Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions

Covid-19 Pandemic Supports

Pearse Doherty

Question:

29. Deputy Pearse Doherty asked the Minister for Finance the action he has taken to address the prospect of mortgage distress for Covid-19 impacted borrowers as a shareholder in banks (details supplied); and if he will make a statement on the matter. [27127/20]

The pandemic, as we know, has caused huge financial distress for households and businesses right across this State. In other jurisdictions, the Minister's counterparts are ensuring that many of these individuals are protected during this period. They have legislated for payment breaks, including payment breaks where interest does not accrue. Crucially, for people living in Germany today, the payment breaks last nine months and, in Portugal, Spain and Italy, they last 12 months. Yet, the Minister sat as majority shareholder in the banks and did nothing to protect these individuals, who will have a negative credit rating from the next couple of days onwards.

The banks and the Government are aware of the great challenges that are facing so many. We have put in place and released the supports that made a difference to so many at such a crucial time. Payment breaks were applied to 157,000 customer accounts over the past six months. Those related to mortgages, personal loans and SME loans, and they were a source of considerable relief to customers at a time of great uncertainty. Approximately 89,000 of these payment breaks were granted to mortgage customers. Almost 37,000 of those customers subsequently opted to take a second three-month payment break, meaning the majority of customers had enough confidence and certainty to come off their initial three-month break. Payment breaks were put in place for 32,000 SMEs and for 4,000 corporate customers.

The Deputy is aware of the guidance from the European Banking Authority, EBA, in regard to the phasing out of, and the changing of the guidelines on, payment moratoria. I have met and engaged with the banks this week in this regard and in regard to how we can make sure the right level of support is available to those who need it across the coming weeks and months.

I listened to what Deputy Doherty said about other countries. However, he did not mention that, for example, in Germany those breaks are on offer in 21% of banks. Here, in Ireland, it is 100% of the banks, but he did not mention that in the contribution he made. He made reference to Spain, but he did not make reference to the fact that those who are able to access those breaks access them if they see their income fall by more than 40%. What we have done here in Ireland is something that is broad and that has made a difference to so many. If he is going to compare us to other countries, Deputy Doherty should portray the full picture of what has happened in other countries and allow the record of what we have done here in Ireland a fairer comparison.

The Minister is the majority shareholder on behalf of the Irish people in AIB and Permanent TSB, and a significant shareholder in Bank of Ireland. What did he do yesterday? He had tea and coffee with the banks through Zoom and a nice friendly chat, where they came in and told him they are going to do what they always do, which is to deal with individuals on an individual basis. Even if Germany has done this for 21% of its customers, the Minister will have failed to address it for anybody after this month. Under the EBA guidelines, banks in this State could have announced a continuation or an extension of the breaks, which would mean these individuals’ credit rating would not be affected. It would mean they would not be deemed as non-performing loans if they could not pay the full capital or interest. It would mean the banks would not have to hold additional capital when we need banks to be lending to SMEs. There are 32,000 SMEs affected, many of which cannot go back to paying full costs and, therefore, this will have a negative impact on their rates. The Minister had a responsibility and, indeed, a duty to do the right thing. He has failed miserably because there will be no extensions to payment breaks for anybody in this State after they run out later this month.

I have a responsibility and duty in this regard which I have discharged. It is by discharging this duty and responsibility that 89,000 breaks were granted to mortgage holders who needed them in the first place. Since then, we have seen almost 37,000 of those deciding they do not need the payment breaks, and that they are able to honour their loans in full.

What Deputy Doherty has just done is a typical Sinn Féin response. What he has put out here, on the floor of the Dáil, is part of the truth. Is he going to go on with this type of debate? In Germany, for example, the breaks he is referring to began in the middle of June whereas the actions we put in place happened when this pandemic arrived in Ireland. I am aware of the need that is there. I am aware of the anxiety and the stress that so many face at the moment. I and the Central Bank have been very clear that with the funding that is available to banks and what they have already done, the ability is now there to put in place arrangements that will work and will do the right thing by families and by business. If Deputy Doherty is going to compare us with what happens in other countries, will he at least do us the duty of a full comparison?

