Deputy Ardagh was in possession but I understand he has concluded and, therefore, I call Deputy O'Donnell.
Markets in Financial Instruments and Miscellaneous Provisions Bill 2007: Second Stage (Resumed).
I am delighted to speak on this Bill. I thank the Minister for bringing forward legislation on the sub-prime market. People will probably be aware that within the sub-prime lending market there is no regulation of any description. The sub-prime market accounts for more than €1 billion of loans while currently the market it not subject to any regulation. It is important that it is subject to the consumer protection code, the CPC. Furthermore, some prudential measures should be examined with a view to introducing controls over this area.
I welcome the fact the Minister for Finance is reviewing increasing the levels in terms of a deposit protection scheme. The levels are too low. He should examine the possibility of ensuring there is consistency and a standard consumer deposit protection scheme throughout the European Union.
I wish to comment on two further measures. The Tánaiste, Deputy Cowen, mentioned earlier that he was looking forward to the budget. It is extremely important that he considers a number of measures in that context. When stamp duty legislation was going through this House on 26 June I stated that it did not go far enough, that the Bill was a sham and that it was not fair. I said it should be examined in particular to make it fairer for home owners who wished to move home. The Minister chose to disregard that proposed amendment to the legislation, but I have been proven right. The market is in a major slump. In rural areas, areas outside Dublin, and the area of Limerick East which I represent the housing market is stagnant. I call on the Minister in the forthcoming budget to amend the stamp duty legislation to make it fairer, to reform it to provide for people who wish to move from their first home to a second home to ensure they will not be liable to penal tax rates. A major point is that while the Minister talks about not interfering in the market, he has a role to instill confidence in the market. The Minister has shirked his responsibility in this area and, therefore, I call for reform.
We have been told that in the next six months there will be a further two increases in mortgage interest rates, probably of 0.5%. That would put people under immense pressure. Ironically, there probably would have been EU mortgage interest rises but for the turbulence in the market. It is important that the Minister makes such reforms in the next budget, particularly in the area of stamp duty and mortgage interest relief. It is all about confidence. The Minister should take steps to build confidence in this regard for the building industry, house buyers and the market.
I wish to make one further comment. The issue of employee pension schemes has arisen. A report on this area was issued on Tuesday. It stated that the number of defined benefit schemes provided by companies has fallen from 67% to 37% of the companies involved in a five-year period. That is worrying. People will be aware that with a defined benefit scheme employees are guaranteed a certain pension whereas with a defined contribution scheme the risk is put back on the employee depending on how the markets perform. The Minister must examine, in the forthcoming budget, reforming employee pension schemes to make them more flexible. Virtually 100% of new employees commencing work in companies will opt for defined contribution schemes rather than defined benefit schemes. We will not see the end result of that until 20 years' time when these people claim their pensions and suddenly discover there is nothing there. In terms of reform, it is important this Minister examines this area.
While I examine a Bill such as this in the context of financial markets, ultimately the Government should consider it in terms of consumer protection; that is what it is all about. There are worrying features to the Bill, primarily to do with the advent of the Internet, which has made regulation more difficult. Effectively, this Bill concerns the introduction of EU-wide regulation of financial instruments. This is good in terms of the principle of the Single Market. However, there are concerns.
The regulation is to be introduced by 1 November, but nine EU countries have yet to implement the directive, namely, Spain, Italy, Holland, Hungary, Poland, Portugal, Estonia, the Czech Republic and Slovenia. The question must be asked as to whether these countries will be able to operate in the Irish market from 1 November. Furthermore, we are unsure whether each country will transpose the directive in the same way or whether we will have different standards. Our Financial Regulator is being asked to rely on regulators in other countries in the matter of activities based in those countries, which is a concern.
A survey conducted by KPMG in 2004 is interesting with regard to the risk that transposition will not be carried out correctly throughout the European Union. Some 49% of companies surveyed stated the regulations would be enforced differently throughout the Union, 29% said regulators would still interpret and apply requirements differently and only 22% of respondents had confidence that the markets in financial instruments directive, MIFID, would work. This is a worrying feature.
In practical terms, as we stand currently with our Financial Regulator, if an investment house based in another country operates through the Internet, with no branch in Ireland, it is subject to our consumer code of conduct and to our money laundering legislation. However, under the new MIFID regulation, the Irish regulator will have no input and must rely on the other country providing security. The Financial Regulator informed me of this when I made contact with it.
When it comes to making amendments to the legislation, we need to incorporate a requirement to retain a consumer code of conduct and money laundering powers over companies providing services into Ireland via the Internet. We have those powers where there are branch offices and subsidiaries, but there is a weakness in the MIFID that does not give us these powers over companies operating purely over the Internet. It is critical we cover this area.
The Financial Regulator can investigate any wrongdoing it discovers in all financial investment houses operating in Ireland, whether they operate across borders or have branches here. However, it must be informed of those wrongdoings because it has no review function. This is a function that should be enshrined in the legislation on Committee Stage.
There are positive elements to the directive. Investment houses must now look after investors by finding a product to suit them. Regulations 74 and 75 of the statutory instrument deal with conflicts of interest. The issue of contracts for differences have received media attention recently. Where investment houses have a conflict of interest, for example, where they receive commission in contracts for difference from whoever is providing funding, the legislation will provide that they declare this to the investor and seek the best price for him or her. The investment advisers must look at a number of markets, whether the stock exchange or other regulated markets and find the best price for the investor and go with that.
There has been a perception that certain institutions have a vested interest in the Stock Exchange and route all transactions through it. This will no longer be the case. Customer trades will be better executed and investment companies must provide more comprehensive documentation for investors and a full audit trail.
On balance, MIFID is good, but we must protect the good regulations we already have which have been built up over many years. My greatest concern is that we will be fully reliant on other financial regulators throughout the European Union, of which there are over 20. They may have different levels and interpretations of the regulations. It is critical that the European Commission gives direction to all financial regulators on a code of conduct for cross-border exchange of information. The regulators of all member states must be provided with defined ways of exchanging information.
Statutory instrument 60, which is the primary instrument, was published last February, but the follow-up, SI 1663, was only published in the past week. This probably contains the most important element for the industry here and mentions for the first time that a code of conduct should be drawn up by the Financial Regulator. I know from speaking to people in the industry that their main concern is that the regulations are currently a grey area and they do not understand exactly how they will affect them. As a matter of urgency they would like a specific code of practice for the regulations. I call on the Financial Regulator to draw up such a code. It is difficult for people operating in the market to abide by the regulations when they do not understand fully how they should implement them.
