Financial institutions have objected to a proposed ban on unsolicited pre-approved loans and restrictions on the circumstances in which firms can cold-call consumers.

The Irish Bankers' Federation (IBF) denied that the practice of offering unsolicited pre-approved credit, which includes automatic increases in credit card limits, was an example of irresponsible lending.

In its submission to the Irish Financial Services Regulatory Authority (Ifsra) consultation on its draft consumer protection code, the IBF said unsolicited pre-approved credit provided peace of mind to potential borrowers that funds were available.

Bank of Ireland, the financial institution most heavily involved in offering unsolicited pre-approved credit, said the proposed ban was anti-competitive and would not always be in the best interest of consumers.

"In certain instances, pre-approved loan facilities may help a customer to reduce charges. For example, a pre-approved overdraft could help customers avoid over limit/interest surcharges or cheques being returned unpaid," it said in its response to Ifsra.

Ifsra's proposed ban on automatic credit card limit increases could lead to exceptionally high credit limits being offered to new customers when they open their accounts, the bank predicted.

In 2004, Bank of Ireland offered over 100,000 increases in credit limits to customers. It said that only "a very small number" of customers requested it not to increase their limit. Credit card provider MBNA also objected to the proposed rule that firms could only increase a customer's credit card limit following a request from the customer.

However, the Money Advice and Budgeting Service welcomed the proposed ban on unsolicited credit, saying that, in its experience, people did borrow on the basis of unsolicited approval and got into difficulty as a result.

The IBF also objected to the proposed restrictions on cold calling, saying consumers took up offers received on an unsolicited basis that they were otherwise unaware of.