Dáil Éireann Debate, Thursday - 21 June 2012
33 Deputy Dominic Hannigan asked the Minister for Finance the engagements the Central Bank of Ireland has had with lenders who appear to have standard variable rates set disproportionate to their cost funds: the outcome of these engagements; and if he will make a statement on the matter. [30076/12]
Amharc ar fhreagraThe Central Bank has advised me that it has no statutory role in the setting of standard variable interest rates except for a limited role in relation to credit unions. The standard variable rate that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned. This interest rate is determined taking into account a broad range of factors, including European Central Bank base rates, deposit rates, market funding costs, the competitive environment and an institution's overall funding. However, the Central Bank has advised me that it does monitor trends across the industry and raises queries with bank boards in the course of its ongoing supervision activities on pricing both in relation to its Consumer Protection and Financial Stability mandates. Within its existing powers and through the use of persuasion, the Central Bank continues to engage with specific lenders which appear to have standard variable rates set disproportionate to their cost of funds. In particular, the Bank advised me that they have written to all lenders and asked them to consider the impact on arrears when considering any future interest rate increases.
I, as Minister for Finance have no role in the day-to-day commercial and operational decisions of financial institutions and the Central Bank would not report to me on the specific issues arising in its engagements with lenders on this issue. However, the Central Bank has informed me it will continue to monitor developments in this area and raise questions where undue concerns arise.
