Tax Rebates

Questions (26)

Finian McGrath

Question:

26. Deputy Finian McGrath asked the Minister for Finance the position regarding outstanding money owed to the Revenue Commissioners (details supplied); and if he will make a statement on the matter. [23661/14]

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Written answers (Question to Finance)

I am advised by the Revenue Commissioners that further to my reply to the Deputy on 27 May last (PQ No. 158 refers) the refunds due for the years 2003-2009 were credited to the taxpayer's bank account on 30 May 2014.

Revenue Commissioners Investigations

Questions (27)

Pearse Doherty

Question:

27. Deputy Pearse Doherty asked the Minister for Finance the purpose of the correspondence sent by the Revenue Commissioners (details supplied); if such general queries are common; and if he will make a statement on the matter. [23673/14]

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Written answers (Question to Finance)

I am advised by the Revenue Commissioners that the correspondence in question is used in very limited circumstances for the purpose of establishing whether a particular person is accurately recorded in their tax register. Where the individual does not have a tax registration, the reply to the correspondence assists Revenue in assessing whether or not the individual should have one.  The response to the correspondence also assists Revenue in matching information accurately to an individual in Revenue records.

Such a questionnaire is issued only where officers in the Revenue District are not fully satisfied that they have been able to match information accurately with an individual's tax registration, despite extensive searching of Revenue records.

I am further advised that Revenue will contact the person in question again to clarify they information they require.

Pension Provisions

Questions (28)

Terence Flanagan

Question:

28. Deputy Terence Flanagan asked the Minister for Finance his views on correspondence (details supplied) regarding pensions; and if he will make a statement on the matter. [23696/14]

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Written answers (Question to Finance)

It is not compulsory for self-employed individuals with Defined Contribution (DC) pension savings to purchase an annuity with those savings. Flexible options at retirement are available in respect of all benefits from DC retirement benefit schemes and other DC pension savings. Choices which are available to individuals (after taking the tax-free retirement lump sum) include the option to purchase an annuity with the remaining funds, to receive the balance of the pension funds in cash (subject to marginal rate income tax, as appropriate), to invest in an approved retirement fund (ARF) or an Approved Minimum Retirement Fund (AMRF), subject to certain conditions.

Under the regime the options to:

- invest in an ARF, or

- receive the balance of the pension fund in cash)

are subject to conditions. The conditions include the requirements that the individual be over 75 years of age or, if younger, that the individual has a guaranteed level of pension income ("specified income") actually in payment for life at the time the option to effect the ARF or cash option is exercised. The purpose of the specified income requirement is to ensure, before an individual has unfettered access to their remaining retirement funds via an ARF or by way of the cash option, that they have the security of an adequate guaranteed pension income throughout the period of their retirement. The specified income requirement is €12,700.

Where the minimum specified income test is not met, and an individual does not wish to purchase an annuity, then an AMRF must be chosen into which a "set aside" amount must be invested. The purpose of an AMRF is to ensure a capital or income "safety net" throughout the latter period of an individual's retirement where their pension income is below the specified income limit. The maximum "set aside" amount is €63,500 of the pension fund or the remainder of the pension fund after taking the tax-free lump sum, if this is less than €63,500. The capital in an AMRF is not available to an individual until he or she reaches 75 years though any income generated by the fund can be drawn down subject to tax. The capital in an AMRF can be used by the owner at any time to purchase a pension annuity and the AMRF can be changed to an ARF with access to the capital sum (subject to taxation) before the age of 75 where the specified income test is met before that age.This question may have been prompted by changes proposed to be introduced by the UK authorities to their equivalent regime from next year. In terms of increased flexibility, the primary difference between the proposed UK regime and the regime that operates here is the fact that from April 2015, the UK proposes to dispense with their guaranteed income test. In that regard, I have no plans to change the equivalent rule here or the alternative AMRF set aside rule.

