Dáil Éireann Debate, Tuesday - 18 September 2012
298. Deputy Pearse Doherty asked the Minister for Finance following the uncovering of mis-selling of interest rate hedging products such as caps, collars, swaps and structured collars in banks in Britain, the steps taken by the Central Bank of Ireland and the Financial Regulator to assess if similar issues have arisen with the selling of similar products by banks operating here. [38517/12]
Amharc ar fhreagraOptions, futures, swaps, forward rate agreements and any other derivative contracts relating to interest rates or yields are defined as financial instruments under the Markets in Financial Instruments Directive (MiFID). Credit institutions are subject to the MiFID Regulations when providing services in such instruments. The Central Bank of Ireland is responsible for the supervision of such activities when they are provided to clients. Clients can be categorised as retail, professional or eligible counterparties. The recent incidents of alleged interest rate misselling in the UK appear mainly to directly involve professional or eligible counterparty clients. There are less onerous conduct of business obligations on the level of protections to be applied to professional or eligible counterparties than to retail clients. For example, eligible counterparties are not subject to the best execution protections.
The Central Bank is currently mapping the MiFID services being provided by credit institutions with a view to ensuring that the best interests of consumers of financial instruments are protected and that the integrity of the market is upheld. In this context issues such as those raised by the Deputy will be considered and dealt with accordingly.
