Central Bank not fulfilling consumer protection role, says FF's McGrath
Fianna Fáil finance spokesman Michael McGrath has dismissed the Finance Minister's claims as nonsense that the publication of his Variable Rate Mortgages bill caused bank shares to fall by as much as 10pc.
Mr McGrath was speaking at a Finance, Public Expenditure and Reform committee meeting where he said the Central Bank is "not properly fulfilling its role of consumer protection" and that it was putting a greater emphasis on the prudential regulation side of its duties.
The bill was devised to help tackle high variable interest rates in the Irish mortgage market, where around 300,000 homeowners are paying 1.5pc more than other eurozone countries.
"In response to fall in bank shares, there is no evidence whatsoever to suggest the bill caused the fall off," Mr McGrath said at the committee's pre-legislative scrutiny of the bill
"There was a trading statement issued by Permanent TSB on May 11 that caused an 11pc drop in share price and it did not refer to variable rate mortgage pricing."
Finance Minister Michael Noonan said the bill posed a threat to banks' profitability in interest rates and that shareholders would sell "as quick as lightning" if they saw the bank losing profitability.
Fianna Fáil had the bill passed through the Dáil in May without a vote after it was supported by Sinn Féin, Labour, People Before Profit-AAA, the Social Democrats, and a number of Independents.
Mr Noonan said the bank shares were hit across the board over an 11-day period between May 6 and May 17.
One of the main tenets of the legislation is to give the Central Bank the power to control variable interest rates.
Mr Noonan said both he and his department would help the bill through various amendments, but was wary of it removing the incentive for new lenders to enter the market.
The committee has also sought the views of the European Central Bank before it brings it forward for further consideration in the Oireachtas.
Sinn Féin's Pearse Doherty accused Mr Noonan of not having "any meat" on the concerns he raised, which included Constitutional worries.
"It's not a committee stage, if it was I would be coming forward with detailed recommendations for amendments," the minister said in return.
"I don't think it's fair to comment that I should come in with a lot of detail today, it's not my bill."
Anti-Austerity TD Paul Murphy said his party supported the bill.
However, he said the proposal was "nowhere near radical enough".
Brendan Burgess of the Fair Mortgage Rates Campaign said it was pertinent that section seven of the bill is pushed through.
Section seven ensures lenders offer the same rates and incentives to existing customers that are offered to new customers.