Tax Code

Questions (29)

Brian Walsh

Question:

29. Deputy Brian Walsh asked the Minister for Finance the current tax liability on a social welfare payment in respect of a person (details supplied) in County Galway; if the person is eligible for a refund; and if he will make a statement on the matter. [23704/14]

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Written answers (Question to Finance)

Carer's income paid by the Department of Social Protection is not subject to the Universal Social Charge but is subject to Income Tax. Income Tax is not deducted at source under the PAYE system by the Department of Social Protection. It is collected by reducing the customer's tax credits. In this case, the customer's marginal rate of tax is 20%. I am informed by the Revenue Commissioners that the customer was in receipt of Carer's income in the amount of €101.50 per week up until the 11th December 2013 and the tax liability was €20.30 per week (collected by way of reduced tax credits).

The customer contacted Revenue on the 28 April 2014 regarding his tax affairs. He explained that he was not currently in receipt of Carer's income but that the matter was under appeal. He expressed concern that an underpayment of tax might arise if his appeal was successful and there was no arrangement in place to reduce his tax credits. He requested that the Carer's income amount of €101.50 per week be included in his total income with effect from the 1 January 2014. He further indicated that he would seek a refund of tax if the appeal was not successful.

If the customer at this stage wishes to claim a refund of tax paid in 2014 in respect of this amount, he should contact his local Revenue office and the necessary arrangements will be made.

Insurance Industry Regulation

Questions (30, 42)

Terence Flanagan

Question:

30. Deputy Terence Flanagan asked the Minister for Finance the reason neither his Department nor the Central Bank of Ireland gave any official warning to Irish consumers about Setanta Insurance in November 2013, in view of the fact that his Department and the regulators in Ireland and Malta expressed serious concerns about the company some two months before the Maltese regulator advised the market; his views on the Maltese regulator in January 2014 insisting that existing policies would remain in force and that it would be business as usual for claims settlement; and if he will make a statement on the matter. [23706/14]

View answer

Pearse Doherty

Question:

42. Deputy Pearse Doherty asked the Minister for Finance the reason in his replies on the issue of Setanta Insurance he has repeatedly said that the Central Bank of Ireland first became aware of problems in November 2013 when the Malta Financial Services Authority has told this Deputy that it was in contact since September 2013 regarding Setanta. [23919/14]

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Written answers (Question to Finance)

I propose to take Questions Nos. 30 and 42 together.

At the outset, I would like to say that both I, as Minister for Finance, and the Government are concerned over the situation that arose with regard to the Irish policyholders of Setanta Insurance Company Limited (Setanta).  My Department and the Central Bank will be reviewing the circumstances relating to Setanta and will be reporting to me on what lessons can be learnt and how the framework can be strengthened. The European Commission has indicated that it will also review whether any issues raised relating to the regulatory framework require action.

In my role as the Minister for Finance, I have responsibility for the development of the legal framework governing financial regulation in Ireland.  The day to day responsibility for the supervision of Irish authorised financial institutions is a matter for the Central Bank of Ireland which is statutorily independent in the exercise of its regulatory and supervisory functions. 

In October 2013 the Central Bank undertook a consumer protection inspection of Setanta.

The Central Bank became aware of prudential issues in the course of this investigation and subsequently shared these with the MFSA, Setanta's prudential regulator, in November 2013. At this point, and in line with its role, the Central Bank entered into a phase of heightened contact with the MFSA in relation to these issues.

Setanta is a Maltese incorporated company and was subject to prudential supervision in Malta by the Malta Financial Services Authority (MFSA) in accordance with the legal regime applied across all of the Member States by the relevant European directives. Therefore, the MFSA, and not the Central Bank, is the appropriate authority to comment on the financial position of Setanta.

The extent of the Central Bank's regulatory responsibility in respect of Setanta, in accordance with the legal regime applied across all of the Member States by the relevant European directives, is limited to the area of consumer protection. The current focus of the Central Bank is to ensure that Setanta policyholders are being communicated with by the liquidator and that consumers are aware of what to do in terms of seeking alternative cover.  The Central Bank has had extensive contact with the Maltese Regulator and the Liquidator of Setanta Insurance in this regard.

