Consumers urged to think carefully about affordability and credit options

THE Financial Regulator’s chief executive Patrick Neary has described the current turmoil in the financial system as the most serious and prolonged in decades.

And he warned that the turmoil was likely to continue indefinitely.

Speaking at the publication of the annual report, Mr Neary, said the regulator had taken action to “widen and deepen” its supervision of financial institutions as a result of the problems.

As the cost of finance increased for banks consumers were feeling the backlash.

And he urged consumers to think carefully about affordability and to look at all credit options.

He urged borrowers to “look carefully” at all propositions from financial institutions offering to consolidate debts into one big loan, as these very often turn out to be much more expensive over time.

Highlights of the 2007 report included:

More than 4,000 new authorisations were granted, bringing the number of entities regulated by the Financial Regulator to 13,000. A total of 65,000 financial returns were analysed.

More than 500 on-site inspections and review meetings took place.

3,000 prospectuses were approved.

Half a million visits were made to itsyourmoney.ie

Individual information was provided to over 40,000 customers.

In the current more difficult economic times, the Financial Regulator has taken additional supervisory action and widened and deepened its monitoring of the institutions it supervises, the report said.

The regulator continues to closely monitor market developments, in particular the availability and cost of funding in the international money markets.

While times were very difficult internationally,

Ireland had not suffered the disruptions seen in other countries, he said.

“This period has been a major test for the robustness of the regulatory system and for financial services firms. I believe that the system of regulation that we have developed over the past five years has played its part in developing the resilience of the system,” he said.

Looking at the outlook for credit availability, Mr Neary said the tightening credit market “is having its greatest impact on those who want to borrow now”.

He stressed that consumers should think carefully about future affordability and examine all credit options.

“All regulated credit providers are now required by our statutory consumer protection code to provide only those products that are suitable for their customers,” he said.

This could mean, however, that some consumers will be refused credit under the tough lending criteria now in place, he pointed out.