Written Answers Nos. 268-283
268. Deputy Michael McGrath asked the Minister for Finance if he will provide, in tabular form, the proceeds, by institution, from the disposal of investments in the State supported banks in 2013, 2014 and in 2015 to date; how these funds have been deployed; and if he will make a statement on the matter. [19986/15]
View answerAs requested by the Deputy, details of the disposal of bank investments since 2013 are set out in the following table.
|
Date of transaction |
Bank |
Transaction |
Total proceeds including interest/dividend |
|
January 2013 |
BOI |
Sale of convertible capital notes |
€1.06bn |
|
July 2013 |
PTSB |
Sale of Irish Life |
€1.34bn |
|
December 2013 |
BOI |
Sale/redemption of preference shares |
€2.05bn (incl. €15m as stamp duty) |
|
2014 no transactions |
|
|
|
|
May 2015 |
PTSB |
Buy-back of convertible capital notes |
€441.7m (incl. accrued interest) |
|
May 2015 |
PTSB |
Sale of equity* |
€97.2m |
*Sale of equity as part of the capital raised in May 2015, PTSB requested the State to sell some of its equity holding to allow the bank meet the minimum free eligibility for listing float requirements of the Irish and London stock exchanges. This request was agreed to which resulted in the sale of 21.8 million shares. The State currently retains ownership of c. 75% of the bank's total shares in issue.
All the receipts in the table above, except those arising from the December 2013 sale of BOI preference shares, were, or will be, paid into the Central Fund. They are therefore available along with other sources of tax revenue, non-tax revenue and capital receipts as well as the funds sourced from borrowing, to fund overall Exchequer expenditure. It should be noted the receipt of such funds reduces the Exchequer Borrowing Requirement.
The receipts from the BOI transaction of December 2013, excluding the stamp duty of €15m which was collected by Revenue, were paid into the NPRF as it was the holder of the preference shares in question. Subsequently, the receipts have been used as follows:
- €1,634m transferred to the Exchequer and used towards the early redemption of IMF loans.
- €240m committed as a loan facility for the SBCI
- €151m invested in the Ireland Strategic Investment Fund
- €10m subscription in shares of the SBCI.
269. Deputy Michael Healy-Rae asked the Minister for Finance his views on a matter (details supplied) regarding the licence to sell petrol and diesel; and if he will make a statement on the matter. [19989/15]
View answerI am informed by the Revenue Commissioners that the requirement that traders dealing in road fuels hold a licence has been in place for decades and that the requirement for a licence for traders dealing in marked mineral oil was introduced in 2012. The new licensing requirement was introduced in response to the threat posed to the exchequer and legitimate business by fuel laundering and was one element of a range of measures designed to provide for effective control of the supply chains for road fuels and marked fuels. I am pleased that the measures that I introduced and the action taken by the Commissioners have been very successful in limiting the availability of marked fuel for laundering and in limiting access to the market for laundered fuel.
The licence fee for an auto-fuel trader's licence and for a marked fuel trader's licence is a flat rate excise duty of €250 in each case. The rate for a licence is not excessive and is comparable to the rates applicable to other excise licences. There has been extensive consultation with industry representatives who have been very supportive of the measures implemented to tackle fraud and protect compliant businesses from unfair competition from illicit operators.
270. Deputy Micheál Martin asked the Minister for Finance if he or his Department has considered Mr. Mario Draghi's comments about being wary of quantitative easing having a negative impact on the distribution of wealth, and in some cases causing more inequality; the actions his Department is taking to prevent this from happening; and if he will make a statement on the matter. [20000/15]
View answerThe President of the ECB, in a recent speech, discussed the evolution of monetary policy since the crisis and the challenges and benefits associated with the decisions made to date. This included a reference to the distributional consequences of monetary policy by penalising savers to the benefit of debtors and through asset price increases which may disproportionately favour the wealthy and increase inequality.
Let me firstly point out that Mr Draghi also highlighted the distributional effects from monetary policy inaction as well as action.
The Expanded Asset Purchase Programme (EAPP), launched on 9 March 2015, is aimed at fulfilling the ECB's price stability mandate. Asset purchases provide monetary stimulus to the economy in a context where key ECB interest rates are effectively at the lower bound. They should further ease monetary and financial conditions. They should also help to support investment and consumption, and ultimately contribute to a return of inflation rates which are close to 2 per cent.