I have no problem making a full comparison. When the Minister compares us to Italy, Portugal, Spain or Germany, the difference is their finance ministers have made sure that, in those countries, people can continue to avail of payment breaks, depending on their circumstances. Here, where the Minister is unique because he is the majority shareholder in two of the largest banks, he has done nothing.

The Minister has allowed these people to fall off a cliff, in a manner of speaking. The reality is that tomorrow is the deadline to apply for a payment break. Some 37,000 people got them approximately six months ago. These people will have to return to making full payments or their credit ratings will be affected. Their loans will be deemed to be non-performing and the banks will have to carry additional capital. We are not back in normal times by any measure. That is why the European Banking Authority, EBA, guidelines allowed countries such as Italy, Spain, Germany and Portugal to do what they did. The Minister had an opportunity to do the right thing. The problem is that he and Fine Gael have done the wrong thing time and again. As we have seen in the cases of Senator Michael D'Arcy and Brian Hayes, the Minister's party is too close to big finance and the banks.

I am representing my party and I am the Minister for Finance in the Government which has at all times sought to do the right thing by those who are facing such difficulties and those who are experiencing the crisis of Covid-19. Deputy Doherty is at it again. He is referring to Italy but, in the comparison he is making, will he point to the fact that, during the moratorium in Italy, only repayments on the principal were suspended while interest payments still had to be made? He also made a comparison to Spain. As I put to the Deputy earlier, to access the measures implemented in Spain, a person must have had a very significant fall in income. In Ireland, we moved quickly to put in place breaks which were needed and which affected tens of thousands of families and many thousands of businesses. I am well aware of the anxiety, pressure and fear that so many are facing. That is why the employment wage subsidy scheme was continued. That is why the Deputy will have heard the Government and Central Bank, over the weekend and recent days, making clear that funding and flexibility exist to put in place the right arrangements for the families and businesses that need them.

Their credit rating will be hit.

I ask for the co-operation of the Minister and Deputies. We are moving on to an chéad cheist eile.

Primary Medical Certificates

Seán Canney

Question:

30. Deputy Seán Canney asked the Minister for Finance the status of the primary medical certificates; his plans to expand the criteria for eligibility for persons to receive this assistance; and if he will make a statement on the matter. [27129/20]

I raise with the Minister the issue of primary medical certificates. Does he have any plans to extend or broaden the criteria under which people can apply for such certificates? They are a very useful support for those who need them but I find many people visiting my constituency office who have children who need special vehicles but who do not qualify because they are not physically in a wheelchair or have not lost a limb. It is important that we look at this issue compassionately.

I thank the Deputy for raising this important matter. As he is aware, this is a very important scheme, the cost of which was, in 2019 and excluding motor tax, €72 million. To repeat what I have said, this scheme is important for many and I understand the many demands on it.

It is open to severely and permanently disabled persons as a driver or as a passenger, and it is open to certain organisations. To qualify for relief, an organisation must be entered in the register of charitable organisations under Part 3 of the Charities Act 2009.

 To qualify for relief, the following criteria apply. The applicant must hold a primary medical certificate issued by the relevant senior area medical officer or a board medical certificate issued by the Disabled Driver Medical Board of Appeal. The vehicle may be a new or a used vehicle but must be specially constructed or adapted for use by the applicant. It must be purchased by the applicant. This criterion includes vehicles purchased through hire purchase agreements but excludes vehicles which have been purchased by way of a leasing arrangement. The engine capacity of the vehicle must not exceed 6,000 cc.

The Deputy is aware of the criteria for being granted a primary medical certificate. This scheme was first introduced in 1968, at which point the legislation only allowed for one medical ground. In 1989, four new medical grounds were added and, in 1994, one new medical ground was added.

A Supreme Court decision of 18 June found in favour of two appellants against the Disabled Drivers Medical Board of Appeal's refusal to grant them a primary medical certificate. The judgment found that the medical criteria set out in the regulations did not align with the regulation-making mandate given in the primary legislation to define further criteria.

I will answer in more detail in a moment.

Additional information not give on the floor of the House

The judgement found that the medical criteria set out in the regulations did not align with the regulation-making mandate given in the primary legislation to define further criteria for "severely and permanently disabled" persons.

