This was announced before that bank's meeting with the Minister for Finance. Permanent TSB has offered a change in its pricing that leaves it still charging a 4.3% variable rate to borrowers above the 90% loan-to-value ratio. This is outrageous. The essential purpose of the meetings between the Minister and the banks in recent weeks was to reduce the exorbitant standard variable rates being charged by the latter. At the time, carefully placed media leaks indicated that variable rate cuts of 0.75% would be on the way over a period. It now looks like this will not happen and the Minister has been duped. For example, where is the Bank of Ireland variable rate cut? In essence, that bank is refusing to cut its inflated variable rate of 4.5% and is instead effectively trying to force existing customers to lock into a two-year fixed rate.

The banks have not met the test set for them by the Central Bank in its recent report on the mortgage market, which reads, "Greater transparency surrounding the variable interest rate policies operated by each bank would help in this regard." If anything, the pricing process has been made more convoluted, with KBC tying in a reduction in its rates for customers moving their current accounts to that bank. As matters stand, customers have been left bewildered as to why they are paying higher rates for their mortgages, given that European Central Bank, ECB, rates have fallen to an historic low. The latest retail interest rates published by the Central Bank on 12 June showed that the average rate in the euro area for a new mortgage was 2.02%. Current variable rates on new housing loans in Ireland averaged at 4.13% in the first quarter of this year. Many existing customers are paying even more.

It is important to put on the record the current rates that apply in Ireland for a variable rate customer with a loan-to-value ratio of between 80% and 90%: AIB's is 3.9%; KBC's rate for mortgage holders who move their current accounts to that bank is 4.3%; Ulster Bank's rate is 4.3%; Permanent TSB's is 4.2%; ICS, now known as Dilosk, has a rate of 4.35%; Bank of Ireland's rate is 4.5%; Danske Bank's is 4.95%; and ACC Bank, now Rabobank, has a rate of 4.4%. These rates are little changed from the rates that applied before the Minister, Deputy Noonan, met the banks. The main focus of their response has been to change their fixed rate offerings. In other words, existing standard variable rate customers continue to get a raw deal from the banks. In fact, the people who have gained the least from this initiative are those in negative equity or who have little equity in their properties. The irony is that those who most need assistance by way of an interest rate cut have not received one.

Why is it acceptable that the pricing of variable rate mortgages would be so out of line with market conditions? The essence of a variable rate is that it should vary in line with them. Are we really suggesting that, if those conditions deteriorated, the banks would have to be asked twice to increase their rates to take account of it? I do not believe so.

I watched the Minister for Finance on "Six One News" this evening. The most depressing aspect is that he seems to believe that the banks have moved enough on this issue. I got the distinct impression that he would like to close this file for good. Instead, he should revert to the banks and tell them that the response has not been adequate and that, fundamentally, they have not dealt with the key issue of variable rate mortgage pricing.

The lack of progress on the standard variable rate issue will be made worse in the next two years or so, as mortgage interest relief is due to end entirely at the end of 2017. This will particularly affect variate rate customers paying high interest rates.

Reducing fixed rates is not an adequate response for standard variable rate customers, as it may not be suitable for a large cohort of them. For example, Bank of Ireland will not allow existing customers to fix their interest rates for a period of less than two years. This comes at a price for them, as they may not be able to benefit from future rate reductions or lower rates from new market entrants, whom I hope will emerge even though there is no sign of any yet. Mortgage holders who want to sell their homes while on fixed rate mortgages could end up having to pay penalties for breaking their fixed terms early. Any person who is lucky enough to receive a lump sum from a redundancy or inheritance while on a fixed rate and wants to use it to reduce the balance on his or her loan may also be hit with a large financial penalty.

The variable rate product should be priced appropriately for customers. In simple terms, the issue has not been resolved. In effect, banks have openly defied the Minister.

This is why I believe moral persuasion on the banks will not in itself be enough. A legislative response is now needed. This evening, the Minister essentially encouraged customers to take up the fixed rate offer and made a prediction on the future direction of interest rates. In my view, this is not the role of the Minister for Finance. His job should be to get the best possible deal for this country's mortgage holders, rather than advising them to sign up to the fixed-rate products that the banks have now offered.

Our comprehensive legislation would apply to all entities providing, managing or administering mortgages. This is very important as it would bring in mortgages that have been sold to vulture funds. If the Central Bank concludes that a "market failure" exists under our legislation, it will be empowered with a range of tools to influence the standard variable rates that are charged, including the power to issue a specific direction to a lender. This process would have the distinct advantage of protecting customers of smaller lenders and families whose loans have been sold to overseas equity or vulture funds. Currently, there is absolutely nothing to prevent an existing financial institution or a US equity fund from increasing the rate of interest on a mortgage to 6%, 7% or 8% - this point is fundamental to understanding why this legislation is needed - and that is exposing every mortgage holder in this country to an unacceptable level of risk. It is a fact that the trend is for banks to dispose of their mortgage portfolios. They are increasingly disposing of them to so-called vulture funds, which are not accountable to anyone. We hope the legislation that is going through at present will deal with that issue. However, it will not deal with the issue of possible interest rate hikes, which needs to be addressed.

Under this Bill, the Central Bank will be required to carry out an assessment of the state of the mortgage market, taking account of 11 considerations including institution-specific factors such as the cost of funds, the weighted average cost of capital, the risk profile, the reasonable profit expectation and the proportion of market of each bank. It will also have to consider general market factors such as the ease with which borrowers can switch mortgages between lenders and the extent to which they are switching. If the Central Bank concludes that a market failure exists, this legislation will empower it with a range of tools to influence the standard variable rates that are being charged. For example, it will be able to direct a lender not to charge a rate which exceeds a specified minimum or maximum rate; a margin above the lender's cost of funds, as determined by the Central Bank; a margin above the ECB rate; or a proportion, for example, more than one third, above the average variable interest rate being charged in the market. Such interventions are common elsewhere in Europe.

This Bill is not simply a response to the current circumstances in the mortgage market. It is intended that it will bring about a permanent improvement in consumer protection for mortgage holders. The Court of Appeal ruling in the Millar case essentially means the courts have found that the law as it stands cannot be invoked by a mortgage customer who feels that his or her bank has hiked the standard variable rate to an excessive extent. Judge Hogan's earlier ruling that Danske Bank had acted incorrectly in raising its variable rate at a time when the European Central Bank was actively cutting its lending rates had offered a chink of light for mortgage customers, but this has now been comprehensively closed off. In essence, the law as it stands does not offer adequate protection to mortgage holders in this country. As I said earlier, this proposal would have the distinct advantage of protecting the customers of smaller and non-bank lenders and those who are exiting the market. Some 46,000 mortgages are now held by non-banks, of which 19,000 are in arrears and therefore in very vulnerable situations. Even in a generally well-functioning marketplace, there is need for measures that protect customers who are weak and vulnerable. While we hope the provisions of this Bill will never need to be implemented or used by the Central Bank on a widespread basis in the market, it is important to have powers on the Statute Book in case the Central Bank might need to use them.

This legislation has an important non-discrimination clause. Some banks are now engaged in a policy of making certain offers available to new customers only. Some of the banks moved on this issue in the recent round of announcements, but not all of them did so. In March of this year, I said I felt the banks' policies in this regard were damaging their own brands. I recently received correspondence from a Permanent TSB mortgage customer who was coming off a fixed rate. This person had received a letter offering three options: a variable rate of 4.5%, a two-year fixed rate of 7.25% or a five-year fixed rate of 8.75%. This is happening at a time when the same bank is offering new customers a chance to fix their rates at between 3.7% and 4% for two years or 3.95% for five years. Such a differential in the treatment of existing customers and new customers should not be acceptable to the Government, the Central Bank or anyone else. We believe banks should be prevented from doing this in the interests of fairness. For that reason, we are proposing that banks should be required to treat new and existing customers equally.

