Today, 1 July, is the deadline for the banks to get back to the Minister for Finance, Deputy Noonan, on the provision of reductions for variable rate mortgages. The Taoiseach must accept that the Minister's initiative has been somewhat of a flop because only two of the six lenders have made minor reductions to their standard variable rate mortgages and one of those was made before the meeting with the Minister.

There are more than 300,000 variable rate mortgage customers in this country paying an average 2% more than the average European customer. There are also 46,000 mortgage holders who are outside the banking system, who have mortgages with vulture funds who bought up their loans and who have absolutely no protection whatsoever. Those people are particularly vulnerable. This is a massive issue in households throughout the country. It is about money in people’s pockets. What is happening at the moment can only be described as a massive rip-off. The rates that are being charged cannot be justified, based on evidence from the banks themselves to the Oireachtas committees. I put it to the Taoiseach that an existing customer with 20 years remaining on a €200,000 mortgage at a rate of 4.5% is paying €992 more than someone availing of a new mortgage, and €3,874 more than someone on a tracker rate. Those are extraordinary variations. They are huge sums of money that matter to thousands of families throughout the country.

Nothing has been done about it. By any yardstick, the Minister’s initiative has been a flop. We have put forward legislative proposals, through Deputy Michael McGrath’s Bill, that are reasonable and balanced and, if adopted, would give capacity to the Central Bank, first, to examine whether there is market failure and then to give directions to the Central Bank to intervene to ensure fairness, equity and, above all, a reduction in the rip-off that is taking place in the context of variable rate mortgages. Does the Taoiseach accept that the Minister’s initiative has been a failure? Will he provide time for debate and accept the Bill that has been published and moved on Second Stage by Deputy Michael McGrath, which would bring a legislative response to this issue, one that the Government has neglected for a number of years?

I agree this is a serious matter for a great number of people. That is why the Government made the recent changes. I do not agree that the Minister’s initiative has been a failure. Today is the first day he set for consideration by the banks. The Minister already notified the Central Bank that if it required legislation to intervene, he would do so to give it the authority. It did not seek that authority. He held a series of meetings with the six banks. They focused on the comparatively high standard variable rates currently being applied by the banks, as in the case to which Deputy Martin referred of a €200,000 loan over 20 years at 4.5%. The banks agreed to review their rates and their products and to have simple options to reduce monthly payments for standard variable rate customers. Some of the potential products include lower standard variable rates for existing and new customers, competitive fixed-rate products, and lower variable rates taking account of loan to value for new and existing customers.

Officials in the Department of Finance have been mandated to review progress in the coming weeks and to set up a number of follow-up meetings between the Minister and the banks in order that they follow through on what they said. Some institutions have announced reduced standard variable rates, which is welcome, while others have offered customers reduced fixed-rate options as a method of reducing monthly repayments. That is the customer’s choice. In recent weeks we have also seen increased competition in the switcher market, which I welcome. That was not available previously. Institutions are offering customers reduced rates and incentives to attract them, which is welcome. The increased range of products already announced by the banks have increased competition in the marketplace, which is also welcome. The Government has always been of the view that an increased level of competition is in the customer’s interest. Officials are following up on what the banks said they would do. I expect there will be further meetings arising from that, and I do not accept that the initiative taken by the Minister, Deputy Noonan, has been a failure. I view it as a work in progress.

We have debated the legislation to which Deputy Martin referred and I do not see it as being pertinent just now. I have outlined the progress made by the Government. We have seen progress on the part of AIB, Bank of Ireland and KBC, all announcing new products for existing customers that will see mortgage rates reduced to less than 4% for customers, which is in the interests of customers.

There are times when I genuinely do not know what planet the Taoiseach is living on.

The same one as Deputy Martin.

To be frank, the banks have told the Government where to go, and they have told the Minister where to go. Only two banks have responded. AIB made a reduction of 0.25%, a very minor reduction. The reduction announced by KBC was very convoluted and even more minor again in terms of its impact. Bank of Ireland has not reduced the SV rate. It has left it untouched. Ulster Bank has not responded in any shape or form. The Taoiseach said today was the first day by which a response should be made but it was the final date for the banks to get back to the Minister with meaningful proposals and responses to the standard variable rate issue.

