Written Answers Nos 41-60
41. Deputy John Browne asked the Minister for Finance if he will confirm the particular consumer codes applying to buy-to-let mortgages for personal investment as distinct from buy-to-let mortgages attached directly or indirectly to trading entities; and if he will make a statement on the matter. [28777/14]
View answerI am informed by the Central Bank that, in the case of buy-to-let mortgages, the following Codes of Conduct may apply:
- Consumer Protection Code 2012
- Code of Conduct for Business Lending to Small and Medium Enterprises (SME Code)
- Code of Conduct on Mortgage Arrears (CCMA)
In order to determine which Code applies in a particular case, a regulated entity would need to assess whether a consumer meets the definition of 'personal consumer', i.e. a natural person acting outside his or her business, trade or profession, in which case the provisions of the Consumer Protection Code 2012 would apply.
If the consumer is considered to be acting within his or her business, trade or profession and meets the definition of 'smaller enterprise', as set out in the SME Code, the provisions of the SME Code would apply.
The CCMA would apply where the consumer's mortgage loan is secured by his/her "primary residence", as defined within that Code. Primary residence is a property which is (a) the residential property which the borrower occupies as his/her primary residence in the State or (b) a residential property which is the only residential property in the State owned by the borrower.
In summary, a regulated entity would be expected to consider the specific circumstances of each case in order to determine whether the consumer is a "personal consumer" and in order to determine which Code would apply.
42. Deputy John Browne asked the Minister for Finance the total expenses claimed against tax by private landlords, excluding loan interest payments; if he will break down the list under common headings, such as refurbishment-maintenance, furnishings, insurance, management costs, agents letting fees, wear and tear capital allowances, accounting, advertising or any similar break down; the percentage and or number of landlords who have recorded a net loss and a similar listing of those who recorded a net profit; and if he will make a statement on the matter. [28779/14]
View answerI am advised by the Revenue Commissioners that, excluding allowable interest, approximately €838m rental expenses were claimed for 2012, which is the most recent tax year for which complete data are available.
The available breakdown of this figure is as follows
|
Expenses |
€ |
|
Expenses Repairs |
€248m |
|
Expenses "Section 23" type relief |
€21m |
|
Expenses Other |
€569m |
The figures shown are based on expenses claimed in tax returns. Taxpayers are not required to provide the level of detail in tax returns that is specified by the Deputy in his question.
It should be noted that these amounts may include claims that cannot be absorbed in 2012 because of insufficient profits (these may be carried forward as losses into future years).
I am advised by the Revenue Commissioners that of the approximately 158,000 returns received in respect of 2012 for which rental income was returned, approximately 137,500 (87%) recorded a profit, i.e., chargeable income after expenses but before Capital Allowances and losses that may have been carried forward from a prior year. The remaining 20,500 returns (13%) recorded a loss.
43. Deputy Finian McGrath asked the Minister for Finance his views on correspondence (details supplied) regarding a National Asset Management Agency issue; and if he will make a statement on the matter. [28780/14]
View answerI refer the Deputy to PQ answer 49 & 55 on the 12th of June 2014, which outlines the position regarding the property referred to in your question.
As the Deputy is aware, NAMA is not in a position to gift assets to potential purchasers as it is obliged to set the realised value of assets against the indebtedness of its debtors.
44. Deputy Pearse Doherty asked the Minister for Finance when he will decide the adjustment for budget 2015; and on which data he will make the decision. [28816/14]
View answerOur established practice, which is consistent with the requirements of the Stability and Growth Pact, is that budgetary planning is based on the most up-to-date economic and fiscal information. This means, in the case of Budget 2015, that the final parameters, including the adjustment, will be decided in early October when the latest macroecnomic forecasts prepared by my Department and endorsed by the Irish Fiscal Advisory Council are available. Furthermore, the revenue and expenditure information for the first three quarters will form an important input to budgetary planning.