Ireland should benefit from quantitative easing in a number of ways:
- Through improved financing conditions for households and firms;
- By raising demand in the euro area, Ireland's single largest export destination;
- Through the depreciation of the currency which improves the competitiveness of Irish exports outside the euro area;
- Through the restoration of price stability which will help reduce the real debt burden.
While quantitative easing will likely be beneficial for the Irish economy, there is nevertheless the possibility of side effects such as increased asset prices which will benefit the holder of the assets.
In this regard, I would point out that Capital Gains Tax applies on any chargeable gain from the disposal of many assets, including non-principal private residences and to equity gains. Stamp Duty also applies to the purchase of assets such as property and shares. Therefore, in the event of increases in asset values, there would be a proportionate increase in the tax paid.
Finally, I would point out that all tax rates and regimes are held under continuous review by my Department and that any changes are made in the context of the annual budgetary cycle, including the Finance Bill.
271. Deputy Paul Murphy asked the Minister for Finance if he will report on the incidence of errors on mortgage accounts of the Irish Bank Resolution Corporation resulting in over-charging and under-charging of customers; the measures that have been taken to review accounts for errors; the policies that are in place when an error is discovered; and if he will make a statement on the matter. [20075/15]
View answerThe Special Liquidators have confirmed to me that there has been no evidence to suggest that there was any overcharging or undercharging on mortgage accounts of IBRC.
272. Deputy Pearse Doherty asked the Minister for Finance if he will provide an update on the Central Bank of Ireland investigation into Custom House Capital; and if he will make a statement on the matter. [20076/15]
View answerI have been informed by the Central Bank that its enforcement action against persons concerned in the management of Custom House Capital Ltd (in liquidation) commenced after the publication of the Final Report to the High Court by Court Appointed Inspectors dated 19 October 2011.
Upon presentation of the aforementioned Final Inspectors' Report on Custom House Capital Ltd (CHC) to the High Court, Justice Hogan ordered that CHC be wound up immediately. It should be noted that copies of the Final Report have been provided to other relevant state authorities for their consideration i.e. the Minister for Justice and Equality, to the Director of Public Prosecutions, to the Director of Corporate Enforcement, to the Revenue Commissioners and to the Garda Commissioner.
Following consultation with An Garda Siochána, the Central Bank's investigation was deferred in August 2013 pending completion of investigations by An Garda Síochána. The Central Bank is not in a position to comment on investigations undertaken by An Garda Síochána.
The Central Bank provides regular updates on CHC on its website. This can be accessed at: http://www.centralbank.ie/press-area/press-releases/Pages/UpdateonCustomHouseCapital.aspx.
In order to enhance the investor protection legislative framework, the Central Bank has been provided with extensive new powers since the onset of the financial crises to prevent the loss of client assets as occurred in the case of CHC. The principal developments are set out below.
Client Assets Regime
Following consultation with my Department new rules for the Safekeeping of Client Assets were introduced by the Central Bank in SI 104 of 2015 ("Client Asset Regulations 2015 for Investment Firms"). These were signed into law on 25 March 2015 and will come into operation for investment firms on 1 October 2015.
New rules in respect of key management positions
I have brought forward a very wide range of statutory powers under the Central Bank Reform Act 2010, which sets out a far-reaching regime for the Central Bank to set out and enforce standards of fitness and probity across the financial service sector.
Enhanced monitoring and enforcement powers for the Central Bank
The Central Bank (Supervision and Enforcement) Act 2013 also sets out a number of new provisions that are relevant. The fitness and probity provisions are reinforced by the whistleblower protections. The Act also provides for the Central Bank to commission, as part of the proper and effective regulation of financial service providers, an independent expert report at the cost of the financial service provider. It strengthens the authorised officer regime, enables the Central Bank to secure assurances from auditors of regulated financial service providers. It also strengthens the enforcement powers of the Central Bank and provides for a substantial increase in monetary penalties. The Central Bank also has the power to suspend or revoke a regulated entity's authorisation following an Inquiry.