I would like to see more resources being made available to the Financial Regulator to allow it to regulate this complex market. Over the past number of years we have had regulated markets like the Stock Exchange. However, we have also had an increase in highly sophisticated unregulated markets, particularly with the advent of the Internet. We need to strike a balance between regulating the markets and allowing for the introduction of innovative products. If we do not have a regulator with sufficient resources to regulate the situation, people will not have confidence in the market. We should allow for the development of innovative products while at the same time putting in place a regulatory mechanism which allows them to operate and gives confidence to the market.
I wish to raise an issue that arose in the Northern Rock situation in the United Kingdom. Our regulatory system is similar to that in the UK. We have a Central Bank that, effectively, provides policy and a Financial Regulator that enforces regulations. However, there is a difference between us. In Ireland, the Central Bank also regulates liquidity in terms of institutions, whereas the Financial Regulator deals purely with regulation. In the UK, the financial regulator deals with both liquidity and regulation. What happened in the Northern Rock situation is that the lines of communication between the Financial Regulator and the Bank of England were slow. If those lines had been more accessible then, once the liquidity problem hit Northern Rock, the Bank of England could immediately have contacted the Financial Regulator. However, it was slow to act and had it provided money more quickly it may have given some stability in the market. It is important that we review the lines of communication connecting the Central Bank, the Financial Regulator and the Government so they can operate in an efficient and speedy manner to ensure a situation like that involving Northern Rock can never happen.
Northern Rock took a hit as a direct result of the sub-prime market. People are of the opinion that the sub-prime market is small, worth €1 billion but growing. However, in the past two weeks Bank of Ireland has raised its mortgage interest rates for first-time buyers as a direct result of the sub-prime market because the interbank market had tightened up, meaning it costs Bank of Ireland more to borrow money. That affected ordinary people who borrowed money so we should not think the sub-prime market is divorced from the normal mortgage market — that is far from the case. I call on the Minister, as a matter of urgency, not only to bring in a consumer protection code, which he promised, but to put in place prudential measures in respect of the sub-prime market.
There is considerable nervousness in the market. Finance Ireland divested its stake in Nua Homeloans last Tuesday and its CEO said it was because of the uncertainty in the sub-prime market, which is worrying. The market is unregulated currently and it hits the vulnerable. We all know of people who get into financial difficulty and are sold products in the sub-prime market on which they are charged the exorbitant rate of almost 9.5%, well over twice the normal rate. I will push the Minister on the sub-prime market and its regulation.
I welcome the Bill but it is extremely important we, as regulator, retain control over all investment houses operating in the country. The interbank market is very much a cross-border market and I ask the Minister to amend the legislation to make certain we keep control over the operation of our consumer code of practiceand matters relating to money laundering forall financial institutions which operate inIreland.
I welcome the fact the limits for the deposit protection scheme will be increased. An EU-wide standard should be considered. It is extremely important the Financial Regulator introduces a code of practice immediately to ensure companies know what they have to do. I call on the Minister, as I did on 26 June when the Finance (No. 2) Act 2007 was going through the House, to introduce real reform of stamp duty in the budget, to make the system fairer for homeowners moving house and to return confidence to the market. It is all very well to say the construction industry needs a soft landing but going from 90,000 houses to 40,000 is not a soft landing — it is a hard, bumpy landing which we may not come out of. It is incumbent on the Minister to bring stability to the market. He must bring in measures in the budget on mortgage interest relief and, as mentioned earlier, he must look after the vulnerable, particularly those with disabilities, the old and infirm. He has a personal interest in the area and I call on him to provide funding. People have been encouraged to get into the housing market so they can trade up at a later stage. The problem is they are being sucked in without having to pay stamp duty but the minute they get in, if they want to move on, they are being screwed for stamp duty and that is diabolical. The Minister must instigate reforms in the budget to bring stability to the market.
I wish to share time with Deputy O'Brien.
That is agreed. The Deputy has ten minutes and Deputy O'Brien will have ten minutes.
I thank the Ceann Comhairle for the opportunity to speak in support of the Markets in Financial Instruments and Miscellaneous Provisions Bill 2007. It is not the most exciting of titles or Bills but it is a very important Bill. While I do not have a technical background in financial services I am speaking on the Bill because I recognise the importance of the financial services industry in Ireland and the benefit that European legislation has brought in terms of stability and competitiveness in the market.
Recent events, referred to by the previous speaker, such as the run on Northern Rock and the faltering of the US sub-prime market, have reminded us all of the importance of good regulation. It is important we do not have regulation for the sake of it but regulation which benefits the consumer and the economy on the whole. The previous speaker mentioned vigilance and the Markets in Financial Instruments and Miscellaneous Provisions Bill 2007 is about continuing vigilance. As markets change it is important that legislation changes to meet the various challenges.
This Bill has not come out of a puff of air but is part of a much broader picture. In 1999 the financial services action plan was created at European level and I am glad to say Irish representatives played a very active role in its creation. The action plan aims to create a single market for financial services. The prospectus directive and market abuse directives, which came into force in July 2005, have already brought great benefit to the Irish financial services industry. The transparency directive was introduced earlier this year and the Markets in Financial Instruments Directive (MiFID) 2004/39/EC is due to come into force across the EU on 1 November.
What sounds like jargon dreamt up by bureaucrats and legislators will actually serve to make our economy more robust and competitive, less vulnerable to fraud and more attractive to foreign investors. The final step in the process is to introduce the primary legislation to ensure the MiFID can function effectively within the Irish system. I am happy to say that Ireland was one of the first member states to transpose the directive, in February this year. I am also happy that we are preparing for the deadline of 1 November by applying the requisite provisions.
The Bill stipulates that a person guilty of an offence under section 5 will be liable on conviction to a fine not exceeding €10 million, or imprisonment for a term not exceeding ten years, or both. These measures have involved consultation with the relevant stakeholders and aim to ensure the directive will be implemented in the most effective way possible.
A further provision affecting Irish law is the repeal of the Stock Exchange Act 1995. I congratulate the Minister for streamlining and, where appropriate, retiring legislation to enable the legal system to run more smoothly and cost-effectively. The financial services industry is a large employer in Dublin South-East and I very much welcome this Bill, which will serve to keep the cogs of the financial machine turning. It will bring transparency and accountability where it is needed.
