Written Answers Nos. 87-101
87. Deputy Billy Timmins asked the Minister for Finance the position regarding a new PPSN being available on the system in respect of a person (details supplied) in County Wicklow; and if he will make a statement on the matter. [22226/14]
View answerI am advised by the Office of the Revenue Commissioners the individual's file has been amended to reflect the new PPSN. A revised Tax Credit Certificate issued to the person concerned and to her employer on the 16th May 2014. The person concerned should contact her employer to have the details of her payslip amended to reflect the change.
88. Deputy Clare Daly asked the Minister for Finance if he will organise an urgent meeting with the Irish Bank Resolution Corporation home owners group. [22227/14]
View answerThe Government is keenly aware of the concerns raised by the Central Bank and others regarding the potential loss of protection under the Code of Conduct on Mortgage Arrears (CCMA). The Government is committed to bringing forward legislation that will protect mortgage holders and believes the sale of loan books to unregulated third parties Bill is the most effective way to address the issue in a comprehensive manner. The legislation will ensure the protection of the CCMA or any replacement code in the future will continue to apply to mortgages which are sold to unregulated financial service providers.
In the interim the Government has always been clear that we fully expected that any purchaser of the IBRC mortgage portfolio would service the loan books in accordance with the CCMA. The two purchasers of the residential mortgage loans to date, Loanstar and Oaktree, have both committed to servicing these books in accordance with the terms of the Central Bank's code of conduct on mortgage arrears, CCMA.
As the Deputy will be aware the Special Liquidators are legally obliged to oversee the liquidation of IBRC for the benefit of all creditors of the bank including the State. As such I am not in a position to interfere in the sales process undertaken by the Special Liquidators as to do so would erode value for the creditors of IBRC including the State and the Irish taxpayer and it could leave me open to legal challenges from other creditors. In such circumstances it would not be appropriate for me to meet with borrowers of the bank.
89. Deputy Finian McGrath asked the Minister for Finance if his attention has been drawn to the fact that a number of financial advisers have left the debt advice business over the application process to the regulator; and his views on the concerns of the Professional Insurance Brokers Association Ltd; and if he will make a statement on the matter. [22287/14]
View answer141. Deputy Charlie McConalogue asked the Minister for Finance his plans to address the concerns of the Professional Insurance Brokers Association (details supplied); and if he will make a statement on the matter. [22961/14]
View answerI propose to take Questions Nos. 89 and 141 together.
The Central Bank (Supervision and Enforcement) Act 2013 amended the Central Bank Act 1997 to introduce a regulatory regime for debt management firms. The Central Bank is responsible for the authorisation and supervision of such firms.
I am informed that the Central Bank issued a consultation paper on 1 August 2013 in respect of the proposed regulatory regime to apply to debt management firms. The proposals set out a robust set of requirements for what is an important sector, particularly for the clients of debt management firms, many of whom are vulnerable and struggling to manage their financial commitments and seek advice and assistance from such firms.
Following consideration of the submissions received from interested parties, including the PIBA, the Central Bank issued a feedback statement in October 2013 confirming that a number of revisions were being made to the proposed requirements. These revisions were made to ensure that the requirements reflected more clearly a proportionate approach based on the nature, scale and complexity of firms' activities, while ensuring an adequate level of protection for consumers who avail of the services of such firms.
I am informed that an applicant seeking authorisation as a debt management firm must satisfy the Central Bank that it is able to fulfil correctly and properly the obligations imposed on holders of such an authorisation. In fulfilling its statutory role in this regard, the Central Bank adopts a robust and risk based approach to the authorisation process for debt management firms. The authorisation process requires applicants to be of good repute and to have the appropriate experience and competence. It also includes prudential requirements aimed at protecting consumers by ensuring debt management firms have appropriate structures and controls in place. The Central Bank considers that the requirements applied are not onerous but must be demonstrated by applicants in full prior to an authorisation being granted.