The Deputy will appreciate that the Supreme Court decision has raised complex legal and policy issues which will require careful consideration. In parallel to that consideration there is a need to examine how best the scheme can target resources to those persons who most need them. My officials are examining the judgement in conjunction with the Attorney General’s Office and will bring forward any policy and-or legislative proposals, as necessary, for my consideration in due course.

I hope the Minister will answer in more detail. If the last review of the scheme or addition to it was in 1994, it may be timely to review it again. I know of a young child who has been blind since birth. He needs special care and a vehicle but cannot qualify for this particular primary certificate. When looked at compassionately, much like every other rule or regulation we bring in, anomalies will arise in the scheme, which we accept. It may be time to review the scheme again as it has not been reviewed since 1994.

I absolutely understand the concerns of the many people who wish to access this scheme. I understand their level of need. I am now considering the consequences of the Supreme Court ruling on this matter. I have asked my officials to prepare options for me as to what we can do in respect of this scheme. I know many Deputies in this House represent constituents who, for entirely understandable reasons, feel that they should have access to this scheme. One of the reasons that so few changes have been made to it in the past, however, is that we have been trying to get the balance right between implementing a scheme that can make a big difference for those who need it the most and not developing a scheme that is so broad that it represents a considerable use of taxpayers' money and which spreads those resources very broadly. I am aware of the issues the Deputy has raised and, as I have said, I am seeking to come up with options for dealing with some of the issues which emerged in the hearing to which he has referred.

I thank the Minister. I am delighted that he is going to review the scheme or take advice based on the ruling made in the courts. This is an opportunity. We do not want to open up the scheme as a free-for-all but it is very important that the right people get support. I have no doubt that, in his capacity as Minister for Finance, the Deputy will look at this issue in a reasonable light. I may send him some details of the case with which I am dealing as an example of what we can do by making a very small change and of how that would help people enormously in their lives.

In his question, the Deputy acknowledged the challenges on which we need to reflect. This scheme is very valuable to those who participate in it. They deserve the value afforded by the scheme, which gives help to those who need it most. I need to ensure that, if any further changes are made to the scheme, it will continue to target a great deal of taxpayers' money at those who need it most while not becoming so broad as to become far bigger than originally intended. If the Deputy wants to send me details of the particular case to which he has referred, I will certainly examine them. We will have to return to the House at a later point with regard to how we will develop this particular scheme.

Insurance Industry Regulation

Pearse Doherty

Question:

31. Deputy Pearse Doherty asked the Minister for Finance his views on phase 1 of the Central Bank’s review of differential pricing in the insurance market; his views on legislation to prohibit its operation in the insurance market; and if he will make a statement on the matter. [27128/20]

Earlier this month, the Central Bank concluded its phase 1 review of dual pricing and concluded that the majority of insurers in the State were involved in this practice, which acts against their customers. This comes a year after I submitted a dossier to the Central Bank comprising a complaint outlining how this practice affected customers, how it ripped off motorists and homeowners, how it is banned in many other jurisdictions, including in the United States, and how a ban on the practice was being considered in Britain. I put it directly to the Minister during his previous term in Government that this practice should be banned. Does he now believe it has to come to an end? Will he support the legislation I am producing to bring this about?

Given all the work he has done in this area, the Deputy will be aware of what dual pricing is, so I will not go through the definition. As he himself has acknowledged, the Central Bank has now published the findings of a phase of its work in studying this practice in the Irish market. Our programme for Government includes a commitment to remove this practice from the market. I will be looking at the work the Deputy has done in this area and any legislation he may bring forward in that regard.

That being said, the Central Bank review is ongoing and focused on motor and home insurance. It is being carried out in three phases, and the first of these was completed recently. While I welcome the publication of the report, I note with concern that the Central Bank has observed that the majority of firms utilise differential pricing through various techniques. A failure to recognise and acknowledge the practice on the part of some firms has raised significant concerns about their ability to assess its impact on customers. This is why, on foot of this, the Central Bank wrote to the chief executives of these insurance providers on 8 September to highlight its concerns following this first phase. I expect that the firms will respond to these concerns and co-operate with the Central Bank.