Banks must be required to open up the market for switcher mortgages in a meaningful way. They like to give the impression that they are willing to take on the mortgages of existing customers of other institutions, but the reality is that very few of them are actively involved in this side of the market. The responses given by all of them to the Joint Committee on Finance, Public Expenditure and Reform recently are evidence of this. We can infer from their refusal to provide figures on the number of switcher mortgages that have actually been completed that the number in question is absolutely tiny. We all know this is the case. This issue needs to be addressed. Fianna Fáil honestly believes this is the last opportunity before the forthcoming general election to deal with this issue by way of legislation in this House. We have been pressing this issue for many months now. Some progress has been made, but it has been very limited. It is unacceptable that the response from the banks, which has been minimalist in nature, has left many customers behind. The focus of our Bill is on variable rate loans. Other customers, including sub-prime mortgage holders and buy-to-let mortgage holders, are paying even higher rates of 5% or 6%. All of that underlines the fundamental need for this legislation to be enacted so that these powers are on the Statute Book. Fairness needs to be introduced to the mortgage market in Ireland to deal with the clear discriminatory practices that are being applied against up to 300,000 variable-rate customers. Such practices are not good enough and must come to an end.

Caithfidh mé a rá go bhfuil fíor-aiféala orm nach bhfuil an tAire Airgeadais anseo anocht. Tagann sé inár láthair ó thráth go chéile, bíonn cúpla focal le rá aige agus ligeann sé air féin gur saoi nó fáidh de shaghas éigin é, ach ní bhíonn aon ghníomh uaidh ar chor ar bith. I have to say I am very disappointed that the Minister for Finance does not think this issue is important enough that he should turn up to hear from our party's spokesman, who is sponsoring this important Bill. This legislation that has been proposed by Deputy Michael McGrath is properly prepared and comprehensive.

We need to look at what is happening. Variable rate mortgages are being kept at an artificially high rate. If any other consumer product were involved, the consumer affairs agency would be in here saying that a cartel is in operation. If one looks at the rates, one will see that KBC, Ulster Bank and Permanent TSB have rates of 4.3%, ICS has a rate of 4.35%, Bank of Ireland has a rate of 4.5% and Danske Bank has a rate of 4.95%. The outlier here is AIB, which has a rate of 3.9%. What are they doing? They are penalising the most vulnerable borrowers of long-term finance in the State - those who borrowed on variable rates during the boom - because they lost money as a result of giving out too many tracker mortgages and being unable to run their affairs efficiently. What is the Government doing about it? I am reminded of summer 2012, when the Minister and the Taoiseach went to Brussels and achieved a "seismic shift" in relation to the bailing out of the banks that amounted to a puff of smoke.

The same thing happened in this case. Everything was supposed to happen by 1 July. That date came and, effectively, nothing of any consequence had happened. In the meantime, the banks are taking houses from people who are paying the full amount of interest and a certain amount of the capital. If the Minister does not know that is happening, he is obviously not listening to his constituents. If he knows it is happening, he knows that if the interest rates were as they should be, those people would be able to pay the full amount of their mortgage repayments.

What makes the matter even more puzzling is what is happening with, for example, Bank of Ireland. That bank will give the customer a fixed rate for two years at a smaller amount than a variable rate, even though we know that the price of money on the wholesale markets will probably never be cheaper. Can the Minister explain that? Why is it giving a two-year fixed rate option cheaper than the variable rate? I could understand that being so if rates were at a historic high, but when they are at a historic low, would it not be cheaper for the bank to borrow short-term funds, or even long-term funds at present, at a cheaper rate than they are likely to be able to get them at in the future? What are the banks doing? They are trying to make money for themselves and their shareholders.

There is a principle of regulation across the board, going to the heart of consumer legislation and competition law, which provides that where there is a small number of private monopolies, one does not allow them to create an effective cartel. Interestingly, if one reads the Constitution and the social guidelines at the back of the Constitution, one can see that there is provision constitutionally for an obligation to deal with this issue. This Bill is a way of doing that. It is a way of ensuring that the banks act in a fair and proper manner and stop robbing the poor people who happen to be in the unfortunate situation of having made the wrong choice, not knowing what the future would hold in terms of interest rates, in taking out a variable rate mortgage rather than a tracker rate mortgage.

I hope that over the next two days the Minister will listen to the proposal put forward by Deputy McGrath, who is a thoughtful and considered person. He has put a great deal of work into researching these issues and studying all of the implications. He has come up with a rational proposal which basically deals with banks if they are overcharging and abusing their monopoly or a cartel situation in respect of a small number of customers. If they are abusing their situation, it is difficult to swap one mortgage for another, because there are all sorts of legal issues attached to swapping, such as security. The Minister is aware of all the hassle that would cause for an ordinary citizen, along with the cost of legal fees, particularly these days. Swapping mortgages is not like buying a new coat. It is quite complicated to change the lender of one's mortgage.

The Minister knows that in this situation it is incumbent on the State to act, as outlined in the Constitution, to protect the interests of the citizen from exploitation. The simple thing for the Government to do tomorrow night is to say, "Deputy McGrath, you have come forward with a good way of dealing with this issue. It is a reasonable proposition, we need it to protect our citizens and we are going to support what you have done." If the Government does not do that, it will be a clear sign to mortgage holders and particularly to distressed borrowers that the Government does not care and that it is acting more in the corporate interest than in the interest of the citizen. The Government will make a clear choice tomorrow. I hope it will make the right decision, do the big thing and accept that Fianna Fáil has been making a valid point and that it must act and do something about it now rather than wringing its hands and literally doing nothing.

I support the Central Bank (Variable Rate Mortgages) Bill put forward by Deputy Michael McGrath. It is a proportionate and considered response to a real failure in the marketplace and our banking system, particularly with regard to its treatment of customers with variable rate mortgages.

It is disappointing that the Minister, Deputy Noonan, indicated in his comments today that he would drop this issue and not pursue it any further. It is reminiscent of his position before he started to engage on this and recognised that it was an issue that had to be addressed. That only happened after Deputy McGrath and the Fianna Fáil Party tabled a Private Members' motion last April raising this issue and making the extent of the problem crystal clear. Due to the widespread support the motion received and the coverage it garnered, the Minister had little option but to realise and admit that there was a problem and belatedly engage with the banks. We have seen the unravelling of that process over the last couple of months and the Minister's various engagements with the banks but, unfortunately, as our party leader said on Leaders' Questions last week, the banks have pretty much told the Minister to take a hike on the issue. They have paid lip service to the problem raised with them, but their response has been exceptionally limited and, in the vast majority of cases, totally unacceptable.

As Deputy McGrath outlined earlier, the response of some of the banks has been that they will only agree to offer reduced rates in respect of fixed rate mortgages for customers. Unfortunately, that is not acceptable or suitable for many customers. It prevents them from moving on or changing bank. It also prevents them from being able to avail of newer rates which might become available in the future. The other difficulty is that under many fixed rate agreements between customers and a bank, the customer is prevented from making additional payments on his or her mortgage when funds become available. Indeed, the customer can incur penalties upon reducing his or her mortgage by a greater amount, should unexpected funds become available.