I welcome this very important legislation. Malahide in my constituency has the highest proportion of individuals in the State working in the financial services sector. My background, before I had the honour of being elected to this House, involved 13 or 14 years in financial services so I am very familiar with the importance of regulation in the market. I do not believe any party in this House does not recognise the importance of the financial services industry, namely, banking, insurance and stockbroking, to the economy. Some thousands of people in Ireland have well paid jobs within the industry. Many companies have expanded and set up their European and global bases in Ireland not only because of the positive corporation tax policy pursued by Government and, in particular, Fianna Fáil, but because of our well educated workforce.
I was quite surprised to hear Deputy Burton state on Tuesday that very few people understand investment or insurance products. Thousands of professionals in the industry are engaged on a day-to-day basis in ensuring the best deal is secured for consumers. The Bill, with which I will deal in a few moments, contains important provisions which further protect the consumer and should assist in driving down charges for those transacting financial business across the EU.
As I mentioned earlier, Ireland is a centre for world financial markets. An example of this is the Irish Financial Services Centre which provides high end jobs for our workforce. Many people with whom I have had the pleasure to work are making a good living from the insurance industry. We must ensure we protect companies and consumers in the investment market. Deputy Burton also stated on Tuesday that regulation in Ireland was "regulation with a very light hand under the financial regulator". Those involved in this market would disagree with that statement. The insurance and investment sectors have welcomed with open arms the introduction of strenuous, independent regulation which permits the financial regulator to conduct on-the-spot audits and ensures companies make annual returns and, in many instances, biannual returns, to the financial regulator. These returns are then subject to independent review. The financial regulator also has the power to impose heavy penalties, such as the withdrawal of a licence to trade within Ireland, in this regard. The financial regulator has, unfortunately, had to use this power from time to time. I disagree with Deputy Burton's statement that regulation in Ireland is regulation with a light hand.
Concern has been expressed in respect of sub-prime lending with its higher rates of approximately 9% to 9.5%. We must get to grips with the issue. Comments by Labour Party Members last Tuesday such as that clients are encouraged to lie or are misled when being sold mortgages will come as a great surprise to the Irish Brokers' Association and Professional Insurance Brokers' Association, both of which have long-standing records within the market and are consumer driven in terms of what is best for their customers. Comments like this do not help the industry or the public's view of it.
The regulations and enactment of this legislation will ensure people can safely trade across Europe. The penalties being transposed through MiFID will ensure the Irish regulator has strong powers, namely, ten years' imprisonment or a €10 million fine, as mentioned by Deputy Chris Andrews. Irish consumers are increasingly seeking more sophisticated means of investment through diversified investment policies. Many Irish companies now meet these needs. However, MiFID will provide clients with more access to other investment services in EU countries. This has to be good in terms of competition and driving down prices and costs to the consumer. With greater access comes the need for greater protection. As I mentioned earlier, I am delighted that MiFID will harmonise investor protection across the EU and makes provision for the imposition of new maximum penalties.
I welcome section 13 which will enable the financial regulator to disclose confidential information to the National Consumer Agency in terms of that agency's performance of its functions. It is important the financial regulator can deal directly with the National Consumer Agency in ensuring the customer is king. The advantages of this legislation must be clearly visible to the customer on the ground.
The Bill also allows the National Treasury Management Agency to provide foreign exchange services to Departments and State bodies, resulting in sizeable savings to the Exchequer. I am glad this provision is being introduced. Savings to the Department of Foreign Affairs alone could be of the order of €700,000 per annum, a sizeable saving. I look forward to the passing of this Bill which shows Ireland is to the forefront in introducing legislation which protects the consumer in the financial services area. We will be well ahead of the posse in having this legislation enacted by 1 November.
I wish to share time with Deputy Connaughton.
Is that agreed? Agreed.
I wish to take the opportunity, in dealing with this Bill which relates to protection of the consumer in the financial services sector, to speak about the economy. Members will be aware that the economy is now at tipping point and, that in a sense, nobody is quite sure in what direction it will go next. While we are all hoping for the soft landing, there is another scenario about which we do not wish to speak.
What the Government does now is crucial. We cannot influence world economic trends but we can mitigate the impact of what is happening elsewhere. Ireland has actually managed to buck the trend in western Europe during the past 12 to 14 years. However, we are all conscious of how worryingly dependent we have become on the construction industry. This makes us vulnerable to even the smallest fall in output. There are almost 280,000 people in the construction industry which comprises a massive 25% of GDP. While it is our major economic driver, it is also our Achilles heel.
We have witnessed a dramatic change in housing output from a high last year of almost 90,000 units to 70,000 units this year. While Government and industry estimates in respect of output vary, I understand 50,000 units is the expected output for next year, decreasing each year after that. Housing construction accounts for approximately 12% to 14% of GDP. A one third fall-off in housing output would result in a 3% to 4% reduction in GDP. If this happened, an almost unattainable growth rate would be required in other sectors to make up for it. If we are to maintain current spending in terms of the type of services we would like to have, we need to ensure the growth rates do not fall to that extent.
What we do now is vital in determining how we weather the storm ahead. I do not believe any of us are in any doubt that there is a storm ahead. With stamp duty take-out down 14% on what was predicted and the tax take increase a full 12 percentage points behind current spending increases, it is clear that something has to give. This is simply not sustainable. Indiscriminate, untargeted current spending that does not give value for money or produce clear quantifiable outputs cannot be permitted or even contemplated. However, spending measures which do sustain employment and contribute to future saving and growth must be prioritised. The danger is that reaction to the less buoyant tax take could result in Government spending being reined in to the extent that it further decelerates an already decelerating economy.
We now have an opportunity to accelerate badly needed infrastructural projects which can take up the slack provided by the loss of housing construction and so sustain output and employment.
Many of the infrastructural projects planned in the good times have fallen behind. A number of the major transport projects in Transport 21 are far behind schedule. The joining of the two existing Luas lines, which was imminent, has been postponed, I suspect forever, but certainly until after Metro north is completed. Other projects have been postponed and are falling behind. We now have the opportunity to bring forward planned projects which may be at the other end of the timescale. Forgive me for being parochial, but the Luas line to Rathfarnham, for example, is planned and could be brought forward to replace other projects. It is important to sustain investment in such projects as these. If we do not do this the impact on the economy will not be confined to the decline in house building. We must build up this infrastructure. The Government must plan to proceed with capital spending and take advantage of the emerging labour availability, which has not existed until now, to add to projects which are already planned. Rather than fall behind, we must accelerate investment.