45. Deputy Barry Cowen asked the Minister for Finance if he will outline in tabular form the total number of sick days taken by staff in his Department in 2011, 2012, 2013 and to date in 2014 further broken down by uncertified, certified and long term absence leave. [28829/14]
View answerPlease see the total number of sick days taken by staff in my Department in 2011, 2012, 2013 and to date in 2014 as requested.
|
Sick Leave |
2011 |
2012 |
2013 |
2014 To Date* |
|
Self Certified Sick Leave |
301.5 |
183.5 |
144.2 |
78 |
|
Certified Sick Leave To Date (>28 Days) |
1816.6 |
851.71 |
403.76 |
513 |
|
Certified Sick Leave To Date (<28 Days) |
1231.35 |
709.05 |
791.55 |
384.52 |
|
Total Certified Sick Leave |
3047.95 |
1560.76 |
1195.31 |
897.52 |
|
|
|
|
|
|
|
Total Sick Leave |
3349.45 |
1744.26 |
1339.51 |
975.52 |
*Please be advised that while all absences are correctly notified are entered on HRMS the end dates and resumption dates for Quarter 2 may not be up to date.
46. Deputy Barry Cowen asked the Minister for Finance if he will provide in tabular form per annum all external consultant reports commissioned by his Department since March 2011; the costs per report; the company involved; the title of the report and the publication date. [28844/14]
View answerI refer the Deputy to the answer given on 21 January 2014 in response to a Parlamentary Question - Reference No. 2361/14. There has been no change in the situation since then.
I am setting out below the information in tabular form provided in the response to Parliamentary Question 2361/14:
|
Consultant |
External Report |
Amount Paid |
Year |
Published/Ongoing |
|
PMCA Economic Consulting |
Assistance and Analysis in the Preparation of the Medium-Term Economic Strategy 2014-2020 |
€49,043.00 |
2013 |
Final report submitted 6.12.13* |
|
Crowe Horwath |
Report to Department in respect of a survey of RandD Active Companies 2013 |
€36,850.80 |
2013 |
Published |
|
Indecon |
Ex ante cost benefit analysis of proposed Living City Initiative |
€28,290.00 |
2013 |
Published |
|
Red C Research and Marketing Limited |
SME Lending Survey October-March 2013 |
€59,593.50 |
2013 |
Published** |
|
Red C Research and Marketing Limited |
SME Lending Survey April-September 2013 |
€58,978.50 |
2013 |
Published** |
|
Mercer (Ireland) Limited |
Remuneration Review of Covered Institutions |
€146,370.00 |
2013 |
Published |
|
Delotte and Touche |
External Review of the Compilation of General Government Debt Statistics |
€ 61,553 |
2012 |
Published |
|
BDO and Amarach |
(a) Survey of audio-visual producers (b) Review on international review of audio-visual state supports |
€64,575.00 |
2012 |
Published |
|
Brendan Ryan B.L. |
Public Finance Procedures in Ireland |
€900.00 |
2012 |
The report was completed in January 2013 but it was not published. It was obtained for the purposes of informing the Department's approach in the David Hall case rather than for publication |
|
Grant Thornton |
Assessment of Credit Review Office |
€31,807.80 |
2012 |
Published |
|
Mazars |
SME Lending Survey October-March 2012 |
€60,885.00 |
2012 |
Published** |
|
Mazars |
SME Lending Survey April-September 2011 |
€52,453.50 |
2011 |
Published** |
|
Red C Research and Marketing Limited |
SME Lending Survey April-September 2012 |
€61,438.50 |
2012 |
Published** |
|
Charles River Associates |
Acquisition by AIB of EBS Building Society |
€50,000.00 |
2011 |
Published |
*Following conclusion of post-submission assessment report will be published on the MTES website in the near future.
**Reimbursed by AIB & Bank of Ireland
47. Deputy Róisín Shortall asked the Minister for Finance the revenue generated from the local property tax in 2013 broken down by each local authority. [28870/14]
View answerI am informed by the Revenue Commissioners that compliance data in relation to the Local Property Tax (LPT) is available broken down by city and county councils nationally and the most up to date figures for LPT collected in 2013 and 2014 were published on 16 April 2014 on the Commissioners' website at: Local Property Tax Statistics April 2014 (PDF 192KB). The Commissioners have confirmed that by the end of December 2013, €318m had been transferred by Revenue to the Exchequer in respect of LPT. Of this amount, €242m was in respect of LPT for 2013 and €76m relates to 2014 LPT. By the end of June 2014, a further €310m was transferred by Revenue to the Exchequer. The Commissioners have also confirmed that more detailed data and analysis will be published shortly.