The Bill is very sensible, if people would take the time to read it. It is proportionate and considered in the way it addresses the problem. It provides for a requirement for the Central Bank to carry out an assessment of competition in the banking market on a quarterly basis. None of us should fear that. With regard to the powers given to the Central Bank on foot of the problems it identifies, again, the Bill is proportionate. It gives a great deal of power and responsibility to the Central Bank to reach judgments about what is reasonable in respect of rates being charged in the market. The current situation with banks in this country is that the average variable mortgage rate is 2% higher than the rate in other countries in Europe.

No one can argue that this is not a difficulty or that customers are not being short-changed or used by the banks and the Government, through its failure to engage with and address this problem, to recapitalise the banks. Those with mortgages, especially large mortgages, are the most hard-pressed people in the country and are least amenable to being used by the Government as a means of recapitalising the banks.

The Bill also addresses the problem of the non-banking institutions that hold approximately 47,000 mortgages and are not restricted in respect of the mortgage rates they can charge on the loans they hold, many of which were purchased from banks. The legislation proposes to ensure that these institutions are subject to reasonable competition constraints and a requirement to protect customers.

I urge the Government to reconsider its opposition to the Bill. This is its final opportunity to address this issue properly. It must not walk away from the issue or brush it under the carpet, as is its wont with such issues. It should instead deliver some relief to some of those who most need it.

I welcome the opportunity to speak on this Private Members' Bill introduced by my colleague, Deputy Michael McGrath, who has shown great consistency in bringing this topic to public attention in recent months. The only time the Minister addresses the issue is when it is raised by Opposition Deputies. The Government would not take any action on mortgage interest rates if it were not for the Opposition and it does so on occasion only to save its own blushes when the issue is highlighted in this Chamber.

This is outstanding, careful and measured legislation. The crunch issue is the proposal to require the Central Bank to carry out an assessment of the state of the mortgage market. Should the Central Bank conclude that a market failure exists, the legislation provides that it would be empowered with a range of tools to influence standard variable interest rates. A couple of qualifications apply. The Bill does not require the Central Bank to intervene but provides it only with the power to intervene. In the first instance, it must examine the mortgage market and only where it finds that the market is operating unfairly would it be empowered to take action on variable interest rates. This is a fair and reasonable approach.

In recent years, we have heard a great deal about mortgage arrears. More recently, the debate has moved on to the 300,000 people who are being crucified by variable mortgage rates, which are out of line with the European Union average. I note the post-programme surveillance report issued by the European Commission last week specifically refers to the importance of allowing banks to obtain sufficient interest rate margins as a means of sustaining the return of profitability. My party accepts that Irish banks must be profitable. Having bailed them out, we want them to be profitable, albeit not at the expense of ordinary citizens who are being gouged and forced to pay on the double. The 300,000 variable rate mortgage holders paid through their taxes to bail out the banks and are now being asked, through the variable interest rates they are being charged, to pay again to return the banks to super-profitability. This is not necessary as they are performing well.

The Commission's post-programme surveillance report notes that the standard variable rate in Ireland is relatively high compared to other European countries and states the main reason for this is credit risk with high non-performing loans and legacy assets. Referring to the recent appearance of the Governor of the Central Bank before an Oireachtas committee, the report states that the Central Bank requested that banks provide a clear and quantified statement of how they set their standard variable rates. This means the Central Bank does not know how variable mortgage rates are set. Imagine the Governor of the Central Bank informing the Joint Committee on Finance, Public Expenditure and Reform that he wants a clear and quantified statement of how the banks set their variable mortgage rates. Shame on the Governor of the Central Bank. It is his job to know how the banks do this. That he can come before an Oireachtas committee and state that the banks should produce documentation and a quantified statement on how they set their rates makes him appear as if he as an observer who has come in from the street. How can the Central Bank regulate the banks if it does not even know the basis on which they set their interest rates?

The Governor of the Central Bank indicated that this information was sadly lacking and subsequently argued that continued pressure on the banks to cut rates may undermine financial stability by reducing bank profitability and impact on future privatisation prospects. I do not take issue with the argument that the banks must be profitable. The Governor also argued that such continued pressure could also have negative implications for market competition by discouraging potential new entrants to the market. I have news for Professor Honohan. I do not know where he was before the problems with the banks occurred, although I know he was not in the Central Bank at the time, but competition was one of the reasons for these problems. When Bank of Scotland entered the market, it claimed it would be the Ryanair of the banking sector and offered low interest rates. All the other banks followed suit to maintain market share and this decision to chase business and engage in excessive and unbridled competition was one of the reasons for the over-lending in the market that resulted in boom and bust policies and the collapse of the financial and property sectors. Despite this, the Central Bank is arguing that we need more competition in the Irish banking market. We need the banks operating here to be regulated by the institution charged with regulating them.

I am shocked by the Governor of the Central Bank's statement to an Oireachtas committee that the Central Bank requires a quantified statement on how the banks set their variable interest rates. I am also shocked that he professed not to have this information. I am not shocked that people are being overcharged when the Governor of the Central Bank does not know what is going on and makes a public plea for information. He should have summoned representatives of the banks to his desk years ago and asked them to provide this information on an ongoing basis.

One thing the Central Bank has done in recent days was to publish a report in which it noted that seven of the major financial institutions - we can assume this to mean practically all of them - have not been adhering to the mortgage arrears resolution process. I and others are aware of court cases where people have defended themselves because they did not have the financial resources required to take legal advice. They will state that the mortgage arrears resolution process was not followed in their case. When such cases are dealt with in the courts, a senior counsel will appear on behalf of the bank and he or she will be advised by a solicitor who has, in turn, been advised by the legal team of the bank in question. This team will have been advised in turn by a mortgage loan manager who will have been advised by a regional manager who has been advised by the official at branch level who dealt with the mortgage holder. The evidence is not even third hand but is at the end of six or seven links in a chain of hearsay evidence that culminates in the legal representative of the bank claiming in court that the bank in question followed the mortgage arrears resolution process. Having reviewed this matter, the Central Bank should now publish the names of the banks in question. Rather than doing this, it has stated it will write a letter to the seven institutions in question. It is again failing citizens by being docile in its dealings with the banks. It is not surprising that the banks are getting away with the statements they are making.

During the hearings of the Joint Committee on Finance, Public Service and Reform, we learned that the banks have over-provided for mortgage losses in recent years and a substantial element of the profits they recorded in the past 12 months is the result of writing back previous provisions. They now acknowledge that they overstated their provisions in the past and presented this information to the joint committee a couple of weeks ago. Moreover, the formula for calculating write-downs was based, among other things, on a 55% fall from peak in the market value of the properties that had been mortgaged. This year, the formula used is only 50% and with prices set to rise next year and the following year, the formula used will be a 30% fall from peak. The banks, in determining the variable mortgage interest rate, factored into their cost structures a property collapse that is now turning around. They also factored in previous arrears which they now describe as being under control. According to the banks, 62% of people in mortgage difficulties have accepted new arrangements and the majority of these arrangements are working.

As such, the level of previous arrears is also declining. They have all said their cost of funds is down at 1% to 1.5% yet they are charging 4% and 4.5%. Even the European Commission in its own couched language acknowledges that an excessive margin is being made by the banks here. The Central Bank seems to know it but does not know how it is happening notwithstanding that it is its job to know. According to the little information the Central Bank does have, the banks are not following the mortgage arrears resolution process. It is no wonder they are playing ducks and drakes. It is only when Fianna Fáil and, in particular, my colleague Deputy Michael McGrath raises these issues whenever we have a chance to do so that there is a flutter of activity by the Minister and the Central Bank to yield some results. Unfortunately, the results we have seen to date are too little too late.