273. Deputy Lucinda Creighton asked the Minister for Finance further to Parliamentary Questions Nos. 71 and 72 of 13 May 2015, the reason the scope of the transaction review conducted by the special liquidators of the Irish Bank Resolution Corporation is limited at €10 million; the way he arrived at the figure €10 million; and if he will make a statement on the matter. [20141/15]
View answerAs the Deputy is aware, the Review which I have directed the Special Liquidators to undertake shall consider all transactions, activities and management decisions, other than those relating solely to the acquisition of assets by the National Asset Management Agency, which occurred between 21 January, 2009 (being the date of the nationalisation of IBRC) and 7 February 2013 (being the date of the appointment of the Special Liquidators to IBRC), and which either:
(A) resulted in a capital loss to IBRC of at least €10 million during the Relevant Period; or
(B) are specifically identified by the Special Liquidators as giving rise or likely to give rise to potential public concern, in respect of the ultimate returns to the taxpayer.
The capital loss threshold of €10 million as set out in the scope of the Review was considered in the context of and is significantly less than the €100 million threshold set out in the March 2012 Relationship Framework between the Minister for Finance and IBRC. It was felt that this capital loss threshold would capture a meaningful number of significant transactions that occurred over the period in question while also allowing the processs to be conducted and completed expeditiously.
My officials and I also considered that if findings from this review raised further questions the scope could be widened. However, without any evidence of wrongdoing having been produced, establishing a review with a lower threshold in the first instance would not have been appropriate.
274. Deputy Michael McGrath asked the Minister for Finance if he will provide a breakdown of the amount and purpose of public funding that has been required to date by the credit union sector; and if he will make a statement on the matter. [20149/15]
View answerThe Government has made available €250 million to the Credit Union Fund for the voluntary restructuring of credit unions being facilitated by the Credit Union Restructuring Board (ReBo) on a voluntary, incentivised and time-bound basis. The Government has also provided €250 million to the Credit Institutions Resolution Fund for resolution purposes.
Credit Union Fund
The Credit Union Fund was established under Section 57 of Credit Union and Co-operation with Overseas Regulators Act 2012 (the 2012 Act) and the Minister for Finance contributed €250m to this Fund. The purpose of the Fund includes provision of financial support for restructuring of credit unions and to meet the expenses of ReBo in discharging its functions under the 2012 Act.
To date, ReBo has drawn down €5,875,000 from the Credit Union Fund. This amount consists of €2,950,000 towards providing financial assistance to credit unions undergoing restructuring and €2,925,000 towards operating costs of ReBo. Approximately 50% of ReBo's operating costs is recoverable in the form of a ReBo levy on the credit union sector. This Levy came into effect in December 2014 with just under €1.4 million collected to date.
Credit Institutions Resolution Fund
The Credit Institutions Resolution Fund - Resolution Fund, was established by section 10(1) of the Central Bank and Credit Institutions (Resolution) Act 2011 (as amended) - 2011 Act. Under section 10(2) of the 2011 Act, the Resolution Fund is to provide a source of funding for the resolution of financial instability in, or an imminent serious threat to the financial stability of, an authorised credit institution. This definition includes a credit union.
To date, the resources of the Resolution Fund have been utilised to fund the resolution of four credit unions. In the case of three of those credit unions, the resolution action taken was a directed transfer under the 2011 Act, and the Resolution Fund funded a financial incentive for the transferee. The remaining case was a liquidation, and no financial incentive was paid from the Resolution Fund in respect of that action. In each of the four cases, the Central Bank discharged its third party resolution-related costs against the Resolution Fund.
The amounts paid or payable to date from the Resolution Fund for incentives in each of the three transfer resolution cases are as follows:
Newbridge Credit Union Limited: €27 million
Howth Sutton Credit Union Limited: €2.15 million
Killorglin Credit Union Limited: €2.15 million
Central Bank resolution-related expenses that have been discharged against the Resolution Fund to date amount to €2.7 million.
Credit unions are contributing to the Resolution Fund in the form of a Levy.
The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and it is absolutely determined to support a strengthened and growing credit union movement.
275. Deputy Michael McGrath asked the Minister for Finance in view of the Registrar of Credit Unions remit to maintain the financial stability and well-being of credit unions, if he will provide details of the initiatives that have been undertaken by the Central Bank of Ireland to ensure development and growth of the credit union sector in recent times; and if he will make a statement on the matter. [20150/15]
View answerMy role as Minister for Finance is to ensure the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions .
The Central Bank, under the Credit Union Act, 1997 is responsible for administering the system of regulation and supervision of credit unions with a view to:
(a) the protection by each credit union of the funds of its members, and
(b) the maintenance of the financial stability and well-being of credit unions generally.
The three key strategic objectives that underpin the Central Bank's work in delivering this mandate are to:
- resolve weak and non-viable credit unions to protect members savings and maintain financial stability within the credit union sector;
- develop an appropriate legislative and regulatory framework to protect the stability of individual credit unions and to allow the sector to develop; and
- bring about longer term restructuring of the sector to ensure its long-term sustainability.
In line with recommendations of the Commission on Credit Unions Report a consultation protocol has been put in place between the Central Bank and credit unions. This provides that prior to the introduction of new regulations the Central Bank will engage with credit unions. The Central Bank has recently consulted on draft Regulations for Credit Unions on commencement of the remaining sections of the Credit Union and Co-operation with Overseas Regulators Act 2012 - Consultation Paper 88, that are proposed to apply to credit unions. The Central Bank has sought views from credit unions on the proposed regulations. This includes regulations on lending, savings, investments and additional services.
Specifically in relation to additional services CP88 indicated that the Central Bank is open to proposals from credit unions on new additional services they wish to provide to members where:
- the proposed additional service is supported by a robust business case;
- the proposed additional service is not contrary to financial services legislation;
- the board of directors has a sound appreciation of the nature of the additional service proposed and is fully informed of the strategic, governance, risk management, operational, financial and legal implications involved; and
- systems and controls are in place to ensure any risks involved in the provision of the additional service are managed and mitigated.
Following the introduction of the regulations, the Central Bank also indicated in CP88 that where credit unions set out a clear path on how they wish to develop, the Central Bank will consider any amendments to the regulations that may be appropriate.
The consultation closed on 27 February 2015 and a feedback statement and final regulations are planned to be published by end June 2015, following consideration of the submissions received.
The credit union sector is currently being restructured on a voluntary, incentivised and time-bound basis. The Central Bank is taking a proactive approach to facilitating restructuring and works closely with the Credit Union Restructuring Board (ReBo) and individual credit unions on restructuring proposals. The Central Bank supports restructuring proposals that are financially sound, supported by proper risk and control frameworks and have clear leadership and vision for the future direction of the merged credit union. The important objective is to ensure that restructuring achieves better outcomes for current and prospective members, enhances the financial soundness of credit unions and acts as an enabler for future growth and development, setting the sector up for a viable and successful future.
The Registrar of Credit Unions has indicated that as part of the Central Bank's role to support the sustainable and prudent development of the credit union sector, the Central Bank intends to invite interested parties to discuss areas of credit union business model development and anticipates that these dialogues will provide credit union stakeholders with a well grounded basis to develop sound risk-based developments to their business models.
The Government recognises the important role of credit unions as a volunteer co-operative movement in this country and while my role and the Central Bank's role in relation to the credit union sector are distinct, we are both working to protect members' savings and maintain the financial stability and well-being of credit unions generally.
276. Deputy Michael McGrath asked the Minister for Finance his Department's strategy for the credit union sector and where it fits within the overall financial landscape; and if he will make a statement on the matter. [20151/15]
View answerMy role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.
The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.
As I have previously stated, credit unions have a key role to play in providing access to credit and other important services in local communities throughout the country. The Government recognises this and has put in place a number of measures to ensure that credit unions can continue to provide these vital services to their members and to ensure the stability of the sector into the future. These measures include:
- the establishment of the Commission on Credit Unions;
- the publication of the Credit Union and Co-operation with Overseas Regulators Act 2012;
- the establishment of the Credit Union Restructuring Board, ReBo;
- the establishment of a stabilisation levy to support credit unions that are undercapitalised but are otherwise viable;
- the availability of €250 million for voluntary restructuring of credit unions facilitated by ReBo; and
- the availability of €250 million for resolution purposes.
Credit union strategy is a matter for credit unions themselves and is specifically provided for in Section 17 of the Credit Union and Co-operation with Overseas Regulators Act 2012.
The setting of strategy for a credit union is a function of the board of directors and Section 17 provides that this should be carried out in close co-operation with a credit union's management team.