The Central Bank has advised me, regarding both its ongoing and specific communications with the MFSA, that it maintains ongoing supervisory contact with regulators throughout Europe as part of its regulatory approach. As part of this approach it had Regulator to Regulator contact with the MFSA in September 2013.

In January 2014 an announcement was made by the Maltese Regulator that the firm would cease writing new business and issuing further renewals. That MFSA public notice stated that Setanta had ceased carrying on business of insurance, including the renewal of existing business, in terms of the Insurance Business Act with effect from 24 January 2014 and that Setanta had appointed Heritage Insurance Management (Malta) Ltd to carry on the run-off of its business.  That notice did not advise that it would be business as usual for claims settlement.

Insurance Industry Regulation

Questions (31, 33)

Terence Flanagan

Question:

31. Deputy Terence Flanagan asked the Minister for Finance his views on financial service providers being regulated in one EU country while only trading in another EU country through the process known as passporting; if EU rules in such cases militate against the protection of consumers, which should be based on a model of assertive risk-based supervision; his views on whether it is correct for regulators to make decisions for passporting on the basis of the operation of the business locally; if the Central Bank of Ireland, or any EU member state's central bank, has authority to refuse a passporting application; and if he will make a statement on the matter. [23707/14]

View answer

Michael McCarthy

Question:

33. Deputy Michael McCarthy asked the Minister for Finance the position regarding the 75,000 Setanta Insurance policyholders, most of whom are small to medium-sized enterprises; the steps taken to assist these policyholders; the role of the Financial Regulator in this matter; if he will address the weakness in the regulatory system which has allowed this company to avail of EU rules, essentially allowing it to be regulated in another EU jurisdiction while operating solely in this jurisdiction; and if he will make a statement on the matter. [23747/14]

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Written answers (Question to Finance)

I propose to take Questions Nos. 31 and 33 together.

At the outset, I would like to say that both I, as Minister for Finance, and the Government are concerned over the situation that arose with regard to the Irish policyholders of Setanta Insurance Company Limited (Setanta).  My Department and the Central Bank will be reviewing the circumstances relating to Setanta and will be reporting to me on what lessons can be learnt and how the framework can be strengthened. The European Commission has indicated that it will also review whether any issues raised relating to the regulatory framework require action.

Setanta is a Maltese incorporated company which was both authorised and prudentially supervised by the Malta Financial Services Authority (MFSA). While its financial position is not supervised by the Central Bank of Ireland, the firm is supervised by the Central Bank for conduct of business rules, i.e. consumer protection obligations.  The Central Bank is in contact with the MFSA in relation to Setanta Insurance Company Limited, the impact on policyholders and the provision for relevant and appropriate information.

Setanta was regulated at EU regulatory level in accordance with a directive known as Solvency I which currently places requirements on the amount of regulatory capital European insurance companies must hold against unforeseen events. I understand that Setanta met its EU regulatory obligations and under EU law is, therefore, entitled to trade across EU borders.  Following negotiations that were completed at European level in November, 2013, a new regime known as Solvency II will commence on 1 January 2016, which will further strengthen the EU regulatory framework. The Solvency II EU Directive sets out new, stronger EU-wide requirements on capital adequacy and risk management for insurers with the key aim of increasing policyholder protection.  The new regime will also ensure greater cooperation between supervisors.

Under EU legislation the Central Bank of Ireland is not responsible for the prudential supervision of Irish branches of credit institutions authorised in other EEA Member States and operating under a passporting arrangement in Ireland.  The Central Bank does however have responsibility for the supervision of such entities in the following areas:

in co-operation with the home state regulator, assessment of their compliance with liquidity requirements;

consumer protection issues; and

compliance with Anti-Money Laundering regulations.

Further information is available on the Central Bank's website on passporting for Credit Institutions.  A current extract from the website is at the Appendix to the PQ response.

