Tuesday, 28 February 2006

Questions (23)

Breeda Moynihan-Cronin


54 Ms B. Moynihan-Cronin asked the Minister for Finance his views of the decision of the Irish Financial Services Regulatory Authority not to proceed with plans that would have required anyone being appointed a director or manager within the sector to produce a tax clearance certificate; and if he will make a statement on the matter. [7862/06]

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Written answers (Question to Minister for Finance)

In my role as Minister for Finance, I am responsible for the legal framework governing financial regulation. In the context of the regulatory system put in place through the establishment of the Irish Financial Services Regulatory Authority, IFSRA, under the Central Bank and Financial Services Authority of Ireland Act 2003, responsibility for the operation of the regulatory regime and the fitness and probity requirements for directors or managers in the financial services sector rests with the Financial Regulator.

The Financial Regulator in February 2005 issued a consultation paper on proposals for a fit and proper test for directors and managers of financial services firms, referred to as "Approved Persons". Taking account of the responses to this consultation, the Financial Regulator in February 2006 published its proposals on fitness and probity, including its proposals for assessment of tax compliance. In opting for a formal commitment to a code of behaviour in the conduct of tax affairs, rather than tax clearance certificates, the regulator took account of responses to the consultation. Some of these questioned the actual value of tax clearance certificates, as the Revenue certification related solely to declared liabilities. The objective in the case of regulation is to assure continued appropriate conduct of tax affairs.

The Financial Regulator is now proposing that each financial services company seeking approval from the Financial Regulator for directors or managers must have in place a code of ethics including in relation to the conduct of tax affairs. There will be an obligation on all approved persons to sign a written commitment to observe the code. The Financial Regulator will expect all regulated firms to ensure compliance with the code at all times.

Furthermore, the Financial Regulator has made it clear that there is no tolerance for serious and systematic tax evasion. The 2005 Finance Act gives greater powers to the Revenue Commissioners to prosecute institutions or persons who aid tax evasion by others. The Financial Regulator proposes to amend the individual questionnaire to include a specific question in relation to tax, asking applicants whether they have been convicted, on indictment, of tax offences or of aiding and abetting tax evasion.

The Financial Regulator is also proposing that any person convicted of summary tax offences or subject to fines by the Revenue Commissioners will provide that information, together with other information, to the proposing firm and to the Financial Regulator. The Financial Regulator will make a determination on a case by case basis, having examined all of the information provided, in a manner that is proportionate and that fully respects due process.

The consultation on these amended proposals will be completed by end-April 2006 and the Financial Regulator proposes to publish guidelines on the fit and proper test for directors and managers in June 2006.