277. Deputy Michael McGrath asked the Minister for Finance if he will provide detailed information, in tabular form, on the number of credit unions currently operating under lending restrictions; with restrictions on lending to persons; with aggregate monthly lending in bands of €10,000; and if he will make a statement on the matter. [20152/15]
View answerI have been informed by the Central Bank that it has been necessary to put lending restrictions in place in credit unions where there are regulatory concerns and resultant risk to members' savings.
Currently about 52% of all credit unions are subject to lending restrictions. Almost all credit unions with a lending restriction in place have a maximum individual loan size restriction as detailed in the table below.
There are two types of lending restrictions:
1. Monthly lending restrictions. At this time less than 10% of all credit unions have this restriction in place which limits the total amount of lending within one month. Therefore, over 90% of credit unions (i.e. over 340 credit unions) have no monthly lending restrictions.
2. Maximum loan size. The average loan size in the credit union sector is just above €6,000. Currently 5 individual credit unions have lending restrictions that limit the amount per loan to less than €10,000. The vast majority of credit unions (over 95%) can continue to make individual loans significantly greater than the average loan size for the sector.
As at 21 May 2015
|
Maximum Loan Size Restriction |
Number of Credit Unions |
|
0 - €9,999 |
5 |
|
€10,000 - €19,999 |
50 |
|
€20,000 - €29,999 |
111 |
|
€30,000 - €39,999 |
5 |
|
€40,000 and above |
18 |
|
TOTAL |
189 |
In February 2015 the Central Bank commenced a lending restriction review initiative, whereby credit unions that are subject to a lending restriction, but are satisfied that they have made the necessary improvements and have embedded these improvements in robust risk sensitive lending practices, may apply for a review of their lending restriction. A communication has been issued to all relevant credit unions outlining the process for the review of lending restrictions and requested them to indicate by 31 March 2015 whether they intend making an application for a review of their lending restriction or not. The closing date for receipt of applications to review lending restrictions under this initiative is 30 September 2015.
I have, on a number of occasions, highlighted the Government's recognition of the important role of credit unions as a volunteer co-operative movement in this country and also the importance of getting lending going in the economy. However, the issue of lending needs to be constructively considered in order to ensure a viable credit union sector into the future.
278. Deputy Michael McGrath asked the Minister for Finance if he will confirm, of the credit unions that had lending restrictions in place at the end of 2014, the number that had them in place at the end of each of the years from 2009 to 2013; and if he will make a statement on the matter. [20153/15]
View answerI have been informed by the Central Bank that it has been necessary to put lending restrictions in place in credit unions where there are regulatory concerns and resultant risk to members' savings.
At the end of December 2014 there were 206 credit unions that were subject to lending restrictions. The number of those 206 credit unions that were subject to lending restrictions at the end of the previous 5 years is outlined in the following table.
|
Year Ended |
Of the 206, the number of those credit unions with a lending restriction |
|
31 December 2013 |
202 |
|
31 December 2012 |
197 |
|
31 December 2011 |
189 |
|
31 December 2010 |
136 |
|
31 December 2009 |
66 |
In February 2015 the Central Bank commenced a lending restriction review initiative, whereby credit unions that are subject to a lending restriction, but are satisfied that they have made the necessary improvements and have embedded these improvements in robust risk sensitive lending practices, may apply for a review of their lending restriction. A communication has been issued to all relevant credit unions outlining the process for the review of lending restrictions and requesting them to indicate by 31 March 2015 whether they intend making an application for a review of their lending restriction or not. The closing date for receipt of applications to review lending restrictions under this initiative is 30 September 2015.
I have, on a number of occasions, highlighted the Government's recognition of the important role of credit unions as a volunteer co-operative movement in this country and also the importance of getting lending going in the economy. However, the issue of lending needs to be constructively considered in order to ensure a viable credit union sector into the future.
279. Deputy Michael McGrath asked the Minister for Finance his plans to remove the current constraints imposed by section 35 on credit unions. [20154/15]
View answerMy role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.
The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.
Section 35 of the Credit Union Act, 1997 (1997 Act), contains lending limits that apply to all credit unions including a limit on the maximum outstanding liability to an individual member and limits on the percentage of the loan book that can be outstanding for periods exceeding both five and ten years.