There is scope for a substantial and significant reduction. The European Commission says so. The Central Bank does not yet know how much it should be as it has not been doing its job. If we come out of this with anything, it should be a Central Bank that is properly able to oversee rates and how they are calculated. Then, we might get some reduction. The Minister is relying on the Central Bank for information but it is clearly saying it does not know how the rates are arrived at.

I call the Minister of State, Deputy Damien English, who has 15 minutes and he will be followed by Deputies Robert Dowds, Brian Walsh and James Bannon, who will have five minutes each.

Regarding Deputy Ó Cuív's concerns, he may not be aware that the Minister for Finance is in Brussels at a meeting and cannot be here. He would like to be here but cannot be. As Deputy Michael McGrath knows, the Minister would be here if he could be as he does attend these debates. However, he cannot be in two places at once despite all he is able to do.

The Government appreciates the concerns which Deputy Michael McGrath has attempted to address in the Bill. We know Deputy Michael McGrath's efforts and those of Fianna Fáil are genuine as it is an issue affecting a great many people. We all want to see the burden eased if at all possible. A monthly mortgage payment is the largest expense faced by most families and, as the Deputy Michael McGrath will be aware, the Minister for Finance has requested the Central Bank to examine and produce a report on the issue. Subsequently, the Minister met the six main mortgage lenders in May to outline his concerns and those of most people here. The meetings focused on the mortgage market and specifically the comparatively high standard variable rates currently being charged by the banks in Ireland. The Minister was clear that all customers should have easy options available to them to reduce their monthly mortgage payments. The banks agreed to review their rates and products and, by the beginning of July, to have simple options to reduce monthly mortgage payments for standard variable rate customers. This is to the benefit of both existing and new customers of the banks. A key concern expressed by the Minister was that all customers, including those with high loan to value ratios, would be in a position to lower their mortgage payments. The main lenders have launched a range of measures ranging from lower standard variable rates, new loan-to-value products and fixed-rate products.

In addition to meeting the banks, the Minister met with representatives from the fair mortgage rates campaign. The Minister briefed the representatives on his meeting with the banks and his expectations in the months ahead. The Minister outlined to the group his view that many of the new products offered by the banks could result in monthly savings for mortgage customers and should be considered fully by customers and their advisers. We are currently in the middle of this process and the bank's responses are being considered by the Minister and the Department of Finance. The Minister wants to see customers offered lower monthly mortgage payments. I am sure this is an objective that is shared by all Deputies in the House. The Minister has made it clear that a follow up set of meetings will take place with the banks in advance of the budget. The Minister has made it clear to the banks that the issue of a penal banking levy in the budget or powers for the Central Banks to regulate interest rates will be considered in future if sufficient progress on this issue is not made. It is therefore not the time to legislate on this issue as the effects of moves by the banks have not yet become clear and a review of the situation is ongoing.

The Government is opposing this Bill and I will outline the reasons. I stress that Department of Finance officials have consulted with the Central Bank specifically on the contents of the Bill and that the Central Bank remains opposed to the regulation of interest rates. I turn to the Bill in detail. The Bill requires the Central Bank to assess whether market failure exists in the principal dwelling house, or PDH, mortgage market and permits the Central Bank to issue a direction to a lender or lenders setting a maximum interest rate defined in a number of possible ways; either a specified rate, a margin above the ECB rate or cost of funds, or a proportion above market average. The Bill also requires the Central Bank to make an assessment of competition in the mortgage market. However, there is already a separate public authority with jurisdiction in this area, which is the Competition and Consumer Protection Commission. I question therefore whether the Bill could create a conflict of authorities in this regard. In addition, while the Central Bank does not support the regulation of interest rates, it has advised on a brief inspection of the Bill that there are numerous other factors which would need to be taken into account in any analysis, including such an analysis as suggested by the Bill. That said, the Bill does permit other matters which are certified by the Governor as relevant to be taken into account.

The Bill permits the regulation of all banks and lenders. Therefore, it would apply to newcomers to the Irish market and might hinder competition, which is crucial to exerting downward pressure on interest rates. In fact, a three-year exemption from restrictions on other fees and charges for new entrants to the Irish market is currently in place to encourage new entrants and to foster competition. In addition, the Bill does not include variable rates which are set by reference to European Central Bank interest rates. This could mean that a tracker mortgage with an unreasonably high margin above the ECB rate would not be included. On an initial consideration, it would seem that the requirement for quarterly reports appears excessive. It is not accepted that significant changes are likely to occur in the mortgage market on a quarterly basis. There may be also legal issues regarding definitions and the factors to be taken into account in the assessments. The Bill prohibits discrimination between existing and new borrowers without defining any of these terms.

Another difficulty with the Bill is that it provides that the assessments should be published "as appropriate" but makes no such provision in relation to directions to lenders. It is not clear whether these should be public although there is a possibility of High Court enforcement action in the Bill, which would, presumably, be public. The Bill limits the discretion of the High Court to impose fines on lenders for failure to follow a direction. Furthermore, the Bill limits the operational freedom of lenders because it seems to only allow two ways to attract new borrowers; defraying legal costs or paying stamp duty. Other practices such as lower introductory rates or cash back directly to customers which are used in Ireland do not seem to be permitted. Of course, there are consumer protection issues associated with such practices which warrant further detailed consideration. Significantly, the Bill does not have a sunset or review clause, which means the Central Bank would be required to undertake these assessments in perpetuity unless the legislation were repealed, even if it is accepted that the market is functioning well.

Notwithstanding the foregoing, it is clear that the objective of the Bill is to reduce monthly mortgage payments faced by standard variable rate customers. This is an objective the Minister shares. As I have stated, the purpose of meeting the banks was to get fair monthly payments for existing as well as new mortgage customers, including those on standard variable and fixed rates. As Deputies will be aware and as I have already stated, the Minister for Finance, Deputy Michael Noonan, met with the senior management of Ireland's six main mortgage providers in May and strongly delivered the message that change was expected. The meetings focused on the mortgage market and specifically the comparatively high standard variable rates currently being charged by the banks. The banks agreed to review their rates and products and, by the beginning of July, to have simple options to reduce monthly mortgage payments for mortgage customers. The Minister does not want to see one solution or mortgage offering from all of the banks but rather a competitive range of products for existing and new customers. The banks have responded to the Minister's initiative and made announcements and these are currently being reviewed. We encourage all customers and their advisors to examine the options now available and to make the best decision for their circumstances. Customers with the highest standard variable rates now have the option to lower their monthly mortgage repayments and we encourage all Deputies to ensure that their constituents are aware of the lower cost products available to them.

A number of the banks have embarked on significant advertising campaigns in order to attract new customers and encourage switching. This is very important because if banks believe they may lose customers, they will be encouraged to offer more competitive rates to existing customers. Switching would also increase the overall competitive nature of the market. Customers should not be put off by the process but should approach a new bank if they wish to switch and allow it to do the work or guide them through the process. I understand that the Competition and Consumer Protection Commission, or CCPC, is planning a significant public awareness campaign on switching in the early autumn which will provide additional information to consumers to encourage switching. The CCPC website, www.consumerhelp.ie, continues to be a valuable source of information on the rates charged by various financial institutions. In relation to other initiatives undertaken by the banks, some have reduced fixed-rate options for new and existing customers while others have introduced new variable rates based on loan-to-value ratios. Therefore, there are options available to those on standard variable rates. They can stay with their lender and, where possible and where it suits their circumstances, switch to an alternative rate or, alternatively, they can look into switching lenders.

