Fianna Fáil Finance spokesperson Michael McGrath will tonight introduce legislation in the Dáil to comprehensively deal with the ongoing issue of banks charging customers unfair and unjustified standard variable mortgage rates.
Deputy McGrath commented, “Fianna Fáil put this issue firmly on the agenda at the end of March 2015 with a motion on the subject of the rip-off variable rates being charged. Tonight’s debate is a significant chance for the Dáil to assert its greater freedom to act collectively and in a spirit of co-operation, in the interests of the general public.
“Under the terms of the legislation, the Central Bank would be required to carry out an assessment of the state of the mortgage market, taking into account factors such as the banks’ cost of funds, reasonable profit expectation, concentration within the market, the ease with which borrowers can switch mortgages between lenders and extent to which they are switching.
“Should the Central Bank conclude that a market failure exists, the legislation empowers them with a range of tools to influence the standard variable rates charged.
“On the question of whether the Central Bank actually wants these powers, it is important to note that ultimately it is the Oireachtas that decides what powers it is granted. The Banking Inquiry highlights the need for all institutions, including the Central Bank, to be challenged on the powers it has and how they are exercised.
“When this issue came to the fore last year the initial strategy on the part of the banks was to deny to existence of a problem. Belatedly some banks have moved to reduce their SVR rate. This is welcome, but more needs to be done. In particular those banks that have steadfastly refused to reduce their SVR rate cannot be allowed to hide behind fixed rate offers.
“Earlier today the Minister for Finance raised potential constitutional difficulties with the Bill, citing the comments of an Investment Bank. This is surprising as when the legislation was originally debated in July of last year, the Minister and his representative did not raise any such concerns in the Dáil.
“Fianna Fáil’s motivation in bringing forward this bill is ensure fair treatment for customers. We welcome the support consumer advocates, other opposition parties and independent TDs, and the time they have also given to this issue.
“We believe the government should not oppose the Bill and instead allow it to go through to Committee Stage. This would allow a line by line examination of the Bill. The outcome of that process should be a finalised piece of legislation which strikes the right balance between the obvious need for the banks to profitable and the desire to ensure 300,000 variable rate mortgage customers are treated fairly,” concluded Deputy McGrath.