48. Deputy Micheál Martin asked the Minister for Finance if he will investigate the local property tax and household charge liability in respect of a person (details supplied) in County Cork; if the person qualifies for a disability exemption due to their circumstances; and if he will make a statement on the matter. [28872/14]
View answerI am advised by Revenue that Sections 10B and 15A of the Finance (Local Property Tax) Act 2012 (as amended) provide, that an exemption from Local Property Tax (LPT), or a reduction in market value may, subject to specific conditions, apply to a residential property that was built or adapted to make it suitable for occupation by a permanently and totally incapacitated person as their sole or main residence. The reliefs can not apply to properties that were not adapted for use by incapacitated persons.
In regard to the specific case to which the Deputy refers, Revenue has confirmed to me that the person in question paid his LPT liabilities in respect of both 2013 and 2014, but according to the HHC records received from the Local Government Management Agency (LGMA) did not pay the original €100 Household Charge (HHC) in respect of 2012. The LGMA records also confirmed that there was no exemption or waiver in place in respect of the property.
By way of background information, Section 156 of the Act converted all HHC arrears still outstanding on 1 July 2013 to LPT, increased the liability from €100 to €200 per property and made Revenue responsible for collecting the liabilities. Revenue has no discretion in this regard and is obliged to apply the €200 charge as set down in the legislation.
Revenue has informed me that a member of the LPT team has already discussed this case with the parent of the person in question and confirmed that the property does not qualify for an exemption from LPT because it was not adapted for use by an incapacitated person, nor does it qualify for an exemption from HHC on the basis of the records received from the LGMA. The LPT team member did indicate to the parent that the person could in fact be entitled to a deferral from LPT/HHC based on his income level, but the parent stated that the family was not interested in taking such an approach.
Again by way of background information, the LPT legislation provides for a full deferral of LPT/HHC where a single/widowed property owners gross income does not exceed €15,000. This income threshold can also be adjusted upwards by including 80% of any gross mortgage interest payments. The interest element of any such deferral is 4% as distinct from the normal 8% charge that applies in respect of unpaid liabilities and in most circumstances remains in place for the valuation period, i.e. currently for the tax years 2013, 2014, 2015 and 2016.
The LPT team member committed to again contact the parent in the coming days once the family has had an opportunity to further consider both the deferral option and the various payment methods that Revenue has made available to pay the arrears of HHC.
49. Deputy Clare Daly asked the Minister for Finance with regard to a couple who have joint custody of their child but are separated, the reason the single parent tax credit cannot be assigned to the father at the mother's request, because they are in receipt of the credit for another child. [28888/14]
View answerAn individual, (the 'primary claimant'), is entitled to the single person child carer credit (SPCCC) where he or she:
- Is not married, cohabiting or in a civil partnership,
- Is not jointly assessed or in receipt of the basic personal tax credit for a widowed person or a surviving civil partner, and
- Proves that for a tax year he or she has a qualifying child residing with him or her for the whole or the greater part of that year.
If the primary claimant does not wish to claim the credit, (e.g. because of insufficient taxable income to use the credit fully), he or she may surrender the credit in favour of another person, (the 'secondary claimant'), who has a significant role in caring for the child.
The secondary claimant is only entitled to the SPCCC, following the surrender of it by the primary claimant, where he or she:
- Is not married, cohabiting or in a civil partnership,
- Is not jointly assessed or in receipt of the basic personal tax credit for a widowed person or a surviving civil partner, and
- Proves that for a tax year he or she has a qualifying child residing with him or her for at least 100 days in the year.
The SPCCC is designed to be an in-work benefit to support the principal carer of a child or children to take up, or remain in, employment. However, there is entitlement to only one credit no matter how many qualifying children reside with a claimant, whether that person is a primary or secondary claimant. Therefore, where the credit is claimed by a primary claimant, there is no credit available to be surrendered to a secondary claimant.
50. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he expects to be in a position to use economic growth as a means of reducing the debt-GDP ratio in the context of the forthcoming budget having particular regard to the criteria set out by the troika and the equally pressing need for some ameliorating measures to facilitate economic growth; and if he will make a statement on the matter. [28910/14]
View answerThe recent forecast by my Department, contained in the Stability Programme Update, shows the general government debt to GDP ratio reducing from 123.7% in 2013 to 107.2% in 2018.
