Address by Mr. Tom Kitt, T.D., Minister for Labour, Trade and Consumer Affairs, on the Opening Day of the Money 2,000 Exhibition in the RDS, Dublin on Friday 19th May, 2000 at 6.00 p.m.

May I thank the organisers for their invitation to visit your opening day of the Money 2000 exhibition.

I think it is a striking measure of our increasing wealth as a nation and of the growing affluence of our citizens and consumers that we are witnessing the holding of exhibitions on a topic such as money. It is not too long ago that the idea that banks, building societies, etc. would be actively seeking to market their products and services to consumers in this way would have been dismissed.

Today financial service providers are realising that they can no longer take customers for granted. Consumers are no longer just happy to have access to financial products, they are quite rightly demanding that such products are competitively priced, transparent and are available on equitable terms and conditions. Financial service providers still have some way to go to meet these demands, however.

The recent entry of certain new players from abroad into the mortgage and savings markets is welcome. The new entrants demonstrate the dramatic effect that real competition can have on the pricing of financial products. Indeed, it is an illuminating commentary on the type of competition existing between Irish providers that it took the arrival of these institutions to initiate this competitive focus. Financial providers need to realise that the days of sheltered competition are coming to an end. The adoption of the euro, particularly when the notes and coins become available in January 2002, will enable consumers to readily compare the price of products and services, including financial services, across the 11 participating Member States.

The growth of e-commerce, including internet banking, together with the increased diversification of traditional non-financial service companies, for example supermarkets and retail stores, into the financial services area clearly demonstrates that those currently providing or selling financial products will face greater rather than less competition.

As Minister for Consumer Affairs, I would urge all institutions providing or selling financial services to fully embrace the competition ethos, particularly those areas of the credit industry such as personal loans and credit card services where consumers have yet to realise the full benefits of the reductions in the interest rates which occurred in the period prior to our adoption of the euro. The development in the mortgage and savings sectors should act as positive examples to the financial services industry.

I have already mentioned the fact that credit today is more available to consumers than at any time in the recent past. As a product, credit can bring many benefits to the lives of consumers. However, along with these benefits come certain risks, the main one being the risk of over-indebtedness. While I accept that over-indebtedness can happen for a variety of reasons, it can arise because consumers have been less than careful in their borrowing. Borrowers must obviously take responsibility for their credit decisions. However, as there are always two parties to any credit agreement, credit providers also have a responsibility to engage in prudent lending. An untrammelled lending policy is a recipe for disaster for both the lender and the borrower. I am aware of the various credit checks carried out by lenders. However, I feel it important to remind lenders of the need to continue to ensure that they follow responsible lending policies.

I would wish to acknowledge that many lenders encourage customers experiencing debt repayment problems to bring these problems to their attention. I would also wish to commend the co-operation offered by lenders to the Money Advice Budgeting Service in its efforts to assist clients with debt problems. I have no doubt of the considerable value of this service and as you may be aware the Government intends to establish the MABs service on a statutory basis. I am sure that lending institutions themselves can see the benefits of their continued co-operation with MABs not only in terms of their customers’ interests but also in terms of their own self interest.

As Minister for Consumers Affairs, my main focus in the financial services area is to ensure that the relationship between the service provider and the consumer is one of equality, fairness and transparency. Two of the main pieces of legislation which seek to ensure those three elements are the Consumer Credit Act, 1995 and the Unfair Terms in Consumer Contracts Regulations, for which I have responsibility, and which are enforced by the Director of Consumer Affairs.

I am strongly of the view, however, that financial service providers have primary responsibility for ensuring that their customers fully understand all aspects of the financial product or service that they are buying or availing of. To meet this responsibility, providers must ensure that their product agreements and the terms and conditions of those agreements are written in as plain and simple language as possible. What is particularly of concern is the practice of some financial service providers to bury the more important clauses of a product agreement, those with a financial impact for the consumer, for example penalty charges for delinquency in a credit agreement, within the main body of the agreement. Product providers must always be up front in their agreements about such clauses. I would applaud all those providers who have conducted a "Plain English" audit of their agreements and their terms and conditions and I would strongly urge those who have not conducted such an audit, to do so.

Finally, I hope that all exhibitors present today and indeed the financial services area as a whole recognises the importance of rising to the challenges of a fast developing sector and particularly your responsibility to restore consumer confidence to the reputation of a vital industry which has been tarnished because of certain well reported mis-deeds in the past. As a legislator, I too have a responsibility to ensure that Ireland enjoys a well regulated financial services sector. You will be aware of the recommendations of the Implementation Advisory Committee for the Establishment of a Single Regulatory Authority for the financial services sector and I look forward to the establishment of that Authority. In the interim, and in partnership with the Director of Consumer Affairs, I also look forward to working in co-operation with yourselves and your representative associations so as to ensure that we can have a vibrant, competitive and consumer conscious industry.