I would not want to give specific advice to borrowers because it is up to each person to make up his or her own mind on whether to choose a standard variable rate or fix or not and for how long. However, I would point out that many customers have the option to make immediate monthly savings by fixing. In some cases, it would take significant and speedy additional reductions in rates in the months ahead to outweigh the immediate savings from switching now. Borrowers need to consider whether the security and peace of mind of having a fixed rate, which will not rise if interest rates rise, could outweigh the lack of flexibility which comes with fixing, particularly when some of the fixed rates on offer are lower that existing variable rates.

As we have stated, the responses by the lenders are currently being reviewed by the Minister and the Department of Finance. In addition, a follow-up set of meetings with each of the six banks will take place in September in advance of the budget. We are, therefore, only in the middle of this process and to legislate now would not be appropriate. The effects of the initiatives taken by banks have not yet had time to effect change or to be evaluated by the Department of Finance.

In advance of the meetings the Minister held with the main mortgage providers, the Central Bank, on the Minister's request, prepared a report on the influences on standard variable rate pricing in Ireland. This report was submitted to the Department of Finance last month and has been published on both the Department of Finance and the Central Bank websites, to which reference was made. The report provides a valuable insight into the mortgage market and I would urge all Deputies to read it carefully. It showed that 52% or €60 billion of credit advanced to Irish resident households for home purchases is on a tracker rate, a further 7% or €8 billion is fixed and the remaining 41% or €47 billion is on standard variable rates.

The report finds that the spread between official European Central Bank, ECB, rates and the standard variable rate is relatively high and lending rates are above average compared to our European peers, which is a point Deputy McGrath referenced. However, it made clear that the high pricing of loans reflects three factors - credit risk, competition and bank profitability. The report went on to say that credit risk is influenced by the high level of non-performing loans and lengthy and uncertain process of collateral recovery. Competition is weak and this is not unrelated to the credit risk as new entrants may be deterred from entering the Irish market. Finally, bank profitability is constrained by legacy issues, but profitability is needed to build capital buffers and to meet increasing regulatory requirements. However, the report did note that the reduction in ECB policy rates has not been passed through fully to the funding costs of Irish banks. Also, non-tracker mortgage lending rates have been slower to respond to a lowering of the policy rate than to increases. Furthermore, the Central Bank thought that it is likely that the rates in effect for most banks at the end of April 2015 were higher than would be necessary in the long run for a bank unburdened by a poorly performing mortgage back book.

The Central Bank highlighted that the mortgage business as a whole is not profitable for Irish banks. This reflects the high levels of non-performing loans and tracker mortgages on their books. The Central Bank suggested that the ability of the banks to partially compensate for the burden of the trackers by retaining higher spreads on variable rates is likely to be transitory, as such spreads will in time encourage entry into the market.

This report by the Central Bank sharply cautioned that any policy steps to interfere with the rates charged risks creating damaging side-effects. In the last few days, the Central Bank has reiterated to the Department of Finance its stated policy opposition to set and enforce mortgage interest rates. Acceptance of the Bill would give powers to the Central Bank that it does not want and does not want to use. Therefore, the Government, in opposing this Bill, is also taking into account the views of the Central Bank, which is opposed to having the power to regulate interest rates.

In regard to the regulation of standard variable rates, on 28 May 2015, in his introductory statement to the Joint Committee on Finance, Public Expenditure and Reform, the Governor of the Central Bank, Professor Patrick Honohan, re-emphasised his opposition to the administrative control of interest rates. While he acknowledged that he would welcome a reduction in bank standard variable rates in current circumstances as a benefit to the economy at large, it remains his firm belief that the introduction of administrative control on interest rates in Ireland would be bad for the country as a whole in the medium term - notably, as he said, because of its stultifying effect on bank efficiency and its chilling effect on the entry of other banks. While the Governor signalled that he would welcome a reduction in bank standard variable rates in current circumstances as a benefit to the economy at large, he was opposed to this being brought about by administrative controls and instead thought that competition would be the crucial determinant. The Minister has also highlighted the importance of competition in terms of exerting downward pressure on interest rates, although it is acknowledged that this competition must be tempered by prudence.

The Governor pointed out that in current conditions, the standard variable rate borrower's main protection is competition: the fact that, by setting its standard variable rate too high, any bank stands to lose business - whether new business or switchers - to competitors. However, he acknowledged that the effectiveness of this strategy was currently hampered by the low level of competition in the Irish banking sector, but that this fact further strengthens arguments against administrative control of interest rates. Ensuring that official policy does not inadvertently deter competition and entry of banks to the market is thus vital for the long-term health of the economy. Professor Honohan warned that if Ireland were to be the country that controls interest rates, this would have a signalling value far in excess of what one might think in terms of causing a retreat of service providers.

The Governor very firmly cautioned against the enacting of legislation that would provide for officially-administered lending rates and the Minister has yet to see convincing evidence to justify going against this advice. He explicitly stated that:

Nothing could be more likely to curtail and discourage entry of new competitors into Irish banking, and without the possibility of such entry, I cannot see that banking can recover the operational efficiency and competitive pricing that is essential for Ireland in the long run. For the sake of modestly lower standard variable rates for a few quarters, a much larger and quasi-permanent albeit somewhat invisible loss would be incurred by the customers of the banking system in Ireland. Well-capitalised banks operating more competitively will, in the end, offer lower rates and better service.

In addition, the Governor highlighted that close administrative control of interest rates would not be easily compatible with the principle of an open market economy with free competition which has underpinned the considerable increase in national prosperity over the past half century in Ireland and which is enshrined in the European Union treaty. As such, the issue of administrative control is not a matter to be taken lightly or quickly for what would be at best be a transitory advantage.

As the Deputies are aware, banks must operate on a profitable basis if they are to provide the services necessary to the economy, to comply with international regulations surrounding capital requirements, to be fully financially autonomous and not dependent on the State, to have the resilience to deal with future shocks and to serve customers adequately.

As I said, Department of Finance officials have consulted with the Central Bank specifically on the contents of this Bill and the Central Bank remains opposed to regulation of interest rates.

It should be noted that the Government is committed to helping address the particular problems faced by those individuals who bought homes at the height of the property boom mainly between 2004 and 2008. In this regard, in budget 2012, the Minister fulfilled the commitment in the programme for Government to increase the rate of mortgage interest relief to 30% for first-time buyers who took out their first mortgage in that period. This was the period during which house prices were at their peak.

As the Minister has made clear to the banks, the issue of a penal banking levy in the budget or powers for the Central Bank to regulate interest rates will be considered in future if sufficient progress on this issue is not made. However, it is too soon to assess the scale or nature of this progress as the banks have only recently set out their responses on the issue to the Minister and these are currently being reviewed by the Minister and the Department of Finance. Moves have been made by the banks in relation to providing options for customers with regard to the availability of different lower rate products and through advertising the possibility of switching lender. The Minister has also committed to a follow-up set of meetings with lenders in advance of the budget, and this will take place in September.