The work of the Central Bank is now moving to the next phase of its review before it makes any final recommendations. I believe it is prudent to wait until the review is complete. This is a complex issue and we will need to consider carefully any potential remedies and what impact they could have on consumers. We need to guard against the risk of unintended consequences and ensure that in attempting to address an issue we do not create an undesirable knock-on impact elsewhere or discourage competition or new entrants to the market.

What annoys me is that the Government is signalling today that it will wait until the end of the review. That sounds logical. I instigated the review because of what I had done with my engagement with and complaint to the Central Bank and the Competition and Consumer Protection Commission. Anyway, the first phase of the review has basically vindicated everything I have said. It has found the practice operates on a wide scale across the market. Many of these operators operate from Britain. The United Kingdom Financial Conduct Authority, FCA, has already concluded its final report. The FCA is going to ban the practice that punishes people for what is called dual pricing or the loyalty premium. If a customer is with an insurance company for five years or more, then the customer will be charged 30% extra on average in terms of the renewal practice. This problem is real right now. It is reckoned operators have been overcharging 6 million people in Britain. People here are being overcharged hundreds of millions of euro. The firms are using big information, including social media sites. They can take information from posts, photographs and videos. I appeal to the Minister to show urgency and to move to give us a firm commitment that this will be banned within the year.

The comparison with the FCA in the UK is interesting. The FCA began this work in October 2018. It has now published a final report. It was published this week along with a related consultation document. The FCA is inviting views on its consultation document up to 25 January 2021. The FCA has indicated that in the aftermath at some point next year it will publish a policy statement. That is the timeline for what is happening in the UK, as I imagine Deputy Doherty is aware. Deputy Doherty has been fair and accurate enough to describe my approach as logical. The UK approach illustrates that we should await the final phase of the Central Bank because I need to understand fully the view of the regulator in respect of this matter, the potential remedies and the consequences of action that the regulator or the Government can take. Deputy Doherty will see from the comparison with what is happening in the UK what timelines those in the UK are operating to. I am absolutely aware of the urgency of this issue. I welcome that the Central Bank has done this work quickly. I will act on this issue as soon as I am clear about what kind of action can deal properly with the matter but not create other difficulties that I would then be held to account for.

The Central Bank has taken a year to confirm what I had submitted to it in the dossier. I am not knocking the bank for doing this. It will take a further year to finish phases two and three, which will include final recommendations. Then the Government will consider it. The point I am making in terms of Britain is that the insurance companies operating here are operating in Britain as well. There is no need for us to reinvent the wheel. These companies are ripping off their customers. Dual pricing is happening - we know that. It is banned in 20 states across the USA. The FCA final report included what the interim report said, which was that the FCA wants to ban it as well. The problem is that it will take the Minister three or four years to do this. In the meantime, people are being ripped off by the insurance industry. They are telling the European Insurance and Occupational Pensions Authority that technology has developed so far that they can look at a customer's social media posts, including posts of their children playing, and draw information to figure out how much they can stick that customer in terms of the insurance premium quote. That is how much this is moving on. As we sit here, consumers are getting ripped off. We need to move now rather than reinvent the wheel. We should look to what is happening in Britain.

The actual timeline is that the Central Bank report began in January and the report is now published. The bank has moved with speed on this issue. The Deputy compared our work to what is happening with the FCA. The FCA has taken longer to do this work. It has now published something that might lead to action next year. That is the timeline for what is happening elsewhere. The Central Bank has done this work across this year and within the year. I know the urgency of this issue. Equally, I know that while I am expected and want to make progress in ensuring we can bring down the cost of insurance for businesses and families and deal with unfair practices, it is also the case that in any action I take I need to ensure it works and does not have other consequences. If that were to arise, the Deputy would hold me to account for that.

Deputy Doherty was open about drawing comparisons with what the FCA is doing in the UK. He can see the timeline that organisation is operating to. The Central Bank has done this complex tranche of work quickly. It has already followed up with the chief executives on this. I will outline what steps the Government will take on the matter when the Central Bank has quickly completed the work it has committed to in this area.