In the short term, a reduction in the cash balances held by the State will assist in the reduction of the debt ratio. In the medium term, the achievement of progressively larger primary surpluses and the impact of growth in GDP will serve to increase the downward trajectory of the debt ratio.
It should be noted at present Ireland has an obligation to correct the general government deficit under the excessive deficit procedure (EDP) and as such, is not subject to the debt rule. The Government is committed to achieving the goal of exiting the EDP by reducing the deficit to less than 3% of GDP by 2015. It is this objective that the Government is committed to achieving, which will provide the confines within which Budget 2015 measures will be finalised.
Three years after exiting the excessive deficit procedure, the debt rule will fully apply. Under the debt rule, Ireland must make steady progress towards reducing the debt to GDP ratio to 60% of GDP over the long term.
Regarding the prospect of ameliorating measures to facilitate economic growth, the Deputy will be aware that it is the standard practice for the Minister for Finance to review all taxation policy before presenting a new budget to the Oireachtas. I have at all times tried to design policies to encourage growth while also addressing the need to restore stability to the public finances. Within three months of coming into office, the Government launched the Jobs Initiative. More recently, in Budget 2014 I introduced a package of 25 measures costing over €500m to promote jobs and growth in the economy. However, given that we are still a number of months away from the Budget, I am not prepared to be drawn into speculation on specific budgetary matters at this time.
51. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the various economic and fiscal targets set by his Department in conjunction with the troika have been met in each of the past five years to date; and if he will make a statement on the matter. [28911/14]
View answerOur EU/IMF Programme ran from late 2010 to December 2013. The European Council Recommendation of 7th December 2010, set out an adjustment path towards the correction of our excessive deficit out to 2015.
These deficit targets were incorporated into the programme. For the programme years these were 10.6% in 2011, 8.6% in 2012 and 7.5% in 2013. The outcome was 8.9% in 2011 (underlying), 8.2% in 2012 and 7.2% in 2013, showing a clear over-achievement of the targets each year.
The 2014 target for the general government deficit is 5.1% of GDP. The latest forecast from my Department, published in the Stability Programme Update, is for a deficit of 4.8% of GDP this year and a deficit of less than 3% of GDP in 2015.
The programme also included quarterly targets for the Exchequer primary balance and the Central Government Net Debt. The definition of these targets and the method of calculation was set out in the IMF Technical Memorandum of Understanding (TMU) attached to Memorandum of Economic and Financial Policies.
The Exchequer primary balance is the Exchequer balance excluding Exchequer debt interest expenditure and adjusted for any payments for bank recapitalisation and credit union funding, and any over/under-performance in Exchequer tax revenues and gross PRSI receipts combined compared to the TMU estimates.
Central Government Net Debt was defined as the total outstanding amount of principal borrowed central government and not repaid to date, less liquid assets available for redemption of the liabilities at the same.
These targets were in place for 12 consecutive quarters up to end September 2013. Targets for all 12 quarters were met and Ireland successfully exited the EU/IMF Programme in December 2013.
52. Deputy Bernard J. Durkan asked the Minister for Finance the steps he will take to encourage economic growth such as reduction in taxation in the coming year; and if he will make a statement on the matter. [28912/14]
View answerIt is the standard practice for the Minister for Finance to review all taxation policy in the run up to the annual Budget. As the Deputy will be aware, I have at all times tried to design policies to encourage growth while also addressing the need to restore stability to the public finances. Within three months of coming into office, the Government launched the Jobs Initiative. More recently, in Budget 2014 I introduced a package of 25 measures costing over €500m to promote jobs and growth in the economy. However, given that we are still a number of months away from the Budget, I am not prepared to be drawn into speculation on specific budgetary matters at this time.
53. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which Ireland’s debt-GDP ratio compares with other countries within the eurozone and without; and if he will make a statement on the matter. [28913/14]
View answerThe latest comparative data on government debt are shown in Eurostat's press release for the EDP notification tables on 23 April 2014.
Sixteen Member States had government debt ratios higher than 60% of GDP at the end of 2013.