The Central Bank is currently processing the applications for authorisation it has received and has authorised 20 debt management firms to date. It is a matter for each firm to determine whether it wishes to seek authorisation to continue to provide services as a debt management firm. The Central Bank has informed me that some firms have determined that, as their debt management activities constitute such a small portion of their business, they do not wish to proceed with their application to seek authorisation.
As the Deputy is aware, the Money Advice & Budgeting Service offers a free, confidential and independent service for people in debt, or in danger of getting into debt.
90. Deputy Pearse Doherty asked the Minister for Finance if his attention has been drawn to the problems being caused to credit unions, as shown by the Irish League of Credit Unions, by the restrictive lending regulations and interpretations of these regulations; and if he will make a statement on the matter. [22301/14]
View answer91. Deputy Pearse Doherty asked the Minister for Finance when he will review the lending regulations placed upon credit unions by legislation to examine whether they are fit for purpose; and if he will make a statement on the matter. [22302/14]
View answer92. Deputy Pearse Doherty asked the Minister for Finance if the Central Bank of Ireland is proposing further lending limits for credit unions; and if so, if these new limits will replace the current system of ad hoc limits placed on some credit unions. [22304/14]
View answer94. Deputy Pearse Doherty asked the Minister for Finance his views on revising the Section 35 lending restrictions on credit unions in view of the argument from the credit union movement that these restrictions are preventing members from taking advantage of improvements in their own economic fortunes; and if he will make a statement on the matter. [22306/14]
View answer95. Deputy Pearse Doherty asked the Minister for Finance if he will ask the Central Bank of Ireland to revisit its prudent lending circular to credit unions of February 2013 in order to clarify whether or not the Central Bank of Ireland will allow any discretion to credit unions in their lending to ensure their social ethos can be protected; and if he will make a statement on the matter. [22307/14]
View answerI propose to take Questions Nos. 90 to 92, inclusive, 94 and 95 together.
Credit unions have an important role to play in providing credit in local communities around the country and I am supportive of safe and responsible lending by credit unions. I am very much aware of the issues currently facing the credit union sector.
To address lending issues the Registrar of Credit Unions at the Central Bank has imposed lending restrictions on some credit unions. These restrictions are in most cases, intended to be short-term in nature and kept in place until a credit union has addressed particular concerns advised to that credit union. The recent publication of the Central Bank's first PRISM risk assessment report on credit unions highlights issues identified in a number of areas including lending. The Registrar of Credit Unions informs me that lending restrictions are reviewed on a regular basis. Section 14 of the Credit Union and Co-operation with Overseas Regulators Act 2012 provides for the appeal of certain decisions of the Central Bank, including some lending restrictions, to the Irish Financial Services Appeals Tribunal.
Where lending restrictions are imposed they tend to take the form of a restriction on individual loan size or on commercial lending activity and in some cases, a limit on the total lending permitted each month. At this time fewer than 10% of all credit unions have a restriction in place which limits the total amount of lending within the month, while close to 40% of all credit unions have a restriction on commercial lending activity. Currently, the average loan rate in the sector is just over €6,000 and about a dozen individual credit unions have lending restrictions that limit the amount loaned to less than €10,000. This ensures that the vast majority of credit unions can continue to make loans significantly greater than the average loan for the sector.
Section 35(2) of the Credit Union Act 1997 permits a credit union to have up to 30% of its loan book outstanding for more than 5 years and up to 10% of its loan book outstanding for more than 10 years. Based on the most recent information provided by credit unions to the Central Bank in the December 2013 quarterly prudential returns, average lending over 5 years as a percentage of gross loans was some 11%, while average lending over 10 years as a percentage of gross loans was about 2%. These figures indicate that, in general, credit unions are currently well within the limits as set down in the 1997 Act.
The Section 35 requirements require that a credit union must not approve further agreements for additional credit where an existing loan has been rescheduled unless a member's ability to repay all credit owed and the proposed additional credit has been clearly established. Where such circumstances have been established, a credit union may grant additional credit to a member with a rescheduled loan where that rescheduled loan has performed in accordance with the new terms for an appropriate period, in most cases not less than one year.