At the height of the boom I remember driving through Drumlish in County Longford, which I am sure Deputy Bannon knows very well, with a friend and I was struck by the madness of the boom because a large housing estate was being built and my friend, who came from south Roscommon, asked where are the people who buy these houses going to work because he realised there was not sufficient work in Longford for people living in such huge estates. Deputy Bannon will correct me if I am wrong but I understand that estate was built under a section 23 tax incentive. From what I understand about tax incentives, they are only given if something that is needed is not being produced. However, in terms of the granting of them, unfortunately, very often that was not the case. This was also the period when 100% mortgages were granted and that combined with other factors led to the crash. While I have no doubt that Deputy Michael McGrath is sincere in bringing forward this Bill which deals with a very real and difficult issue for many families, it is very hard to take it from Fianna Fáil given that it presided over all that in those years.

In terms of the issue, the most important thing to say about people who are dealing with distressed mortgages is that no one should have to leave their home unless there is somewhere else for them to go to live and, most preferably, people's mortgage situation should be dealt with in such a way that they can stay where they are. The Minister of State, Deputy Damien English, has outlined quite a few of the ways in which the Government is trying to tackle this issue and I will refer briefly to one or two of them.

The Government is facing a dilemma in this regard because on the one hand it wants the banks to become profitable again and, on the other, it does not want to see them screwing people to the wall.

The Government has taken action in various ways on this issue. The banks were called in and the Minister for Finance made it clear that a penal banking levy or powers for the Central Bank to regulate interest rates will be considered if enough progress is not made by the banks, for example, in regard to excessive standard variable rate mortgages. There have been cuts in some interest rates. In the 2012 budget, the Government increased the rate of mortgage interest relief for first-time buyers. In the 2004 to 2008 period, the rate was increased to 30%. Major reform of the personal insolvency framework is planned where the Government has agreed to give the courts power to review and, in some cases, approve insolvency deals rejected by the banks; the legislation on that will be brought forward imminently. There is a greater role for the Money Advice & Budgeting Service, MABS, and the mortgage to rent scheme has expanded.

Progress is being made in some areas. If we consider the overall figures, 84.5% of primary home mortgages, fortunately, are not in arrears. Nearly 38,000 mortgages are two years or more in arrears, which is an area of considerable concern, but it is worth noting that over 114,000 accounts have been restructured.

Overall, good progress has been made but I urge the Minister for Finance to hit the banks hard if they do not treat these mortgage holders fairly. It is vital that mortgage holders in distress are treated as fairly as possible and that we keep an eye on the banks behaviour to ensure they treat people as fairly as possible.

I welcome the opportunity to contribute to the debate on this Bill proposed by Fianna Fáil concerning regulation of variable mortgage interest rates. The Bill envisages a role for the Central Bank in oversight and enforcement in the domestic mortgage market and in the relationship between borrowers and their lenders. There is some merit in the Bill but it is possibly premature given the strategy the Government has adopted.

It is a terrible pity that Deputy Michael McGrath was not in a senior position in the previous Government because he might have convinced his party to concern itself a bit more with regulation of such matters in the past. Fianna Fáil presided over an utterly unsustainable regime in which 100% mortgages were routinely handed out by banks, and that was the root of many of the difficulties that subsequently arose. It is difficult, therefore, to read this Bill without some sense of irony given that it has been proposed by a party whose guardianship of the economy in the recent past can be reasonably compared to a fox's guardianship of a henhouse.

As I said, I believe the Bill is premature and in some ways it is opportunistic. The Minister, Deputy Noonan, has mapped out and initiated moves to address comprehensively the issue of mortgage rates in the banking sector. To change course at this stage in the manner being suggested would not be the prudent route to pursue. The Opposition Members know that. They know that this Bill cannot possibly be supported by Government, but they propose it for the sake of headlines or a sound bite. It is symptomatic of a trend in Opposition politics in the Dáil where policies do not have to make any sense. They just have to sound good when reports of them fall on half-listening ears.

Sinn Féin, which opposes principles south of the Border while it implements them in the North, threatened to unleash a reign of economic terrorism on the country through its fairy tale type policies, and amnesia stricken Fianna Fáil beside it is struggling to feign indignation as this Government strives to fix everything they broke. While these and others scramble to outflank each other in the populism stakes, the Government is working to do something about the problems and rebuild our shattered economy on a lasting foundation of sustainable economic growth. The Minister, Deputy Noonan, met with the six main lenders earlier this year to discuss the mortgage market and the issue of high standard variable rates. The banks have agreed to review their rates by the beginning of this month to have options to reduce monthly mortgage payments for standard variable rate customers. I understand they have reverted with these proposals and they are currently being considered by the Minister and his Department. He will meet them again later this year ahead of the next budget, and it is at that point that the question of a penal banking levy or regulation of interest rates will be considered if sufficient progress has not been made.

Before coming into the Chamber, I listened to a report on RTE about a draft report by the European Commission, which stated that it is important to allow Irish banks sufficient leeway in setting mortgage interest rates. I would not entirely concur with that sentiment but there is a dilemma here for Ireland in the sense that many of the Irish banks, in which the taxpayer has a stake, are returning to profitability. It appears that we will not have to avail of the retrospective recapitalisation of banks now because the State will recover its interests in the main Irish banks through sale on the open market. There is a dilemma in that regard in terms of profitability and interest rates, but taxpayers have contributed hugely to sorting out the economy and recapitalising the banks. That is where there is merit in the Bill. Something has to happen. I do not know whether punitive penalties on banks if they do not deliver is the answer because that will impact on the overall value of the banks. It is an issue that must be handled very carefully but the Minister has adopted the right position, and I hope we will see significant progress on this later this year.

Deputy Dowds will be glad to know that I got considerable funding under the Government through the ghost estates initiative to have Drumlish and many other estates throughout Longford and Westmeath finished to a very high standard. We were successful in getting more funding for estates in Longford-Westmeath than any other county or region in the country. The people of Drumlish and the other villages that have benefited from funding from this Government are very proud of their area, as are all Longfordians and Westmeath people.

For quite some time it has become very clear that we need to encourage strong competition for new entrants in the banking sector in order to place some downward pressure on interest rates for variable rate mortgage customers. Indeed, in February 2015, figures published by the Central Bank showed that the average variable rate for Irish mortgage holders was 4.26%. When we look towards our eurozone neighbours, we see that the average variable mortgage rate is 2.47%. We can all agree that Irish home buyers are forced to pay disproportionate amounts compared to our European counterparts.

There is not one Member of this House who does not understand how serious the issue of obtaining a mortgage has become for families. Every day, I am inundated with phone calls from constituents asking for advice or recourse when they have been unable to obtain a mortgage. Before I came into the Chamber, I was speaking to a person who was working with the same company for nearly five years, earning over €41,500 per annum plus an annual bonus of approximately €2,000 per annum, and who was paying €500 per month rent for a property that has been put up for sale for approximately €90,000.

When he applied for a loan of €75,000 from the Bank of Ireland and EBS, he was refused by both. He then sought a loan from the local authority and was told his income was too high. This type of situation baffles me. Who is looking after the affairs of people in this situation? The vast majority of these people are on sustainable incomes and it beggars belief that they are being refused loans. The reason they are being refused is that there is little or no competition in this sector. A person who is refused a mortgage has few valid alternatives. As a result of this lack of competition, potential home buyers are being forced into the already crowded rental market, which is not a friendly environment for any young couple hoping to start a family. It has zero long-term certainty and landlords can charge extortionate amounts of rent. This is all due to a severe lack of competition among mortgage lenders. That said, I am pleased that the Consumer Protection (Regulation of Credit Servicing Firms) Bill will ensure that all mortgage holders in the State will have the protection of the code of conduct on mortgage arrears and access to the office of the Financial Services Ombudsman.