Ireland's end-2013 debt was recorded at 202.9 billion which is 123.7% per cent of GDP and is the fourth highest debt ratio in the EU28 area, behind Greece (175.1%), Italy (132.6%) and Portugal (129.0%).
Three Member States had debt ratios less than 30 per cent of GDP these are Estonia (10.0%), Bulgaria (18.9%) and Luxembourg (23.1%).
In the EU28 the end 2013 government debt was €11.4 trillion* or 87.1 per cent of GDP.
* A trillion is here defined as 10 to the power of 12
54. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the economic fundamentals remain positive for this country; and if he will make a statement on the matter. [28914/14]
View answerDevelopments in the Irish economy in the year to date have been largely positive. What is particularly encouraging are the growing signs of recovery in domestic demand which suggest that some of the imbalances built up during the bubble years are being corrected.
Supported by the gradual restoration of consumer confidence over the past year, personal consumption has been healthy over the first five months of 2014. Retail sales, in volume terms, over January to May were up about 7 per cent when compared with the same period in 2013. This has been supported by a strong recovery in car sales over the year - the number of vehicles licensed for the first time in this period was 27.4 per cent higher than in January to May 2013 - as well as the strong performance of more traditional retail outlets, with core sales (excluding motor trades) up 3.4 per cent over the same period.
The rebound in retail sales is also being aided by the continued strong performance of the tourism sector. I am particularly pleased to see that the momentum gained last year - when overseas trips to Ireland increased by 7 per cent - has not been lost in 2014. The latest figures from the CSO show that overseas trips to Ireland were up by over 9 per cent year-on-year in the first five months of the year, as the substantial competitiveness gains which have been achieved are being reflected in strong growth in visitor numbers.
But, of course, no sector was hit harder in the recession than construction and, while nobody wishes to see a return to the construction-reliant economy that preceded the downturn, some recovery in the sector in vital to support wider economic growth. In this regard, the recent developments have been positive, with increasing signs of a recovery in the sector following nearly six years of continuous decline. The construction purchasing managers' index began to grow in the second half of last year and has continued to grow strongly into this year, with the sector now having expanded for each of the last nine months. Furthermore, the Government's recently-published Construction 2020 strategy aims to guide the continued recovery of the sector over the coming years in order to ensure that a competitive and sustainable construction sector will support a recovering Irish economy.
A recovering construction sector will also play a vital role in getting people back to work and tackling the still-high levels of unemployment. In this regard, developments over the last year have been particularly positive. Employment grew by 42,700, or 2.3 per cent in the year to the first quarter of 2014. This marked a sixth successive quarter of employment growth and was driven entirely by full-time employment which increased by 46,400. On foot of this, the unemployment rate continues to fall, from a peak of 15.1 per cent in 2012 to 11.6 per cent last month.
55. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which this country’s per capita GDP compares with others within the eurozone and without; and if he will make a statement on the matter. [28915/14]
View answerIreland continues to compare favourably internationally in terms of GDP per capita. According to the latest IMF World Economic Outlook, Ireland's per capita GDP expressed in terms of purchasing power parity was estimated at $39,547 in 2013. This compares with the euro area average of $34,015; $37,306 for the UK and $53,101 for the USA.
56. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the economy remains competitive in comparison with other countries throughout Europe, both within the eurozone and without; and if he will make a statement on the matter. [28916/14]
View answerSubstantial progress has been made in recent years to improve the competitiveness of Ireland's economy. Ireland's rate of annual HICP inflation has now been on par with or below that of the euro area average for every month since March 2008. For instance, in 2013 HICP inflation for Ireland was just 0.5 per cent, as compared with a euro area average of 1.3 per cent. This trend looks set to continue in the coming years and the European Commission expects Irish inflation rates to be below those of the euro area average for both this year and next.
At the same time, there has also been a significant improvement in Ireland's economy-wide cost competitiveness. Indeed, the European Commission recently forecast that our nominal unit labour costs will improve by 20 per cent relative to those of the euro area over the period 2008 to 2015.
Added to this, the real Harmonised Competitiveness Indicator - which measures the trade-weighted exchange rate as well as relative price developments - has fallen by 22.7 per cent between mid-2008 and end-2013, indicating a substantial improvement in our international competitiveness.