Section 11 of the Credit Union and Co-operation with Overseas Regulators Act 2012 (2012 Act), will substitute a new section 35, which relates to lending, into the 1997 Act. On commencement of section 11 of the 2012 Act, the current large exposure and maturity limits contained in the existing section 35 of the 1997 Act will be removed and the Central Bank will be provided with regulation making powers, including powers to set large exposure and maturity limits for lending.
The Central Bank issued a consultation paper - Consultation on Regulations for Credit Union on commencement of the remaining sections of the Credit Union and Overseas Regulators Act 2012 - CP88 - on 27 November 2014. This paper includes draft lending regulations for credit unions. Under these regulations credit unions will continue to be allowed to lend up to 30% of their loan book over five years and up to 10% of their loan book over 10 years, subject to a maximum maturity of 25 years. In addition, credit unions will be able to apply to the Central Bank for an extension to their longer term lending limits - up to 40% of their loan book over 5 years and up to 15% of their loan book over 10 years. Approval will be subject to conditions set by the Central Bank. As indicated in CP88, the Central Bank is reviewing the conditions that currently apply for credit unions to be approved to extend their longer term lending limits.
The Central Bank has provided a 3 month consultation period and the closing date for submissions was 27 February 2015. Following review of all submissions received the Central Bank will publish a feedback statement outlining the feedback received, the Central Bank's response and the final regulations for credit unions. All submissions received will be made available on the Central Bank's website at this stage. The Central Bank is planning to publish the feedback statement at the end of June.
280. Deputy Michael McGrath asked the Minister for Finance in the past five years, the number of credit unions that have been approved for, and declined for, additional services; the number of applications ongoing; and the length of time it takes on average from the preliminary application to full approval. [20155/15]
View answerMy role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.
The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.
I have been informed by the Central Bank that where a credit union wishes to provide services to its members, in addition to the services that are provided for under the Credit Union Act, 1997 (1997 Act), an application may be made to the Central Bank for approval to provide such additional services in accordance with the provisions set out in sections 48 to 52 of the 1997 Act.
The Central Bank has further informed me that since 2010 it has received less than 10 applications for approval of additional services under section 48 to 52 of the 1997 Act. These have all been received in the last 9 months and are currently at a various stages of the approval process.
As required under the 1997 Act a credit union must complete the approval process before it can provide an additional service. This process has a number of steps including the following:
- Obtain a Preliminary View from the Central Ban
- Approval by the credit union of the provision of the proposed additional service. Once a positive preliminary view has been received from the Central Bank, the credit union must adopt a decision to provide the proposed service to its members. The credit union can proceed with giving notice of the resolution for the proposed service to its members in accordance with the rules of the credit union. Such a resolution may be passed in any of the following ways:
- by AGM;
- by SGM; or
- by a resolution of he board of directors of the credit union
- Amendment to standard rules of a credit union
- Obtain Formal Approval from the Central Bank
The length of time from preliminary application to final approval varies and can be impacted by the quality and completeness of the information provided by the credit union.
The Central Bank has indicated in communications to the sector that it is, in principle, supportive of credit unions developing additional services. The Central Bank will consider proposals from credit unions on new additional services they wish to provide to members where the credit union can demonstrate that:
- the proposed additional service is supported by a robust business case;
- the proposed additional service is not contrary to financial services legislation;
- the board of directors has a sound appreciation of the nature of the additional service proposed and is fully informed of the strategic, governance, risk management, operational, financial and legal implications involved; and
- systems and controls are in place to ensure any risks involved in the provision of the additional service are managed and mitigated.
281. Deputy Michael McGrath asked the Minister for Finance the additional services most frequently requested by credit unions; the number of inquiries that relate to an application for provision of debit card services; and specifically the number of applications for debit cards that have been approved in the past five years. [20156/15]
View answerMy role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.
The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.
I have been informed by the Central Bank that the Credit Union Act, 1997 (1997 Act) and related statutory instruments (which set out services exempt from additional services regulations) specify the services that a credit union may provide to its members. These services include loans; savings; account access by phone; account access by internet; third party payments, including EFT; ATM services; bureau de change; certain insurance services on an agency basis; group health insurance; bill payment; money transfers; standing orders; direct debits; financial counselling; and Personal Retirement Savings Accounts (PRSAs) on an introduction basis.
