Oct 27th, 2009

Farmers say NAMA continues 'feather duster regulation'of banks and won't work for their sector

Availability of credit and the cost of credit are issues of critical importance to farmers, but ICMSA say that the NAMA Bill is completely unconvincing and silent on how credit is to be made available to the productive sector and unforgivably casual on its intention to monitor lending institutions charged with extending credit to the farming and SME sectors

The President of ICMSA, Jackie Cahill, said that last spring a Code of Conduct was drawn up by the Financial Regulator to cover availability of credit to SMEs. This became fully operational on 1 October but following a recent meeting with the Offices of the Financial Regulator it was now perfectly obvious to ICMSA that this Code of Conduct had very little implementing power and does not even allow for individual farmers or SME businesspeople to make specific complaints and have their cases assessed. Instead, what was being introduced was precisely the kind of ‘feather duster regulation’ that had helped the banks land us all in the chaotic situation in which we now found ourselves. Mr Cahill pointed out that, at the moment, the maximum fine that can be levied against a bank is a mere €1000 on a summary conviction but even then the Financial Regulator has no plans to deal with complaints on a case-by-case basis, just a general oversight.

‘We all have learned to our ruinous cost that you cannot trust the banks so we need the Financial Regulator to do her job and the Government to give her the legislation which will make the difference. Farmers are paying over a half a billion euro in interest per year and those levels of interest are the second most costly item at farm level after animal feed. Farmers spend the equivalent of 23% of their income on interest alone. From our experience, banks have started to generate unjustified profit and margin from farmers and SMEs through the extension of credit facilities – and that is in those rare cases where they even extend credit. The banks cannot be trusted to fund the productive sector and the Government must act. We have all learned – or we should have learned - that that light or non-existent regulation of banks always ends up in tears for the borrower or the taxpayer’, stated Mr Cahill.

Mr Cahill pointed that this area requires urgent attention through a code of practice that has the full force of law complete with criminal sanctions and the possibility of awards being made against banks in the event of specific cases transgressing the Code.

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