57. Deputy Bernard J. Durkan asked the Minister for Finance the steps that will be taken to encourage the lending sector to meet the credit requirements of the domestic economy; and if he will make a statement on the matter. [28917/14]
View answer59. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the lending institutions can be encouraged to meet the working capital needs of small and medium enterprises; and if he will make a statement on the matter. [28919/14]
View answerI propose to take Questions Nos. 57 and 59 together.
As the Deputy is aware, as part of the 2011 recapitalisation exercise, the Government imposed SME lending targets on AIB and Bank of Ireland for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion last year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks achieved their targets.
Having completed a process of deleveraging, both AIB and Bank of Ireland are now concentrating on growing their balance sheets. In this context, both banks recognise the need to increase business lending in the period up to 2016, including lending for working capital purposes, and have put on record their commitment to the SME sector. Although the targets were a useful policy intervention, the focus now needs to shift towards the collation and examination, on a monthly basis, of more granular data on the funding of the activities of SMEs from both AIB and Bank of Ireland, the wider banking sector and increasingly the non-bank funding sector. This focus is further underpinned by the commitments contained in the "Access to Finance" chapter in Action Plan for Jobs 2014. I recently wrote to the banks with a view to ensuring their continued commitment to work closely with my Department in faciliatating a positive business environment in which SMEs can prosper and contribute to economic growth, in addition to maintaining and increasing jobs in this vital sector. In addition, AIB and Bank of Ireland meet my officials on a quarterly basis to keep them abreast of issues pertaining to the SME sector, both in the area of SME lending and distressed SME borrowers.
I would remind the Deputy that the Credit Review Office look at cases where borrowers have their loan applications refused or feel that the terms and conditions of their existing loan, or a new loan offer, are unfairly onerous or have been unreasonably changed to their detriment. I am informed by the CRO that they have overturned 55% of appeals to a value of €16.6m leading to the creation or maintenance of 891 jobs.
The Government has agreed to proceed with putting legislation establishing the Strategic Banking Corporation of Ireland before the Oireachtas. It is hoped that the Oireachtas will pass the legislation before the summer recess. During its first year of operations, the Government s ambition is that the SBCI will lend €500m to SMEs for investment. Experience in other countries suggests that any lending facilitated by a state investment bank of this type is generally complementary to lending already taking place in an economy.
58. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which his Department and the Central Bank of Ireland continues to monitor the issues of mortgage arrears with particular reference to the use by some lenders of voluntary sale or surrender as a first rather than a last resort; and if he will make a statement on the matter. [28918/14]
View answerThe Central Bank's Code of Conduct on Mortgage Arrears (CCMA) sets out requirements for mortgage lenders dealing with borrowers facing or in mortgage arrears. The CCMA provides a strong consumer protection framework to ensure that borrowers struggling to keep up mortgage repayments are treated in a fair and transparent manner by their lender, and that long term resolution is sought by lenders with each of their borrowers in genuine mortgage difficulty. In that context, provision 39 of the CCMA provides that, in order to determine which options for alternative repayment arrangements are viable for each particular case, a lender must explore all of the options for alternative repayment arrangements offered by that lender. Such alternative repayment arrangements may include:
a) interest only repayments on the mortgage for a specified period of time;
b) permanently reducing the interest rate on the mortgage;
c) temporarily reducing the interest rate on the mortgage for a specified period of time;
d) an arrangement to pay interest and part of the normal capital amount for a specified period of time;
e) deferring payment of all or part of the scheduled mortgage repayment for a specified period of time;
f) extending the term of the mortgage;
g) changing the type of the mortgage;
h) adding arrears and interest to the principal amount due;
i) equity participation;
j) warehousing part of the mortgage (including through a split mortgage);
k) reducing the principal sum to a specified amount; and
l) any voluntary scheme to which the lender has signed up e.g. Deferred Interest Scheme.
However, if a lender does not offer a borrower an alternative repayment arrangement (for example, where it is concluded that the mortgage is not sustainable and an alternative repayment arrangement is unlikely to be appropriate), the CCMA requires that the lender must provide the reasons, on paper or another durable medium, to the borrower and also provide the further information set out in provision 45 of the CCMA including the other options available to the borrower in such circumstances such as voluntary surrender, trading down, mortgage to rent or voluntary sale and the implications of each option for the borrower. The same information must be given to the borrower if he/she does not accept the alternative repayment arrangement offered by the lender.