Several significant infrastructural projects in the area of the arts could make a difference to sustaining employment. The new national theatre, the national conference centre, the National Concert Hall extension and the Abbotstown campus projects have a big employment potential but have been painfully slow in coming to the construction stage. A new momentum must be given to projects such as these to substitute for the decline in other areas of building. Otherwise the drop in housing output could become a catastrophe, not merely for the construction industry but for the entire economy. That is a real concern.
The capital grants available to householders to switch to alternative fuels were a welcome initiative. It is worrying that this scheme appears to have stalled. It would be very short-sighted not to maintain a scheme such as this in the construction area. With construction workers becoming available, value for money could be obtained by householders. Employment could be sustained and, in the long term, energy saved and carbon output reduced. A scheme such as this must be continued. The improved housing insulation standards are welcome but will have little impact in the short to medium term as very few new houses will be built in the coming years. The housing stock has been increased in recent years and, unfortunately, new houses have been built to a very poor standard, which would not be acceptable elsewhere. Something can now be done to retrofit insulation in the existing housing stock. The existing low level of home insulation will increase householders' fuel bills and add to the cost of the country's carbon credits for many years. A carefully devised targeted capital grants scheme to bring insulation in the existing housing stock up to a standard which would reduce imported fuels and carbon emissions would be of great advantage to householders and the economy.
The Minister must be conscious of the dangers of reducing capital expenditure at a time when the economy is decelerating.
At first glance this seems a technical and complicated Bill. However, it deals with a number of issues that would have huge effect on ordinary people in the future. I can well imagine why it was decided that primary legislation should be enacted to copperfasten penalties as high as €10 million or ten years in jail. Those are large penalties and I can understand why secondary legislation would not be sufficient. When one considers that we are talking about markets across the European Union it is easy to see that penalties of this kind are necessary. There are always opportunists who are able to manipulate markets to their own advantage and have done so in the past. In my years in the Dáil I have heard on many occasions of crime gangs and opportunists of one sort or another who are involved in financial crime on this scale. While it behoves every parliament and the European Union to ensure that legislation is enacted to stop this sort of crime, there is always a new twist somewhere. Despite our best efforts and those of the European Union on this occasion, someone will get around these regulations at some time or another.
Given that we have a financial regulator, will all other financial regulators, irrespective of their guise in other countries, now be singing from the same hymn sheet? It is my understanding that the directives contained in the Bill have this effect. Does the European Union now write the script for the regulators? That is my understanding of the Bill and I ask the Minister to clarify the matter.
I understand that Statutory Instrument 60/2007 is 259 pages long and I assume it contains every conceivable reference to financial markets in the European Union. The core issue being addressed in the Bill is the requirement to introduce penalties at national level for breaches of the provisions involved. Like most legislation, it will ensure that the financial regulator will be able to levy fees on the financial services sector. I assume this will not involve a cost to the Exchequer and that the financial regulator will be able to levy fees on the users of the service. The same system operates for other regulatory provisions.
I note that the Bill repeals the Stock Exchange Act of 1995. Does this mean the Stock Exchange will be marginalised or has the measure more to do with the world of computers and electronics than with the workings of the Stock Exchange? I recently heard an item on the radio indicating that it will soon be possible to do some of the work of the Stock Exchange without having any connection to the Stock Exchange. Is this what is intended in this legislation? I assume it is on the way.
The relevance of the legislation to every person will be in the regulation of investment firms and credit institutions when providing investment services. This is why I say that no matter how one regulates a system someone will get around it somehow. The directive aims to create a pan-European market in investment products by replacing the various national rules with a harmonised European legislative system. I hope this will mean greater regulation of lending institutions.
We have been lucky in Ireland in having a strong banking system. I have been long enough in the House to remember a time when our banking system was not strong. That was not good for the economy at the time. There is great trust in our present system, although the excessive profits of the banks is another story. It is important that banks are financially sound and the people can put their trust in them.
The banks in the United States, the United Kingdom and other countries have so much money they are in a position to lend to themselves. This is called inter-bank lending. With the new culture of taking every opportunity to make more money, bankers have engaged in the new in-thing of sub-prime lending. I think sub-prime lending is a new form of hire purchase, HP. The younger Deputies may not know much about the time when people used to buy household items and cars on the HP. I am sure the Minister of State, Deputy McGuinness, knows what I am referring to——
That was based on the understanding that it was easy to get money provided that one entered into an agreement to pay a very high interest rate on it. There is not much difference between it and sub-prime lending, because the banks advanced the money on the understanding that it might not be that easy to get it back and therefore charged a significantly higher interest rate. It would be nothing short of disaster if sub-prime lending took hold in Ireland. We are told it is minimal, but I do not know if that is correct. I know that when billions are circulating in the banking system, the banks will take the opportunity to make more money. I hope this legislation will guarantee that young people are protected from sub-prime mortgages. In effect we are protecting people from themselves. It is the dream of every couple to own their home and if there was a possibility of getting a mortgage, even if it was more expensive than normal, they would be likely to go for it. It is important to prevent that. The people with the grubby fingers in the banking fraternity will make money and do not care too much about the anxieties impossible repayment rates create.
The National Treasury Management Agency, which handles our national debt, has performed extraordinary well and I have great time for it. We are quick to knock organisations when they do not do things right, but in fairness the National Treasury Management Agency has done well in funding the local authorities, the courts section, the universities, the Railway Procurement Agency and Housing Finance Agency. I often wonder why the National Treasury Management Agency did not have a great involvement with the National Roads Authority. I cannot understand why that agency, rather than the public private partnerships, cannot get involved, given the significant resources at its disposal. A greater part of the national road network would be completed if this had been the case. I think I speak for the Minister of State and most of my parliamentary colleagues when I say that whatever happens, I do not want the Government or the European Union to lay a hand on the basic principles that have made the credit union movement so powerful and important to ordinary people.
I cannot understand why there should be a debate about the duration of a loan from a credit union, given that its core principle is that people must first save before they can get a loan. We have moved away from saving. The credit union is an organisation for the people run by the people and, whatever happens, I want a hands-off approach to any measures that might hold up the progress of the credit union movement. I hope the legislation liberalises the credit union movement so that it can take its place on the high street or in the smallest community with any banking institution.
Deputy O'Connor has 20 minutes.
I got a different directive from the Whips office.
We transcend them.