The Central Bank issued a prudent lending circular for credit unions and expects credit unions to apply prudent lending standards to the granting of all new loans or top-ups of existing loans and to have systems in place to ensure that such applications are fully assessed to confirm the member's ability to repay the loan. This includes assessing a member's creditworthiness before concluding a credit agreement, which is required under Regulation 11 of the European Communities (Consumer Credit Agreements) Regulations 2010 for credit agreements between €200 and €75,000.
On foot of recommendations from the Commission on Credit Unions, section 11 of the Credit Union and Co-operation with Overseas Regulators Act 2012 substantially amends section 35 of the 1997 Act. These amendments provide for new Central Bank regulations to deal with a range of lending issues including:
- the classes of lending that a credit union may engage in, for example business lending;
- the duration of loans;
- large exposures; and
- concentration limits.
Section 11 will be commenced in tandem with new Central Bank regulations on lending, which are to be introduced as part of the tiered regulatory approach recommended by the Commission. This tiered approach will address a range of areas including lending, investments, savings, borrowings, additional services, reserves and liquidity. The Central Bank has recently held the first of its consultation processes on the tiered regulatory approach and is considering the views submitted by credit unions and others.
I am satisfied that the safety of members savings and the security of the credit union sector as a whole are central to any actions taken by the Registrar of Credit Unions.
93. Deputy Pearse Doherty asked the Minister for Finance if he favours the three tiered regulatory approach to credit unions as proposed by the Commission on Credit Unions or the two tiered approach currently being proposed by the Central Bank of Ireland; and if he will make a statement on the matter. [22305/14]
View answerThe Commission on Credit Unions in its final Report recommended a tiered regulatory approach for credit unions. This will allow certain credit unions take on a more sophisticated business model.
In December 2013, the Registrar of Credit Unions at the Central Bank issued a consultation paper on a proposed tiered regulatory approach in order to provide an opportunity for credit union stakeholders to set out their views across a range of issues. I have been informed by the Registrar of Credit Unions that the structure of the tiered regulatory approach has not yet been agreed. The purpose of the consultation process is to seek views from credit unions and other sector stakeholder on:
- the proposed approach to tiering;
- the high level operation of the tiers, including the activities and services proposed for credit unions in each tier; and
- the appropriate timing for the introduction of a tiered regulatory approach for credit unions.
The consultation process was extended by one month to 31 March 2014, at the request of sector stakeholders. The Registrar of Credit Unions is currently considering over 160 submissions received and following analysis of these submissions, will communicate with credit unions and other stakeholders in relation to the proposed next steps in this process.
96. Deputy Pearse Doherty asked the Minister for Finance his plans to extend the period of operation of the Credit Union Restructuring Board; and if he will make a statement on the matter. [22308/14]
View answerThe Credit Union Restructuring Board (ReBo) was established on a timebound basis in line with recommendations in the Report of the Commission on Credit Unions. ReBo is working towards the timetable set out in the Report, with a view to completing the restructuring process by the end of 2015. At that stage a review of the operation of ReBo in accordance with section 43 of the Credit Union and Co-operation with Overseas Regulators Act 2012 will have been completed.
I have no plans at this time to extend the term of ReBo.
97. Deputy Pearse Doherty asked the Minister for Finance the amount that has been drawn down to date by the Credit Union Restructuring Board; and the amount that has been used to aid in the restructuring of credit unions to date. [22309/14]
View answerThe Credit Union Restructuring Board - ReBo, has incurred expenditure of circa €1.3m from its establishment until 30 April 2014, in fulfilment of its legislative mandate. This amount is made up of the following:
- Approximately €220,000 of this relates to approved direct funding for credit union restructuring costs.
- Approximately €700,000 relates to ReBo staff costs.
- The remaining €380,000 consists of costs in relation to the establishment and office administration, information technology and communications, legal costs, accountancy costs and other professional fees, bank charges, sundry expenses and Board costs.