Furthermore, under the Mortgage Arrears Resolution Targets (MART) process, the Central Bank is requiring the main lenders to work through their mortgages in arrears (both primary dwelling and buy to let mortgages) of more than 90 days and, where possible, to "propose" and "conclude" sustainable solutions with their borrowers in arrears. The Deputy will be aware that the Central Bank has now set quarterly targets to the end of 2014 by which time the relevant banks will be required to "propose" sustainable solutions to 85% of customers over 90 days in mortgage arrears and for "concluded" solutions to reach 45%. The latest data from the Central Bank on the ongoing MART process, which is in respect of the period to end 2013, is at the following link: http://www.centralbank.ie/press-area/speeches/Documents/30%20April%202014%20Oireachtas%20Committee%20accompanying%20chart.pdf.
Any bank proceeding to legal action or otherwise seeking the loss of ownership with co-operating borrowers, in circumstances where a sustainable alternative repayment arrangement is feasible and can be agreed, is not acting in a manner consistent with the MART process, or with the CCMA. Of course, the CCMA and MART can only achieve positive results in circumstances where the borrower and lender cooperate and engage with the process. If a borrower is not happy with the way that their lender is dealing with them, or if they think they are not complying with the CCMA, the borrower can make a complaint to their lender. Borrowers can also make an appeal to the lender's Appeals Board if they are not happy with the alternative repayment arrangement offered, or if the lender declines to offer an alternative repayment arrangement or if they believe they have been wrongly classified as not co-operating. If the borrower is not happy with the outcome of the appeal/complaint made to the lender, they can refer the matter to the Financial Services Ombudsman (FSO). Further information on how to make a complaint to the FSO is available at www.financialombudsman.ie.
The Central Bank has informed me that, through the MART process, the relevant statutory codes (such as the CCMA) and through regulatory engagement with the individual banks, it continues to monitor progress in dealing with mortgage arrears. As part of this engagement process, the Central Bank has also indicated that it intends to commence a review of mortgage lenders' compliance with the CCMA later this year.
60. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which bank charges in this country are comparable to those that exist in other EU jurisdictions; and if he will make a statement on the matter. [28941/14]
View answerThe Programme Documents (the Memorandum of Understanding on Specific Economic Policy Conditionality and the Memorandum of Economic and Financial Policies) agreed following the 10th Review of the EU-IMF Programme of Financial Support included a commitment to carry out an assessment of banks' fee income by end-December 2013 as follows:
The authorities will assess banks' fee income relative to peers in selected other jurisdictions. Based on this assessment they will complete an external review of the regulation of bank fees.
The Department of Finance undertook this assessment and review. Part of the review process involved comparing bank charges in Ireland with those in other EU jurisdictions. In this regard the review found that:
- net fee and commission income divided by average assets in Irish banks was well below the average of their peers,
- net fee and commission are lower in the Irish banks than in their European peers relative to net interest income,
The review concluded that it would not be appropriate to repeal Section 149 of the Consumer Credit Act 1995 at this point in time. The lack of competition in the banking sector means that the removal of section 149 would give unfettered price setting power to the incumbent banks. This issue should be revisited when competition in the banking sector has improved significantly.
However, as part of the conditions under which the Irish banks received state aid, Ireland made various 'sectoral commitments' to the European Commission in order to promote competition in the Irish banking sector. Among these commitments, Section 1.1 (b) of the approved State Aid for Bank of Ireland states: "Legislation will be enacted that will provide that Section 149 of the Consumer Credit Act, 1995 regarding price regulation and fees will not be applied to new entrants in their first 3 years of commencing business in Ireland". This exemption was provided for under the Central Bank Supervision and Enforcement Act 2013.
In addition, the review conducted by the Department of Finance made a number of recommendations with regard to the process of assessing notifications under Section 149. The Central Bank of Ireland recently confirmed that it had begun to implement these recommendations. A copy of the report is available on the Department of Finance website as follows: http://www.finance.gov.ie/news-centre/press-releases/results-review-regulation-bank-charges-ireland-section-149-consumer.