I thank the Chair for the opportunity to speak on the Markets in Financial Instruments and Miscellaneous Provisions Bill 2007. I am sensitive about following the accomplished Deputy Connaughton, who made the issue very interesting. The young students in the Gallery were riveted.
Take out the guitar.
On occasion students are very unhappy to be taken out of school but I think it is good for them. A Cheann Comhairle, they have had the opportunity of seeing a national personality and I am sure they are very happy about that. If the Ceann Comhairle wants me to stray off I can talk about Tallaght for the next 20 minutes. I am very glad that the Dáil has returned to normal business. People want us to deal with the issues that are of concern to them. During the past few days we have had major statements on crime and health issues. That is what people want us to address.
As the previous speaker said there are issues which are of concern to our communities. I take the opportunity to acknowledge the presence of the Minister of State at the Department of Enterprise, Trade and Employment, Deputy John McGuinness, because I have not been in the House with him since his appointment, which I warmly welcome. I think he will do a tremendous job and I hope he will not spend all his time wondering about the prospects of the Kilkenny-Carlow region. Tallaght is the third largest population centre in the country and we appreciate the attention of Ministers. I know the Minister of State was in Russia last week and did some very positive work, however, members may be surprised to learn that I am the chairman of the Ukraine parliamentary friendship group. Therefore, I take the opportunity to mention the significant market in Ukraine.
I do not think there is anything in the Bill about Ukraine or Russia. I ask the Deputy to confine himself to the legislation.
I am surprised the Chair did not remind me that Tallaght was not in the legislation either, because I could talk about it. However, I take the point. I am a relatively new Deputy, as this is my second term, I have watched other Members and some of my more experienced colleagues talk about everything. If I stray, I apologise. I am sorry the Tánaiste and Minister for Finance, Deputy Brian Cowen, is not here because I wanted to pay tribute to him as well.
The Bill complements the EC regulations made last February transposing the Markets in Financial Instruments Directive, MiFID. It harmonises and modernises the EU-wide legislative framework for investment firms, promoting greater cross-border competition. It takes in the whole EU financial sector. The Markets in Financial Instruments Directive should make it easier and cheaper for customers, including retail customers, to buy and sell shares across a Single Market.
I have been warned by the Ceann Comhairle to keep to the subject and not to talk about Tallaght, Ukraine or anything else. I do not know whether the Leas-Cheann Comhairle will be as strict.
I would go into shock if the Deputy did not mention Tallaght.
I did. I am glad the Leas-Cheann Comhairle is here. I am happy to make a brief contribution on this Bill. I repeat what I said earlier, that irrespective of the importance of the subject under discussion and the public response to it, people want us to get on with the business as we have been doing over the past couple of days and it is important that we do that. What we are discussing this morning is very much part of that.
While we transposed this directive by way of EC regulations, the scale of the maximum penalties proposed for serious breaches of certain of the new MiFID regulations is such that primary legislation is needed. That is the main reason for this Bill. The proposed maximum penalties are fines of up to €10 million and-or ten years imprisonment on foot of conviction on indictment. The level of the proposed penalties is in line with the maximum penalty provisions set out in other financial services legislation such as the Investment Funds, Companies and Miscellaneous Provisions Act 2005. I note that minor offences will, as a matter of course, continue to be dealt with through the administrative sanctions system and-or as summary offences.
This Bill also empowers the Financial Regulator to levy fees on the financial services sector towards the cost of implementing its new MiFID functions. I also note that the Stock Exchange Act 1995 is being repealed in this Bill as its provisions are being superseded by the MiFID regulations. This Bill is being taken at this time as the new MiFID regime comes into effect for the industry across the EU member states on 1 November.
The Markets in Financial Instruments Directive is a significant directive for the financial services sector. Ireland was one of the first member states to transpose this directive through detailed comprehensive regulations earlier this year. This has created an important competitive advantage for the financial services sector in Ireland as it provides legal certainty about what is required and plenty of time to plan. This adds to Ireland's strong record in the transposition of EU financial services directives.
Deputy Connaughton spoke about credit unions. It is important we should support our local credit unions. That applies in Cork, Kilkenny and Wexford as well as in the Dublin region. I am particularly supportive of my local credit unions in Tallaght, Firhouse, Templeogue and Greenhills. It is interesting that credit union organisations, which do so much great work in our communities, often come to public representatives to discuss issues of concern to them. As a public representative, but also as a customer, I am able to make representations about the issues brought to me by credit unions and their members and, like the last speaker, I am pleased to do that.
As Deputy Chris Andrews said, this is a very technical Bill. It is difficult to get simple sound bites from it. The legislation is clearly important and, at a time when politics in this House has become so competitive, it is good to hear colleagues agree that it is good legislation. I am sure the Ministers of State are happy to hear that. It will be interesting to see whether there will be a vote on it later.
Section 9 of the Bill will ensure that appropriate sanctions can be provided for a conviction on indictment for specified offences in the reinsurance regulations which were introduced in July 2006 as part of the transposition of the EU reinsurance directive. The proposed maximum penalties for serious offences are fines of up to €10 million and-or ten years imprisonment on foot of conviction on indictment. The indictable offences include the offence of carrying on reinsurance business without authorisation. Minor offences will, as a matter of course, continue to be dealt with through the administrative sanctions system and-or as summary offences.
Section 10 deals with the Netting of Financial Contracts Act which provides protection for netting or set-off arrangements between parties to financial contracts in the event of insolvency. Given the rapid pace of change in financial services, this Bill now widens the definition of financial contracts in response to market developments.
Section 11 deals with client moneys. The Bill amends section 52 of the Investment Intermediaries Act 1995 to confirm certain limitations of receiver-liquidator access to client money following the winding up of an authorised investment business firm as recommended in the report of the Morrogh Review Group.
Section 12 provides for a simplification for the State ownership of Icarom plc, formerly the Insurance Corporation of Ireland, which, I understand, is under administration, by authorising the removal of the holding company from the current ownership structure.
The question of the Financial Regulator is dealt with in section 13. Section 13(a) and (b) enable the Financial Regulator to disclose confidential information to the National Consumer Agency for the performance of the agency’s functions as provided for in the Consumer Protection Act 2007, subject to any EU confidentiality constraints. Section 13(c) extends the deadline for submission of its annual budget by the Financial Regulator from end September to end October each year. Given the complexity of the process for establishing the Financial Regulator’s budget, it is felt that the Financial Regulator should be given a more extensive period for preparation. Section 13(f) will reduce the number of required compulsory retirements from the board of the Financial Regulator by the number, if any, of voluntary resignations which may have occurred between the relevant anniversary dates to ensure continuity of membership and to minimise any potential disruption to the efficient working of the Financial Regulator.
