Dáil Éireann Debate, Tuesday - 21 October 2008
218 Deputy Jimmy Deenihan asked the Minister for Finance the projected income from the banks as a result of the Government guarantee of €400 billion; if the normal commercial rate for insuring debt of between 1% and 2% will apply; and if he will make a statement on the matter. [35425/08]
View answerThe Credit Institutions (Financial Support) Scheme 2008, approved by both Houses of the Oireachtas on 17th October 2008, provides that a covered institution must pay a charge for its guarantee. The aggregate charge for the participating institutions is set at a level that is based on the long-term cost to the Exchequer of providing the guarantee. Current estimates indicate that over the two years of the Scheme around €1 billion will be yielded from the charge to covered institutions for the guarantee.
As I emphasised in the Dáil during the debate on the Scheme on Friday 17th October, it is essential both that taxpayers are protected and that the guarantee charge is set at a level consistent with the long-term sustainability and commercial viability of our financial institutions. I am confident that the Government's approach strikes the right balance between ensuring that the Exchequer is reimbursed in full for the cost of the scheme up-front and that the financial sector is safeguarded at a time of very substantial financial upheaval.
219 Deputy Joe McHugh asked the Minister for Finance the way he will assist home owners here who bought endowment policies in the 1980s and 1990s in view of the Credit Institutions (Financial Support) Bill 2008; if he is aware that these endowment policies were mis-sold on behalf of the banks by brokers who were encouraged with the reward of larger commissions; if the compensation he will provide will be similar to that supplied by the British Government to British purchasers of endowment policies; and if he will make a statement on the matter. [35468/08]
View answerFor the purposes of giving some background on this to the Deputy I would like to point out that early in 2004, the Financial Regulator commenced a survey of institutions' endowment mortgage business. The Financial Regulator wrote to lenders and insurers seeking information on their endowment businesses. The then Chief Executive of the Financial Regulator made a statement on the main findings of the survey to the Joint Oireachtas Committee on Finance and the Public Service on 18 January 2006 highlighting that endowment mortgages represented a low percentage of mortgage loans outstanding. He went on to say that endowment mortgage holders, who believed that they were mis-sold, or who felt that their issues were not properly dealt with, could in the first instance, contact their financial services provider and seek a formal response to their complaints and that if they were not satisfied with the explanation or response made by the financial service provider, the person could then refer the matter to the Financial Services Ombudsman (FSO) for consideration, in accordance with the procedure set out by the FSO.
At the same Joint Oireachtas Committee meeting the Financial Services Ombudsman also made a statement on the matter in respect of complaints received by his office on endowment mortgages. In that statement he confirmed that of the endowment cases referred to him, those that were upheld were done so on the grounds of maladministration rather than on the grounds of mis-selling. Some of those cases were cases he had taken over from the previous voluntary ombudsman scheme.
I do not therefore propose to establish a compensation scheme.