The Taoiseach said in response to a question from me in April that from any moral or ethical point of view, when banks are now restructured and on their way to making a profit again, it is just not acceptable that when they themselves can borrow at much cheaper rates, they continue to have higher rates applied to mortgage holders. That is exactly what is going on right now. We know from all the evidence to the Oireachtas committee that the cost of funds is far lower than what the banks are charging the standard variable rate mortgage customer. It is a shocking rip-off. What the Taoiseach has proposed today is more inertia, as has been the case for years. It is not a question of whether the Central Bank wants the legislation. It is the Oireachtas that must do something about the situation because the sums of money are enormous for the households that are affected. The situation is much more significant than the combined effect of property tax and water charges in terms of the sums of money that have been gouged out of hundreds of thousands of families by unacceptable behaviour by the banks. According to the Taoiseach’s own words, the situation is unacceptable from an ethical and moral point of view. In April, the Tánaiste said gratitude would only get one so far with the banks, and that she had never known bankers to be an especially grateful sort of people.

Could Deputy Martin ask a question please?

What will be done about the situation? We have endeavoured to be constructive. Deputy Michael McGrath has produced well-researched legislation. A legislative response is required. At a very minimum, the 46,000 households whose loans have been bought up by vulture funds are extraordinarily vulnerable to arbitrary hikes in rates. Does the Taoiseach accept that legislation is required? I do not know by what criteria the Taoiseach would judge the Minister’s initiative as being a success or what timeframe he is now setting out. He said the officials would follow up on what the banks have undertaken to do. How long will the process last? Does the Taoiseach not accept that legislation is required to bring fairness between existing customers and new customers, for example?

All the Taoiseach announced were marketing and promotional approaches by the banks. They do not deal with the core issue of how existing customers are being screwed and ripped off. This is the key point and it is unacceptable.

I live on the same planet as the Deputy and work in the same building as he worked in when he was a Minister in a Government that allowed the banks to do as they liked and wrecked our economy.

A history lesson.

I do not accept from the Deputy, or anybody else, that the Minister for Finance, Deputy Noonan, has not taken the problem by the scruff of the neck.

Where are the results?

Tell it to the young couples.

The changes that have been made in restructuring and recapitalising banks and making arrangements for the taxpayers to get back all their money is markedly different from the situation Fianna Fáil left when its Government ended.

Hear, hear.

I accept that 300,000 people paying variable mortgage rates that are above the rate at which banks are borrowing is not a morally justifiable situation.

What is the Taoiseach going to do about it?

This is why the Minister, Deputy Noonan, met each of the six banks and gave them a piece of his mind about what they should do.

When the Taoiseach wanted to get rid of the Garda Commissioner, he left him in no doubt. Why does he not send in the Secretary General?

KBC, Bank of Ireland and AIB have introduced measures to reduce variable rates below 4%. The Minister’s officials are monitoring the progress of what the banks said they would do to see the outcome of it. The October budget will be an opportunity for the Minister to deal with the banks if necessary.

"If".

Deputy Martin does not seem to understand that the Central Bank is an independent regulator.

The Taoiseach does not understand.

He has no respect.

He wants the Government to direct everybody in this democracy.

The Taoiseach was not long moving the Garda Commissioner when it suited him. He should put half as much effort into dealing with the banks.

The Minister wrote to the Central Bank some time ago and said if it required the legislative authority to intervene he would provide it by way of legislation.

Are you not the Taoiseach?

He got rid of the Minister for Health too.

The Taoiseach has the power to initiate legislation.

The Central Bank did not take up the offer. Time is moving on.

It is, for the borrowers.

Deputy Dooley's Government, which he supported, left them in some mess. He has some neck.

Every day, people come to me about variable mortgage interest rates and the pressure they are under. This is why the entire suite of measures put in place by the Government is designed to alleviate it. I expect the banks to reduce their variable mortgage interest rates, which are unfair on so many. The Minister has given them a warning, and I expect them to respond.