Section 13(d) and (e), on the Financial Services Ombudsman, relieves the Ombudsman of the requirement to provide the Financial Regulator with certain details where he decides not to investigate or to discontinue an investigation. The Bill also provides that members of the Ombudsman Council shall not be liable for costs arising from the discharge, in good faith, of their statutory duties.
I am sure the students in the Gallery are delighted to be here, although perhaps they are a little upset by being out of school. It is good that they had the opportunity to see national personalities in the person of the Ceann Comhairle and the Leas-Cheann Comhairle who is also an easily recognisable personality. I have no doubt the Minister of State, Deputy Batt O'Keeffe, has fans all over the country.
I am sure this is not within the scope of the Bill.
I do not get many chances to praise Ministers of State but Deputy Batt O'Keeffe has been very good to my constituency, he is looking after the fire service in Tallaght and I want to acknowledge that.
I welcome this opportunity to make a brief contribution on this important business. This may not be the sort of issue that is talked about on the doorsteps or in the shopping centres in Wexford and Cork but people want us to deal with these issues. I rambled around my village in Tallaght early this morning — people would be surprised if they followed me around and saw what members of the public are saying to me. Interestingly, people do talk about financial matters and the economy. They raise crime and health issues but this morning people also mentioned stamp duty and property. These are of concern to people and they want us to represent them on these issues and I am happy, as ever, to do so.
Having heard positive noises from the Opposition benches about this Bill, I look forward to finding out if our Opposition colleagues are ready to support it. I hope so because Deputy Connaughton said this morning that this is good legislation.
I appreciate the Leas-Cheann Comhairle's latitude and thank him for letting me stray a little. It is Thursday, which is a different sort of day.
I take this opportunity to congratulate the Minister of State on his new appointment. I wish him well in the role for many years ahead. I also welcome the opportunity to speak on this Bill which is part of an EU-wide regulation of financial services.
Undoubtedly, the International Financial Services Centre is one of the great success stories of the Irish economy in the past 20 years. Its success has benefitted the economy and the many people who work there. The financial services industry is built on confidence, trust and a good reputation and it is important that it is sufficiently regulated. Its good reputation is the guarantee of future expansion and growth.
The reputation of the British banking industry has been severely dented, with the Northern Rock case highlighting the threats we might face if we are unlucky. We must learn from that experience to ensure such an event does not occur here. We must enhance the protection scheme for savers and depositors in Irish financial institutions. Our scheme is currently limited to 10% of deposits, with an upper limit of €20,000, which is completely out of sync with other European countries. We must protect depositors and ensure that banks do not take inappropriate risks. I welcome the fact that the EU is examining the Irish deposit protection scheme.
As with previous speakers, I have major concerns about sub-prime lending in Ireland. Lenders sell on a door-to-door basis, attempting to persuade people to roll up their loans and remortgage their homes. Such practices take place in my constituency of Dublin North-East. The lenders talk about easy borrowing while making huge commission by pressurising vulnerable people into taking out loans. There are applicants who lie on the application forms about their capacity to make repayments so they can secure loans. Irish regulation is too lax. It is estimated that sub-prime lending in Ireland amounts to over €1 billion. The Financial Regulator must have greater control of this market to ensure operations by these companies are robust and that they apply proper selling practices.
The regulation of complex securities and their rating agencies must also be reviewed. This process currently lacks transparency, particularly the uncertain valuation of securities which lies at the heart of the present credit crunch. In recent years many Irish people have been enticed to buy second properties abroad by freeing up equity in their homes. It is questionable if those selling properties are providing buyers with the necessary consumer information. These properties are being marketed as having rents guaranteed for many years to come but it is obvious that wages in those countries cannot support those rent guarantees. This area must be thoroughly examined by the Department.
The economic challenges we face are more serious than the Government would have us believe. We now face a much larger budget deficit, around €1 billion, as the Minister for Finance advised recently. Important lessons must be learned from recent developments in global financial markets. The Irish economy is beginning to slow and we clearly face more economic challenges. Our economy is vulnerable to a slow down because of our over-reliance on property lending. The property market is over-valued and confidence is falling as a result. We are one of the most indebted countries in Europe, with private debt two and a half times greater than our GNP. The warning signs have appeared in the newspapers and in announcements by the Central Bank in recent years but they have been ignored by the Government. With the budget on the way, the ordinary people of the country face difficult times. I call on the Minister of Finance to think of the neediest in society, the homeless, when framing the budget.
I welcome this Bill, which aims to increase the transparency of quotations for financial instruments by standardising them. This will help to reduce costs for users of financial instruments such as equities and shares, bonds and derivatives. It is to be welcomed that the new financial instruments, such as derivatives, are being brought within the scope of this legislation. I welcome section 14 of the Bill, which will extend the National Treasury Management Agency deposit and borrowing facilities to non-commercial bodies such as the Courts Service, universities, the RPA and the Housing Finance Agency. The extension of treasury services to the HFA will allow the National Treasury Management Agency to provide it more efficiently with short-term funds needed to manage its cashflow requirements.
I hope that the House's endorsement of the Bill will yield significant benefits to both Irish investors and investment firms. I look forward to debating the Bill on Committee Stage.
I welcome the opportunity to speak on this Bill. One of the most interesting things I read recently was the interview with the Minister for Finance in the Sunday Independent, where he suggested that Ireland’s economy was the strongest it had been for ten years. That is a phrase to remember, like Michael Fish’s famous prediction that there would not be a hurricane or Margaret Thatcher saying there would never be a woman Prime Minister in her lifetime. Most of us are starting to realise that, although many of the basic factors in the economy remain strong, the economic position in which the country finds itself is certainly more vulnerable than it has been for at least a decade. Like our finance spokesperson, Deputy Bruton, I agree we are well beyond the time for talking about wake-up calls because the warning clouds have been gathering for quite a while.
We have seen phenomenal credit growth in the economy. We often congratulate ourselves on the fact that over the past 15 years we have managed to reduce our public debt as a percentage of GDP from well over 100% to 20% or 30%. Yet what we have really seen is a transfer from public to private debt, whereby private debt is 2.5 times our GNP. In many ways, therefore, we are just as much in debt as in the early 1980s, but we are indebted in a different way. We have also witnessed an appalling over-dependence on the property market. We had a real Celtic tiger up to 2000 or 2001, but since then we have had a false boom based largely on the property market coupled with low interest rates and cheap credit. The effects of that will come home to roost. In addition, inflation is 50% higher than the rest of the eurozone and it is obvious to anyone that it is beginning to impact on people's pockets through price increases. Inflation is outstripping wage increases, which leads to further pressure to increase salaries.