The Minister for Finance has been quite vocal on this issue for a long time now and his recent meetings with the six main mortgage lenders have resulted in all lenders agreeing that customers should have much greater access to more competitive mortgage options. While the banks have agreed to review their rates, we must ensure they lower the standard variable rates for existing and new customers. It is only when this has been achieved that customers will get real value for money. I firmly believe that the six major lenders need to launch a strong promotional campaign to raise awareness of their best offers and how easy it is for customers to switch between lenders if they so wish. I hope all of the above steps will have been taken by the time officials from the Department of Finance meet with each of the six lenders in September to review the progress made.

This Government has already taken a number of steps to promote competition in the banking sector, including the establishment of the Strategic Banking Corporation of Ireland, the credit

guarantee scheme and the amendment of section 149 of the Consumer Credit Act, to name but a few. I want to see this type of reform continue. We now have an excellent opportunity to push for a substantial reduction in variable rates. In my opinion, this is an opportunity that we simply cannot miss out on.

I call Deputy Pearse Doherty, who is sharing time with Deputy Dessie Ellis. The Deputies have seven and a half minutes each.

Here we are again, only this time, the last fig leaf for the Government has been removed. Since the Government voted down my Bill less than a month ago, the banks have given their answer. They have said a definite "No" to decreasing their standard variable rates in any real way. I recognise that Permanent TSB has moved, but Bank of Ireland and Ulster Bank have not budged on reducing their standard variable rates. In the case of AIB, it has made only a tiny move. The move by Permanent TSB is very much a nuanced one. It appears that those who need the cut most will be those least likely to benefit from it. The Minister set a deadline that has come and gone. Three of our four biggest banks have not budged in any real way. Meanwhile, each day four family homes are either repossessed or surrendered. Statistics from the Central Bank show that in the first quarter of 2015, 351 homes were repossessed or surrendered.

I welcome Deputy McGrath's Bill, which is another genuine attempt by Members of the Opposition to deal with this issue. The core of the Bill is that the Central Bank should be allowed to declare a market failure and take action. This is a sensible approach, because there is a market failure. It is as clear as day that there is a market failure. We do not have a functioning banking system and we should not pretend that we do.

I have some minor concerns about this Bill. For example, the idea that one lender can represent a market failure while others do not seems counterintuitive. Likewise, the imposition of fines as penalties presents some problems. Recent information I have received shows how reticent the Central Bank is in fining any financial institution, and that those fines, when levied, are minimal and can be passed on to the consumer. However, these are issues that can be thrashed out, in a genuine spirit of trying to reach agreement, on Committee Stage.

To put this and last month's debate into context - I have said this before but it is worth repeating - in 2011, when I challenged the Government on its failure to stand up to the banks and to pass on the ECB rate decrease at that time, the then Tánaiste, Deputy Eamon Gilmore, told me: "Deputy Doherty need be in no doubt that this Government will act decisively, forcibly and effectively with the banks." There is a new Tánaiste, but the same old guff persists. As in the case of other issues such as mortgage arrears and bankers' pay, this Government is content to let the banks decide policy. The Taoiseach laments that the friendly reminder the Government gave to the banks about the deadline that has passed on mortgage rates has largely been ignored, but we are all told, "Don't worry because the Minister will follow it up." This is not a credible position. This Government is not willing to stand up to the banks. This has been proven over the past four years.

As in the case of the Bill I introduced last month, this Bill introduced by Deputy McGrath seeks to empower the Central Bank to act in the interests of society and the economy. The refusal of the Government to take action, so that it is only shaking its finger at the banks, is not good enough. Sinn Féin supports this Bill. Like the Bill I introduced last month, it represents a genuine call for action and not just words. This is an issue of direct relevance to hundreds of thousands of families across this State. We do have a market failure when it comes to mortgages. Some call it a lack of competition and so on, but it is a market failure. It is becoming more and more obvious that this Government wishes to ignore the reality. Why it wishes to ignore the reality is a question of debate. One can imagine that the sale of the banks is a factor in its thinking.

As I stated last month, when we look coldly at two facts, it is inconceivable that the State would not move to use its influence at the banks it owns to make it possible to decrease rates for its citizens. It makes sense at this point of our economic development to act in the people's interest. There is no reason to delay, no reason to give more time and no reason to be satisfied with some banks indicating that they will reduce rates by the bare minimum. I fear that those of us who prioritise the welfare of society over the profit of banks are talking to the wall when it comes to this Government.

The Minister, Deputy Noonan, huffed and puffed but the banks did not move. We are told there will be more meetings and that we should not worry. Given the record of this Government, I do not think the banks are trembling in their shoes or losing sleep. The banks have the measure of this Government. They have sized it up. They know this Government will not act in the interests of citizens when they say "No." All we have to do is compare this to the events of the past few days. When it comes to the mighty one-parent families, the Government has no problem moving decisively. When it comes to the courageous people who have fallen on hard times and cannot pay their debts, the Government has no problem ramming through legislation to impose attachment orders to what little money they can scrimp or save to pay off their debts. But when it comes to the banks, it is a case of taking out the kid gloves, treating them with deference and bowing to their every demand. Even with an election around the corner, the Government will not stand up to the financial institutions in the interests of citizens. We are led to believe that everything will be okay on the night. September will see another round of meetings and the Minister will huff and puff again and ask the banks to do the right thing. We own a number of the banks. The Minister for Finance holds the shares on behalf of the Irish people.

It is right and fitting that the Irish people would expect, if not demand, that their Government acts in their interest instead of the interest of banks which are driven only by making profits. This, however, is a Government that is driven to see those banks make as much profit as possible on the backs of the Irish people, so that the institutions can be sold off to whichever vulture is ready to pick up the scraps.

The time for posturing and delaying is over. The time for mealy-mouthed words is gone. It is time now to act on behalf of citizens. This Bill is one of a number of proposals from the Opposition to allow the Minister to bring forward legislation. It has the same purpose as the legislation the Minister indicated he may bring forward himself later this year. Why wait until then? Now is the time to act on behalf of the 300,000 people who are suffering as a result of the ultimate rip-off by the banks in respect of variable-rate mortgages.

Last month, my colleague, Deputy Pearse Doherty, introduced a Bill to deal with this very issue. It is timely that we are again debating these matters just as another deadline has passed without any satisfactory move to change interest rates. The banks agreed to review their rates and products by the beginning of July, but that did not happen. Our Bill, like the one we are debating this evening, did not ask for anything too radical. It simply asked that the Government do what it said it would, namely, to act forcefully and decisively in dealing with the banks in order to protect the public, including the home owners who bailed out those banks. The Government's deeds have fallen very short of its claims.

As with the Sinn Féin Bill last month, Deputy Michael McGrath's proposals represent only a small step in the right direction but would nevertheless be an important move towards making the Government's commitments a reality and helping struggling mortgage holders. The Government opposed our Bill last month and has already indicated it will take the same position on these proposals. Like the banks, this Government remains predictable in its failure to do anything meaningful to help home owners. It made clear last month that its commitments to be strong and act in the interests of the people are merely what Fine Gael and the Labour Party do at election time.

In the early 2000s, Fianna Fáil engineered the property bubble and sold the public the lie that everybody could afford huge mortgages and would be fools not to avail of them. The party in government was aided and abetted by RTE, The Irish Times and the Independent Newspapers group. Fianna Fáil went on to oversee a catastrophic bank bailout, the facts of which we are only now beginning to untangle. It must be a little hard for Ministers to be lectured by Fianna Fáil, but constant references to that party's responsibility for mortgage distress and the economic trouble this country suffered in recent years does nothing for the people who are struggling to keep their homes.