Where a credit union wishes to provide services to its members, other than those services that are provided for under the 1997 Act, an application may be made to the Central Bank for approval to provide such additional services in accordance with the provisions set out in sections 48 to 52 of the 1997 Act.
As set out in communications to the sector the Central Bank is, in principle, supportive of credit unions developing additional services. The Central Bank will consider proposals from credit unions on new additional services they wish to provide to members where the credit union can demonstrate that:
- the proposed additional service is supported by a robust business case;
- the proposed additional service is not contrary to financial services legislation;
- the board of directors has a sound appreciation of the nature of the additional service proposed and is fully informed of the strategic, governance, risk management, operational, financial and legal implications involved; and
- systems and controls are in place to ensure any risks involved in the provision of the additional service are managed and mitigated.
Where a credit union wishes to provide debit card services to its members, there is no requirement for that credit union to apply for approval to provide that service under sections 48 to 52 of the Credit Union Act, 1997, provided that the debit card service proposed falls within the services that are provided for under the 1997 Act. The Central Bank has indicated to credit unions that where they are considering offering debit card services to their members, the credit union should, in the first instance, contact the Registry of Credit Unions to inform them of any such proposals.
As set out in the Registrar of Credit Union's recent speech at the Credit Union Managers Association conference, where credit unions are partaking in such activity it is important to consider carefully the business case for any such business activity and assess the credit union's resource capability to develop the operational model, infrastructure and expertise to deliver such services, while recovering the costs involved and mitigating risks.
Fewer than 10 credit unions are currently offering card services to members or are involved in card services pilot schemes.
282. Deputy Michael McGrath asked the Minister for Finance the impact the proposed legislation contained within Consultation Paper 88 is likely to have on the future income of credit unions; the financial impact analysis of this that was conducted; if the results of this will be shared; and if he will make a statement on the matter. [20157/15]
View answerMy role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.
The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.
I have been informed by the Central Bank that the draft regulations set out in Consultation Paper 88 - CP88, will be introduced on commencement of the remaining sections of the 2012 Act. The regulations will replace and, where appropriate, amend a number of requirements that currently exist in legislation and guidance. Additional requirements have also been included in the regulations, where necessary, to strengthen the regulatory framework.
In accordance with the Consultation Protocol for Credit Unions, issued on 27 November 2012, the Central Bank has conducted a Regulatory Impact Analysis - RIA - on the draft regulations set out CP88. The purpose of the RIA was to examine the impact of different policy options on commencement of the remaining sections of the 2012 Act and to identify the most appropriate option. The RIA also examines the costs, benefits and impacts associated with each option. The RIA was provided as an appendix to CP88 and credit unions and other sector stakeholders were invited to provide additional information or analysis on the potential impact of the draft regulations in their submissions to the Central Bank on CP88.
Following review of all submissions received the Central Bank will publish a feedback statement outlining the feedback received, the Central Bank's response and the final regulations for credit unions. All submissions received will be made available on the Central Bank's website at this stage. The Central Bank is planning to publish the feedback statement at the end of June.
283. Deputy Michael Healy-Rae asked the Minister for Finance his views on a matter (details supplied) regarding value added tax on defibrillators; and if he will make a statement on the matter. [20181/15]
View answerThe VAT rating of goods and services is constrained by the requirements of EU VAT law with which Irish VAT law must comply. Defibrillators, other than implantable defibrillators, are liable to VAT at the standard rate, currently 23%. Parts or accessories and training are also liable to VAT at the standard rate. However, training provided in a work setting, for example for the purposes of health and safety in a company or for medical persons who require such training for their profession, would qualify as exempt vocational training for VAT purposes.
There is no provision in VAT law that would make it possible to apply a reduced rate or zero rate to the supply of such products. Under the EU VAT Directive, Member States may retain the zero rate on goods and services which were in place on 1 January 1991, but cannot extend the zero rate to new goods and services. In addition, Member States may only apply a reduced VAT rate to those goods and services which are listed under Annex III of the VAT Directive. While Annex III does include the supply of medical equipment for the exclusive personal use of a disabled person, it does not include defibrillators for general use. In this regard, a reduced rate cannot be applied to the supply of defibrillators. Therefore the only rate that can apply to the supply of defibrillators, their accessories and non-vocational training is the standard VAT rate of 23%.