Our export market share is falling and we all know how much our competitiveness is going down. I look forward to reading the NESC report next month. Meanwhile, spending is increasing at roughly twice the rate of tax increases, which is not sustainable in the longer term. The programme for Government is committed to 7% increases in current spending year-on-year which will be impossible to deliver without significant tax increases, given that the economy will only grow by 3% to 5% per annum and tax receipts will grow by a similar percentage.
As in 2002, fiscal policy is largely determined by the electoral cycle rather than the economic cycle, with major spending increases and tax reductions in the run up to elections, followed by clawbacks thereafter. The Government got away with it the last time but will not do so again.
Ireland needs a comprehensive strategy for economic renewal. We need to hang onto the old formula of low taxes, a good education system and balanced budgets in a pro-enterprise environment, but we must do much more. We need to upskill most of our labour force. Some 500,000 people are working in jobs that require little or no skills. Most of those jobs will disappear over the next ten to 15 years and, if not, they will largely go to transient immigrant labour. People in that situation need the opportunity to develop new skills. We must also consider introducing welfare reform, possibly along the Danish model, identifying the approximately 120,000 long-term unemployed people who can work, thus enabling or requiring them to develop skills to enter the work force.
We need to restore competitiveness and deliver on infrastructure. In many ways, it is unfortunate the economy has grown so fast to the extent that it has not allowed us to deliver the required infrastructure. There is a crying need for public sector reform, which could have been done relatively easily over the past ten years while there was plenty of money in the economy. It will be hard to do that now but it must be done — particularly deregulation of sheltered sectors and protected quarters in the economy. Indigenous industry should be promoted by focusing on industries that have grown up from small businesses run by self-employed operators. Sustainability is needed through the development of a green economy in preparation for the realities of climate change and increased fossil fuel costs.
A fundamental reform of the planning system is also required, particularly in constituencies such as my own. Large-scale urban areas can be developed in such a way that infrastructure and amenities, including schools and other facilities, are delivered in due time.
I broadly welcome the Bill, which is largely technical in nature. It aims to give effect in primary legislation to the Markets in Financial Instruments Directive. We do not dispute the need for such legislation. I welcome section 9, which provides for stronger penalties, including prison sentences in some cases for people breaching the reinsurance regulations. I am somewhat confused about the changes concerning the NTMA, which seems to be taking on the form of a bank. I am not sure what the purpose of that change is, but I will advance my views on the matter on Committee Stage.
Section 16 deals with ministerial pensions and most of the proposed reforms therein are acceptable. An opportunity now arises within the context of the Bill to table amendments with a view to removing the ministerial component of pensions for former Ministers who have been convicted of tax fraud, other financial offences, corruption or non-co-operation with tribunals. Such an amendment should be considered by the Minister on Committee Stage.
Although it may not require legislative change, I echo Deputy Terence Flanagan's call to address the issue of protection for depositors. In Ireland this amounts to only €20,000 or 90% of the deposit, whichever is the lower figure. However, this is vastly inferior to what is being proposed in the United Kingdom where they are talking about a level of £100,000. I am not suggesting that taxpayers should indemnify all the banks in the country to 100%, but we should strengthen that protection for depositors. We also need new measures to restrict the practice of sub-prime lending here, which thankfully is nowhere near the situation in the United States or elsewhere.
I broadly welcome the Bill and look forward to dealing with it on Committee Stage when we will have a more detailed discussion and can table amendments.
I welcome the Bill and am glad of the opportunity to contribute to the debate. As previous speakers have said, there are serious concerns that the economy is possibly not as strong as it was. There will clearly be a reduction in stamp duty intake and VAT returns, so we will have to look long and hard at how we address the shortfall.
If responsibility and credibility are not evident at the top they cannot percolate down to Ministers, the Civil Service and our public services generally. Where will the management leadership come from? How many public servants have lost their jobs because of incompetence or a refusal to do particular work? A case in point is PPARS, which cost €180 million at least — we think it cost that figure but we cannot get absolute clarity on the matter. That was the level of expenditure, yet it turned out to be a financial disaster. Was anybody held to be responsible or culpable, and did anyone lose their job as a result? If that level of taxpayers' money can be wasted and not a single person is found to be accountable or responsible we have a serious problem. Why did the former Minister for Health and Children, Deputy Martin, refuse to take any responsibility for the scandal involving €2 billion in nursing home charges? When nobody takes responsibility at the top, the effects percolate down through the system.
Worries have now arisen about sub-prime lending practices. Meanwhile, banks are repackaging high-risks mixed with good risks and selling them on to other banks, which sell them in turn to other banks. Therefore, nobody is quite sure what they are buying, what they are getting or what the ultimate liability will be. Clearly, this area must be regulated.
My attention has been drawn to the issue of the Financial Regulator. In France, 12,000 public servants are working in the field of financial services regulation, compared to 1,800 in the United Kingdom where they seem to manage their business. Who is in charge and who will take control and be responsible for the various financial scandals in our public service? I do not wish to point a finger in any direction but there is a significant haemorrhage of funds. When we had plenty of money people could shrug this off but in the climate of cutbacks this is no longer acceptable.
Credit unions have been a strong source of support to communities, helping people manage their money and save for relatively small items such as a holiday or a car yet they are prevented from entering the mortgage market. This Bill should be amended to allow for regulations to be put in place to enable the credit unions enter this area of activity. They have the interest of the consumer at heart, being not-for-profit organisations.
People remain concerned about how financial institutions offer life assurance with mortgages making customers feel that if they do not accept this assurance the mortgage may not come through, or that problems will arise that they might not otherwise have anticipated. This area needs to be more closely regulated.
Inflation has risen excessively in all the areas that the Government controls, at a rate of 5%. This affects ESB and gas rates which makes business uncompetitive. Prices in areas over which the Government has no control, such as imports, are competitive and the inflation rate is much lower.