Many people who simply wanted a home for their family were left in dire straits, with falling incomes and massive mortgages. The banks were ripping off mortgage customers then and they continue to do so unhindered to this day by the current Government, which has been forceful in its treatment of lone parents, carers and other vulnerable groups but not with bankers. We need a firm hand to bring the banks into line and protect home owners. Sinn Féin sought to introduce that firm hand last month and by way of previous legislative proposals brought forward by Deputy Doherty, but the Government baulked at the idea. In the week when the courage of the Greek people has sent shock waves through the EU establishment, the measure of this Government's cowardice is all the more stark and embarrassing.

No institution in our society has ever been better protected than the banks. Meanwhile, vulnerable sectors of our communities are regularly vilified, humiliated and insulted by a Government which has sought to remove the entitlements people have won over the years, the basic supports which keep them alive. If the Government had shown a fraction of the concern for the needs of homeless families and those in housing need as it shows for bankers' feelings, we certainly would not have more than 1,000 children in emergency accommodation tonight. We would not have an €18 million hole in funding for homeless services in Dublin city. These facts give the lie to the rubbish from Government about its commitment to tackling housing issues. It has ignored these devastating social issues and chosen instead to treat bailed out bankers as sacred cows even though they continue to ride roughshod over the people of this State.

The kid gloves must come off now. We need that forceful and decisive hand in dealing with the banks. Deputy Eamon Gilmore, as former leader of the Labour Party, promised four years ago that his party in government would wield that firm hand. This Bill would be a step in the right direction. It is on the side of the home owners of Ireland, not the banks. Unfortunately, that principle is utterly absent from the actions of this Government. These proposals would introduce a legal process to allow the Financial Regulator to set a cap on the standard variable rate imposed by bailed out institutions. We have waited too long for the banks and the Government to act in favour of home owners or with any modicum of fairness in mind.

The time for asking for compliance is past; it is time now to demand actions by the banks and legislate accordingly. This Bill is an extraordinary measure for the extraordinary times in which we are living. The families struggling to keep their homes are in need of such measures to ease their hardship. The banks must play their part in building a fair recovery. The opportunity was provided through the Bill we brought forward last month to do so and, prior to that, by our Interest Rates Approval Bill. If no action is taken now, even stronger measures will be needed in the future. When the Dáil rises for the summer recess next week, the struggles of families with variable-rate mortgages will continue. They cannot wait any longer for a change. They have waited for four years under this Government, paying a rate that is higher than that charged anywhere else in Europe and more than 1.4 percentage points higher than the median rate.

The time to be decisive and forceful is now. This Bill should be supported, as the Bills brought forward by Sinn Féin should have been supported. Otherwise, we will be back here in September debating the same issue and no closer to a solution while families go on struggling, with no hope offered by the Government. Reference was made earlier to the prospect of the banks being sold off in the future. I offer the Government a warning in this regard. We have bailed out these banks and supported them. They belong to the people, not to the Government. There was no proper negotiation by Government when it came to the bailout, so I should not expect Ministers to talk to the banks, even though we have ownership of them. Indeed, their record in terms of negotiations is well known. Members opposite like to lecture my party on economics. I say to them that economic madness is when a debt of €88 billion ends up at more than €200 billion as a result of helping out bondholders and others.

Deputies Mattie McGrath and Michael Fitzmaurice will share time.

I thank the Technical Group for affording me time to contribute to the debate. I compliment my colleague, Deputy Michael McGrath, on bringing forward this Bill. As the last speaker noted, Sinn Féin has tabled similar proposals, as have other Members of this House. The Minister of State, Deputy Damien English, apologised for the absence of the Minister for Finance, Deputy Michael Noonan, who is in Brussels. Where is the wonder man, the Minister of State, Deputy Simon Harris? He was proclaiming last week about how much the situation in Greece might cost us until his senior Minister, Deputy Noonan, slapped him on the wrist a few hours later and said it will cost us nothing. This Government has been in office for four and a half years and the genie is out of the bottle.

Deputy Eamon Gilmore, when he was in opposition, promised, as then leader of the Labour Party, that he would burn the bondholders and sort out the banks. Hellfire would not be as hot as the fire he was going to start. Now he is going off into the sunset with his big pension. Many other members of this Government will be following him out of office, perhaps without the big pension, because the people will not put up with this. With interest rates elsewhere in Europe at 2%, mortgage holders here are paying 4%. The Government has had four and a half years to do something about this but has instead been feeble, lethargic and inept. The Minister, Deputy Noonan, was proclaimed as the man with the Midas touch who would sort it all out. He was apparently reformed since his time as Minister for Health when he oversaw the hepatitis C goings on. He was the new cool, clean Silvermint hero.

He has been found out. The Taoiseach, Deputy Kenny, had a cheek and the Minister, Deputy Noonan, was arrogant a few weeks ago when they lectured Greece, instead of minding their business in our small nation which has always been proud to support other small nations and the ordinary people. We have now gone past that and the ordinary people no longer matter. It is all about big business.

The Government promised the Central Bank consolidation Bill. It has been on the Order Paper since I was elected four and a half years ago, but it has not been introduced. There is no worthwhile legislation to deal with banks. It is a cabal and they want to do what they like. They want us to say, "Yes sir, how high sir, how much more do you want sir, screw the people as long as you like sir." It is disgusting.

People can get variable rate mortgages. They are waiting for the Minister, Deputy Kelly, to change the regulations in rural Ireland, as he promised, before they build anything, and the result is that nothing is happening. It was brought to my attention some months ago that there is a Bank of Ireland branch in Clonmel which has a list of properties that were removed and are now back up again. There is a note stating that not all of them are to be sold by the bank.

The people are being treated like pariahs under the Government's watch. It will be punished, and deservedly so, for the contempt it has shown, given that no Ministers came to the House, took this Bill seriously and responded to it. The Bill will be voted down and Ministers will tell their constituents they did not vote, but they have been found out. What the banks are doing is despicable. They are only interested in big business.

I commend Deputy McGrath on his Bill. I am all for competition, but sadly the banks we as a nation bailed out have created cartels and are screwing the Irish public. People from all parts of the country are struggling to pay their mortgages and the cartels in the banking sector continue. It is a sad day when the Government has to intervene, but the reality is that it has to be done because AIB, EBS and other banks owned by the people have given us the two fingers. They decided to close branches in small towns and pull out in order to make their figures count, and to hell with the people who stood behind them in their hour of need.

The only sector which picked up the slack in rural Ireland was the credit union sector. I have asked that the Minister give credit unions the facilities to clear cheques, do bank transfers and make sure they can function and compete with banks. When credit unions put money into banks they pay for the service, which is wrong. I urge the Minister to change that.

People who currently take out new mortgages can pay 1% to 2% less than those who have been paying them for years, which is wrong. The banks have to be hauled in because they cannot get away with it. We know they can get money at a very cheap rate from the likes of the ECB. What goes around comes around. If we do not give householders a break, there will be even more than the 99,000 people currently in trouble looking for help.

The banks were bailed out to the tune of €65 billion, but every Deputy has met people whom the banks have tried to evict from their houses. This is an intolerable situation that should not and cannot be allowed to continue. The Irish people did not sacrifice €65 billion for their neighbours, friends or any other Irish person with a family to be thrown out of their houses.

Debate adjourned.
The Dáil adjourned at 10.05 p.m. until 9.30 a.m. on Wednesday, 8 July 2015.