ReBo staff are actively working with credit unions and other stakeholders in the development and completion of their restructuring proposals as set out by ReBo in its Statement of Strategy. ReBo has interacted on an individual basis with over 350 credit unions and is currently involved in 50 active projects. Consistent with the co-funding of ReBo by the credit union movement and the State as recommended by the Commission on Credit Unions, 50% of ReBo's total expenditure is recoupable from the credit union sector via a levy.
98. Deputy Billy Kelleher asked the Minister for Finance if the property of a person (details supplied) in County Cork is exempt from the local property tax. [22313/14]
View answerRevenue has advised me that following contact with the Deputy's office, it was confirmed that the Question relates to both exemption from Local Property Tax (LPT) and waiver from Household Charge (HHC)
Revenue has also advised that properties located in 'unfinished' housing estates must be included on 'prescribed lists' approved by the Minister for the Environment, Community and Local Government in order to qualify for any exemption/waiver from LPT or HHC. The compilation of the 'prescribed lists', which can be viewed at www.environ.ie, is entirely within the Minister's remit and neither I nor Revenue have a role in regard to the inclusion or exclusion of any property. All queries in this regard should be directed to the relevant Local Authority.
It does not follow that properties, which are exempt from the HHC are automatically included in the 'prescribed list' for LPT as the qualifying criteria in respect of both exemptions are not the same. For example, certain properties and estates that were listed as exempt from HHC on the basis of being 'unfinished' and which were subsequently further developed in the period up to March 2013 were excluded from the LPT 'prescribed list'. This had the effect of very significantly reducing the number of exemptions in respect of LPT in comparison to HHC.
In regard to the specific case to which the Deputy refers, Revenue has confirmed to me that neither the property in question, or the area of the estate where the property is situated, are included in the 'prescribed list' for LPT exemptions or the 'prescribed list' for HHC waivers. On that basis the property is not entitled to either relief.
In order to avoid any possible debt collection/enforcement action by Revenue, the property owner should make immediate arrangements to pay the outstanding liabilities in respect of both LPT and HHC. The payments can be made online through Revenue's secure LPT portal at www.revenue.ie, using the Property ID and PIN access codes, which are included with the various returns/notifications that issued to the property owner, or by contacting the LPT Helpline at 1890 200 255.
99. Deputy Charlie McConalogue asked the Minister for Finance the position regarding an Irish registered company trading and employing staff based in the Republic of Ireland but which also has a company registered in Northern Ireland in order to have Northern Ireland registered vehicles (details supplied); if there are difficulties with the legality of such a situation; and if he will make a statement on the matter. [22314/14]
View answerI am informed by the Revenue Commissioners that 'haulage' vehicles owned by or registered in the name of a company registered in Northern Ireland may be driven or used by persons established in the State, provided that the company in question has its only or principal place of business outside the State. In such instances, the vehicles may be used only for business purposes on behalf of the company established in Northern Ireland; they may not be disposed of, hired out or lent to a person established in the State; and may not be used in the State for business purposes (e.g. transport of goods between places in the State) unless authorised by law.
If the Deputy has specific information about the use of vehicles registered in Northern Ireland by a business whose principal place of business is not outside the State he should provide it to Revenue. Any such information passed to the Revenue Commissioners will be treated in strictest confidence.
100. Deputy Pearse Doherty asked the Minister for Finance if a parent who is not the primary carer can avail of the single parent tax credit if the primary carer is unemployed but does not agree to allowing the other parents avail of the credit. [22322/14]
View answerThe Single Parent Child Carer Credit is designed to be an in-work benefit to support the primary carer to take up, or remain in, employment.
As a result of an amendment which I brought forward on Committee Stage of the Finance Bill, a primary carer who is entitled to the credit and who does not wish to avail of it can choose to relinquish it. A secondary carer may then make a claim for the credit, provided that the qualifying child resides with him or her for not less than 100 days in the tax year. However, the primary carer does not decide who would then be entitled to the credit and cannot confer it on any particular individual. The relinquishing of the credit does not, of itself, confer an entitlement to the credit on a secondary carer.