This morning on the Order of Business, the Tánaiste and Minister for Finance said in response to the decision not to open a plant in Cork with 1,100 jobs, that it was made for commercial reasons and had nothing to do with competitiveness. Is this more gobbledygook? Has the Government become infected with this line? One can make a commercial decision only on the basis of competition and competitiveness, wages and costs. People vote with their feet. Business men are hard-nosed and know where they can make greater profit, where costs are higher or lower. It beggars belief that the Minister for Finance could tell this House that a commercial decision was made without regard to competitiveness.
People in Government agencies seem to be losing a sense of responsibility and nobody wants to take control. The Health Service Executive is a case in point.
The Deputy should stay within the scope of the Bill.
This point concerns financial control, regulation and people taking responsibility for their activities. This problem is evident in various sectors of the public service. How will a shrinking budget accommodate the inflation in public sector spending given the amount of money spent?
I thank all the Deputies who attended for this debate. I particularly thank the Whips for agreeing to give priority to this Bill, in recognition of the requirement to activate some of its provisions from 1 November next.
Deputies raised many interesting points, some of which were of a general nature rather than specific to the provisions of this Bill. I shall try, nevertheless, to respond to the significant points. Deputy Burton made many references to so-called "light" financial regulation in Ireland indicating that our regulatory system is somehow inadequate or ineffective. This characterisation of the quality of Ireland's financial regulatory regime is wide of the mark and does not stand up to scrutiny.
The reputation of Ireland as a suitable base for international financial services activity is a key element within our overall competitiveness and something we have a common interest in maintaining. The IMF, a reputable international authority competent to assess the standing of our system of financial regulation, conducted a comprehensive on-site assessment of IFSRA and declared that our Financial Regulator was well up to international norms. The Comptroller and Auditor General also carried out a recent value-for-money assessment of the Financial Regulator. Overall, the report presents a positive picture of the financial services regulatory environment in Ireland and it is evident that the Financial Regulator is operating to a high standard.
The chairman and the chief executive officer of the Financial Regulator recently set out in detail the regulatory approach that guides the conduct of its activities. I refer Deputies to these speeches and the Financial Regulator's strategic plan for a very clear explanation of its regulatory principles. It is essential that public comment and discussion is accurate and properly informed by the factual position in an area of strong interest to consumers which is also an important strategic and highly competitive sector of our economy internationally.
Some Deputies said that the Minister for Finance should be playing a more prominent role in managing the response to the current turmoil affecting the global financial services sector. This is based on a misconception of the role of the Irish Minister for Finance in the area of financial regulation. His role is to bring forward proposals to the Oireachtas for the regulation of the financial services sector. Once that legislation has been enacted, the task of implementing it on a day-to-day basis rests with the Financial Regulator. Neither the Minister nor the Department exercises legal powers or responsibilities in the area of financial regulation and the Financial Regulator is independent of the Minister in the exercise of its statutory functions. Various accountability mechanisms are in place for the Financial Regulator, including obligations on specified officers, including the chief executive, to appear before an Oireachtas committee on request.
Several Deputies commented on contracts for difference and the need to regulate them. Spread betting has become popular of late in virtually any activity, from sports results to weather predictions, and even election results. Financial contracts for difference, or FCDs, are used in spread betting and involve taking a position on the future movement of a price, either up or down, of a share, a commodity or an index such as a stock market index.
As from 1 November next, FCDs will be regulated under the markets in financial instruments directive regime as they are classified as "financial instruments" under Part 3 of Schedule 1 to SI 60 of 2007. Therefore, from that date, financial spread contracts, for instance, on specific shares, bonds or indices of shares, will become a regulated activity, and firms providing this service will have to be authorised. As part of their authorisation, firms will have to comply with all the requirements, including the rigorous client protection requirements, set down in SI 60 of 2007. Spread betting on matters other than financial instruments, such as sporting events, is not covered by the directive or the transposing regulations.
Deputies were interested too in whether credit unions were precluded from investing in non-capital-guaranteed products or savings for client moneys they have on deposit. The Registrar of Credit Unions took steps to limit the exposure of credit unions in the investment market by issuing a guidance note on investments in October 2006. This guidance note sets out the framework within which credit unions should maintain their investments. The guidance note is subject to regular review by the registrar in consultation with the sector. The board of directors of each individual credit union is responsible for managing the funds and setting the investment policy of that credit union. However, the registrar expects credit unions to comply with this guidance to avoid undue risk to members' savings and will monitor credit unions' investments against this guidance.
The legislation and the guidance in place at present do not prohibit explicitly credit unions from investing in financial derivative products. However, the guidance note sets out a list of authorised investments for credit unions and within this list there are limits for each class of investment instrument in which credit unions can invest. Credit unions are not precluded from investing in non-capital guaranteed products under current legislation or guidance. For instance, while they can invest in equities, under the terms of the investment framework, investment in equities is not to exceed 5% of the total of a credit union's investment portfolio.
Deputy Burton referred to the need for legislation to regulate the sub-prime lending sector that will enable borrowers to be protected. The measures the Minister proposes to bring forward as outlined in the consultation paper will provide for a robust legislative framework to address this concern and other regulatory issues in respect of the non-deposit lending sector in general.
Under these proposals, all non-deposit-taking lenders engaged in retail lending will be brought within the Financial Regulator's authorisation and ongoing supervision regime. In this context, retail lending means lending to all natural persons and to companies with a turnover not exceeding €3 million or, in other words, lending to all those who would benefit from the consumer protection code and the Financial Services Ombudsman scheme in their dealings with any other regulated provider.
It is important to note that notwithstanding the growth of what is described as sub-prime lending in Ireland in recent years, it still comprises a very small share, namely, approximately 2% of overall lending. A significant proportion of this lending is for borrowers who, owing to the atypical nature of their employment or income, would not have access to loan finance otherwise. It allows such people build up a credit record which, in time, will enable them to access mainstream finance.
While Ireland was one of the earlier movers in transposing this directive, there was some interest among Deputies as to the number of member states that have yet to transpose the Markets in Financial Instruments Directive, MiFID, and what might be the implications of their delay. The latest information I have to hand is that ten member states have yet to notify the European Commission that they have transposed the MiFID. While a number of them are expected to meet the deadline, it is likely that some will not.
As for the firms established in member states that fail to meet the 1 November deadline, it is likely they will be allowed to continue to operate on the basis of their existing authorisation. However, they would not be allowed to provide the new MiFID activities such as the provision of investment advice until such time as the directive was fully transposed in their home state.
Once again, I thank Members for their contributions to this debate and express appreciation for their input
When is it proposed to take Committee Stage?
Next Tuesday, subject to the agreement of the Whips.