The current legal and regulatory framework for the provision of insurance in the EEA, and the supervision of that activity, is prescribed by European Union Law in the Life and Non-Life Insurance Directives. The provision of insurance throughout the EEA on a freedom of services basis and a freedom of establishment basis (i.e. a branch) within this framework is predicated upon the absence of internal market frontiers and the mutual recognition of the authorisation of insurance undertakings by Member States.

The Insurance Directives specify particular roles for both the home Member State supervisory authority (i.e. the supervisory authority that grants an authorisation) and the host Member State supervisory authority (i.e. the supervisory authority of a Member State where an insurance undertaking conducts business of a freedom of services or freedom of establishment basis) of an insurance undertaking. Insurance undertakings authorised under the Insurance Directives are subject to solvency and financial reserving requirements, the supervision of these requirements is the sole responsibility of the home Member State supervisory authority. The primary objective of these requirements is to ensure that claims made in respect of policies issued will be adequately provided for by an insurance undertaking.

Under EU law which governs non-life insurance, an insurer is required to inform the regulator in its home Member State (its home regulator) that it intends to pursue business in another Member State. The home regulator must then provide the host regulator with a certificate attesting that the insurer covers the EU Solvency Capital Requirement, as well as the nature of the business which the insurer intends to undertake. The insurer may start to pursue business from the date that the certificate is communicated to the host regulator, in this case the Central Bank of Ireland.

Under Article 20 of the Third Non-Life Directive the Home Regulator is also required to notify the Host Regulator if the solvency margin of an undertaking falls below the statutory requirement. In such instances the Home Regulator should inform the Host Regulator of the measures it has taken to address the solvency deficit.

EEA insurance regulators are also members of EIOPA (European Insurance & Occupational Pension Authority) and are required to comply with the General Protocol relating to the collaboration of the insurance supervisory authorities of the Member States of the European Union.   This general protocol statement was issued in 2008 and is currently under review by EIOPA.

With regard to the position of Setanta policyholders, my officials have been in discussions with the Central Bank of Ireland, with the Setanta Liquidator, the Accountant of the High Court and with the insurance industry representative bodies and I have asked them to convey my wish that every effort is made to facilitate Setanta policyholders in obtaining new motor insurance policies and in understanding their overall position.  We are endeavouring to obtain legal certainty on a number of matters relating to policyholders' claims for compensation and this will be made publicly available in due course.  At this time, I propose to set out the position as it currently stands.

Setanta was formally placed into liquidation by the MFSA on the 30 April 2014 and a liquidator was appointed. Officials from my Department together with officials from the Central Bank met with the Liquidator and his representatives in Ireland on 7 May 2014 and the Central Bank is in ongoing contact with him regarding the position of Setanta policyholders. All Setanta policies have now been cancelled in line with the terms of the policies.

In the circumstances, I continue to strongly advise policyholders to make alternative insurance arrangements without delay and that they should contact their insurance broker or an insurer directly to seek alternative cover.  This is also the advice of the Central Bank.

The Liquidator made arrangements for policyholders to obtain their "no claims bonuses" certificates from Setanta. Insurance Ireland have informed me that these certificates are being honoured by other insurers and we are aware that many insurers are being flexible surrounding requirements for documents.  In addition, the Insurance Ireland 'Declined Cases Agreement' is available to policyholders of Setanta.  I am informed that under the agreement, the insurance market will not refuse to provide insurance to an individual seeking insurance, if he/she has approached at least three insurers and has not been able to obtain cover from them.  I understand that Insurance Ireland is also making information available to those who have queries, complaints or difficulties in relation to this matter through their service at (01) 676 1914 or by email at info@insuranceireland.eu.

With regard to Setanta premiums and claims, the position on each policy is for the liquidator to decide in due course.  My officials and the Central Bank will remain in close contact with the Liquidator and I have asked that public statements are provided to clarify matters for policyholders and claimants.

