Dáil Éireann Debate, Wednesday - 1 February 2012
11 Deputy Barry Cowen asked the Minister for Finance if he is concerned by the apparent anomaly that Permanent TSB is charging new residential mortgage customers a standard variable mortgage rate considerably below that which it charges its existing customers, particularly in view of the difficulty customers face in switching to an alternative mortgage provider; and if he will make a statement on the matter. [5619/12]
Amharc ar fhreagraThe lending institutions in Ireland, including those in which the State has a significant shareholding, are independent commercial entities. Ultimately, the pricing of financial products, including standard variable mortgage interest rates, is a commercial decision for the management team and board of each lending institution, having due regard to their customers and the impact on profitability, particularly where the cost of funding to each lending institution, including deposit pricing, is under pressure.
Neither the Central Bank nor I have any responsibility for the variable mortgage interest rates charged by the financial institution mentioned by the Deputy. I have no powers to compel the institution to reduce its rates for existing customers to that charged for new customers. However, the Central Bank has advised me that, within its existing powers it will continue to engage with specific lenders which appear to have standard variable rates set disproportionate to their cost of funds.
The Deputy may wish to note that there is a proposal before the House to give the Central Bank power to make regulations for facilitating the switching of business by customers to other financial service providers. This proposal is contained in Section 40(2)(m) of the Central Bank (Supervision and Enforcement) Bill 2011 as initiated.