Furthermore, there may be many reasons why a primary carer may choose not to relinquish the credit, including a wish to avail of it in a future employment.
Any arrangement regarding the possible surrender of the credit is an issue which the parties must agree among themselves. It would not be appropriate or desirable for the State to become involved in what is essentially a private matter.
101. Deputy Finian McGrath asked the Minister for Finance if he will clarify the exact situation for disabled families in respect of the local property tax and exemptions; and if he will make a statement on the matter. [22337/14]
View answerI am advised by the Revenue Commissioners that while there is no specific exemption from Local Property Tax (LPT) for a person with a disability, a residential property occupied by an individual who is disabled may qualify for a reduction in the market value of the property for LPT purposes. In instances where a residential property is occupied by an individual who is permanently and totally incapacitated, the property may be exempt from LPT. These two LPT reliefs are outlined below.
Section 15A of the Finance (Local Property Tax) Act 2012 (as amended) provides for a reduction in the market value for LPT purposes of a residential property that has been adapted for occupation by a disabled person where the adaptation has been grant-aided, or approved for grant aid, by a local authority and where the adaptation increases the market value of the property. The person with the disability must occupy the property as his or her sole or main residence after the adaptation is completed. Under the Disability Act 2005 disability means "a substantial restriction in the capacity of an individual to carry on a profession, business or occupation in the State or to participate in social or cultural life in the State by reason of an enduring physical, sensory, mental health or intellectual impairment."
Section 10B of the LPT Act provides that an exemption from the charge to LPT may apply to a residential property purchased, built or adapted to make it suitable for occupation by a permanently and totally incapacitated individual as their sole or main residence, where an award has been made by the Injuries Board (formerly known as the Personal Injuries Assessment Board) or a court, or where a trust has been established, specifically for the benefit of such individuals. In the case of adaptations to a property, the exemption only applies where the cost of the adaptation work exceeds 25% of the market value of the property before it was adapted.
Entitlement to the exemption provided for in section 10B depends on whether the extent of a person's disability is such that they are permanently and totally incapacitated from being able to maintain themselves. "Maintain" in this context means a person's ability to support themselves by earning an income from working. Total incapacity in this context means that the individual is not capable of earning a living from any kind of work. The incapacity must also be permanent, that is, there must be no prospect of the individual recovering, or of the condition improving, to the extent that they become capable of maintaining themselves.
Following representations and a review of the reliefs by Revenue, I announced on 2 May that I intend bringing forward legislation amending section 15A to remove the requirement that any adaptation work on the residential property must be grant-aided, or has been approved for grant-aid, by a local authority as one of the qualifying conditions for the tax relief. I also intend to remove the requirement, by way of legislation amending section 10B, that a permanent and totally incapacitated person must have benefitted from a Court or Injuries Board award or a public trust fund, to qualify for the exemption.
My officials wrote to the Chairman of the Revenue Commissioners advising her of my intention to amend the legislation with retrospective effect. In view of this, the Chairman has advised me that Revenue will apply the exemption and the tax relief in line with the proposed revised legislation. The Commissioners have recently published detailed guidelines which describe how a residential property qualifies for the reduction in market value or the exemption under the new arrangements, and how liable persons should make their application to Revenue. The Guidelines are available on their website at: http://www.revenue.ie/en/tax/lpt/extension-reliefs-disabled-incapacitated.html. I am informed that Revenue will examine each application and may seek additional information if considered necessary before determining whether the person is entitled to a reduction in the market value of the property or to the exemption, whichever one is being claimed.
The Commissioners have also advised that no further action is required where a property previously qualified for the reduction in the market value under the LPT legislation and the liable person declared the reduced valuation when filing the 2013 LPT1 Return. Similarly, no further action is required where a property previously qualified for the exemption and the exemption was claimed when filing the 2013 LPT1 Return. The reliefs will continue to apply for all years up to 2016, inclusive.