The Motor Insurance Bureau of Ireland (MIBI) is a non-profit-making organisation registered in Ireland.  All insurance companies underwriting motor insurance in this county must, by law, be members of MIBI and contribute to the funding of claims in proportion to their market share.  The principal role of MIBI is to compensate innocent victims of accidents caused by uninsured and unidentified vehicles. This is regulated under the terms of an Agreement between the MIBI and the Minister for Transport, Tourism and Sport.  We are endeavouring to clarify the position on a number of matters relating to policyholders' claims for compensation, including the role of MIBI in this regard.  However, if, for legal reasons, MIBI is not in a position to accept a claim, these third party claims will be eligible to proceed for consideration by the High Court for compensation from the Insurance Compensation Fund (ICF).

Claims on personal insurance policies will be payable from the ICF.  All ICF payments are subject to the limit of 65% of the amount due or €825,000, whichever is the lesser. Under Section 3.6 of the Insurance Amendment Act 1964 (as amended) first party claims by a body corporate or unincorporated body are not covered by the ICF.

The refund of premiums for either commercial or personal insurance policies is not covered by the ICF or MIBI. However, unpaid premium would fall to be claimed from the Setanta Liquidator in due course.

 APPENDIX

Passporting for Credit Institutions 

Under European Union (EU) passporting rules a credit institution authorised in one EEA Member State can establish as a branch in another Member State and/or provide services in another EEA Member State without establishing a physical presence there.  The supervisory responsibilities of financial regulators in relation to credit institutions operating in more than one EEA member state have been set out by the EU in a number of Directives and cover both home and host state regulators.

Notification Process

- A credit institution authorised in Ireland must notify the Central Bank of Ireland if they wish to operate under a passporting arrangement in another EEA Member State.

- Credit institutions authorised in another EEA Member State must notify their home state regulator if they wish to operate under a passporting arrangement in Ireland.

Role as Home State Regulator

When the Central Bank of Ireland authorises a credit institution it is responsible, as home state regulator, for regulating their activities in other EEA Member States.

Role as Host State Regulator

As host state regulator the Central Bank of Ireland is not responsible for the prudential supervision of Irish branches of credit institutions authorised in other EEA Member States and operating under a passporting arrangement in Ireland except, in co-operation with the home state regulator, for their compliance with liquidity criteria.  The Central Bank of Ireland is responsible for consumer protection issues and compliance with Anti-Money Laundering regulations for the services provided by these entities in Ireland.

Download our Requirements for the Management of Liquidity Risk

Section 149 of the Consumer Credit Act, 1995 (as amended) ('the Act')

Credit institutions operating in Ireland on a branch basis and passporting their services into Ireland must comply with Section 149 of the Act, which provides that you shall not impose or increase a charge for a service provided to a customer or a group of customers, without the prior approval of the Central Bank of Ireland (the 'Central Bank').

Read further details of this requirement in Information on Bank Charges Approval Process.

Disabled Drivers and Passengers Scheme

Question No. 33 answered with Question No. 31.

Questions (32)

Finian McGrath

Question:

32. Deputy Finian McGrath asked the Minister for Finance if he will support a matter (details supplied) regarding a pin number; and if he will make a statement on the matter. [23740/14]

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Written answers (Question to Finance)

I am advised by the Revenue Commissioners that the relevant legislation governing the Drivers & Passengers with Disabilities Scheme is contained in Section 134(3) of the Finance Act 1992 (as amended) and Statutory Instrument No. 353 of 1994 (Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations, 1994.

A Form DD1 (Application for Tax Relief in respect of vehicles purchased for use by persons with disabilities) was received in Revenue's Central Repayments Office, Monaghan on 29th April 2014. An Exemption Notification issued on 27th May 2014, which permits the garage concerned to register the vehicle exempt from Vehicle Registration Tax.

On receipt of invoices for the vehicle and the adaptations to it, the relevant VAT repayment will be processed by the Central Repayments Office.

In relation to the "PIN number" referred to by the Deputy, I am advised that this is not relevant in relation to claims under this scheme.

Question No. 33 answered with Question No. 31.