Written Answers Nos. 1-141
127. Deputy Maureen O'Sullivan asked the Minister for Finance if he will intervene in the public interest to ensure that 1916 buildings of national historic importance, including 14-17 Moore Street, Dublin 1, which are currently under the financial control of the National Asset Management Agency, will not be included in the Project Jewel auction of Chartered Land's loan portfolio; and if he will make a statement on the matter. [32862/15]
View answerI have received a number of items of correspondence regarding these important historic buildings, including from the Deputy and the Cross Party Committee on Moore Street. I believe NAMA has also received representations on the matter and have advised that these buildings were not part of the Project Jewel portfolio.
The formulation and implementation of policy relating to the protection of Ireland s archaeological heritage is the responsibility of the National Monuments Service, under the Minister of Arts, Heritage, and the Gaeltacht. As the Deputy will be aware, the Minister of Arts, Heritage, and the Gaeltacht recently deemed 14-17 Moore Street a National Monument.
Following that decision to deem the buildings a National Monument, I am advised that NAMA swiftly facilitated the sale of 14-17 Moore Street, by one of its debtors to the State. I am further advised that since my last correspondence with Deputy O'Sullivan on the matter, this transaction has been completed and 14-17 Moore Street are now in State ownership under the aegis of the Minister of Arts, Heritage, and the Gaeltacht. As a result of this sale, 14-17 Moore Street no longer serve as security in relation to any NAMA loan. The contract for sale included all licenses needed to enable the State carry out the National Monument works including site access from all sides.
It should be noted that, whilst NAMA facilitated the transaction, the sale was ultimately a commercial matter between the owner of the properties and the Department of Arts, Heritage and the Gaeltacht as purchaser and therefore questions relating to the commercial aspects of that transaction should be addressed to those parties.
The sale to the State has meant that the Moore Street National Monument has now come into public ownership and the long-term future of this historical landmark is secured. I am also aware that the 1916 Commemorative Centre is planned to be developed on the site and will be run as a public facility with access for citizens and visitors. The new Commemorative Centre will also enhance and complement the 1916 visitor facility currently being developed in the GPO.
I trust the Deputy, and all those with an interest in the history of the 1916 Rising, will welcome this information.
128. Deputy Billy Timmins asked the Minister for Finance if he has had any discussions with the financial institutions with respect to their policy on uncashed bank drafts; and if he will make a statement on the matter. [32881/15]
View answerI have not had discussions with the financial institutions with respect to their policy on uncashed bank drafts, nor do I have a statutory function in this matter. I have contacted the Central Bank and they do not have readily available information on the amount of money in uncashed bank drafts.
I am informed that the number of bank drafts in issuance is small, and the evidence suggests that it is in steady decline. According to the Central Bank, bank drafts represented 3.4% of all cheques issued in 2012, and just 1.7% in 2014. Over this time, the total number of cheques issued annually declined by around 20%, with the survey suggesting that approximately 1 million bank drafts were in issuance in 2014. Of these bank drafts, approximately 59% of the beneficiaries were consumers, 28% were SMEs, while the beneficiaries of the remainder (13%) were public sector bodies or large companies.
This drop in usage would suggest that transactions which would have historically been done by bank draft are increasingly being executed electronically through Electronic Funds Transfer (EFT) which is a more efficient transfer mechanism.
129. Deputy Pearse Doherty asked the Minister for Finance if he will provide an update on the liquidation process at the Irish Bank Resolution Corporation; and his views on whether the junior bondholders will receive payment during the process, the timeframe envisaged for such payments and the amounts estimated to be due. [32861/15]
View answerSignificant progress has been made to date in winding up the affairs of IBRC but further work remains.
A progress update report was published in March 2015, which is available on the Department of Finance website, this highlights the progress which has been made since the liquidation of IBRC in February 2013 while also highlighting the key tasks remaining in the liquidation.
While it is too early at this stage to advise on the likely timeframe for conclusion of the liquidation of IBRC, I can confirm that the liquidation of IBRC can only be concluded once all assets are realised, all creditor claims have been resolved (including those subject to litigation) and all surplus funds have been distributed to creditors. This process is ongoing.
As the Deputy is aware, the Special Liquidators published advertisements and wrote to all those known creditors in order to finalise their claims in the special liquidation of Irish Bank Resolution Corporation Limited. Creditors in the UK and Ireland had until 31 March 2015 to submit their claims and those creditors in the US had until 31 May 2015 as part of this process. I understand that subordinated bondholders have submitted claims in the region of €285m as part of this process
I am advised by the Special Liquidators that they continue to adjudicate on claims by each creditor class. As the Deputy is aware the payment of proceeds from the liquidation, the costs and expenses of the liquidation, preferred creditors and senior unsecured creditors will all rank in priority to the holders of subordinated debt.
I am advised that it will be some time before the Special Liquidators will be in a final position to advise on the likelihood of payment of proceeds from the liquidation given the ongoing adjudication process of creditor classes, including preferred creditors, other contingent creditor claims which may crystallise from litigation and the level of future receipts from the sale of the remaining assets.
130. Deputy Seán Kyne asked the Minister for Finance in the context of the increasing cost of private rented accommodation, if he will consider reviewing the decision to phase out the tax relief scheme by 2017; and if he will make a statement on the matter. [33011/15]
View answerI assume the Deputy is referring to tax relief in respect of rent paid, which is available at the standard rate to certain individuals renting private accommodation, which is their sole or main residence. Rent relief was introduced in 1982 to alleviate the cost of private rented accommodation for those aged 65 and over. In subsequent years, the relief was extended to all age groups. The level of rent qualifying for relief depends on an individual's marital status and age.
In its 2009 report, the Commission on Taxation was of the view that in the same way as mortgage interest relief increases the cost of housing; rent relief increases the cost of private rented accommodation and, as a result, recommended that rent relief should be discontinued. The relief was abolished in Budget 2011, such that it is no longer available to those that commenced renting for the first time from 08 December 2010. Thus there is a considerable cohort of rental tenants that are currently not entitled to rent relief.
In recognition of the impact that immediate withdrawal of rent relief in its entirety would have on those already in receipt of it, a decision was taken to gradually phase out the relief. The amount of rent that can be relieved is reducing on a gradual basis, culminating in the total withdrawal of the relief for the year 2018 and subsequent years. Tax relief at the standard rate continues to be available on a range of rental amounts depending on age and marital status. The current maximum amounts of rent relievable are €2,400/€1,200 per annum for a married couple/individual over 55 years of age and €1,200/€600 for a married couple/individual under 55 years of age.
In 2013, the cost of this relief was €37.9 million, with 153,100 claimants.
I have no plans to review the original decision in this matter, as I believe that any increase or reintroduction of such relief would end up being priced into the rents demanded by landlords, and thus provide no benefit to tenants.
131. Deputy Pearse Doherty asked the Minister for Finance the expected returns, in dividends or in any other form, from the State’s stake in Allied Irish Banks and Permanent TSB in 2015 and 2016; and if he will make a statement on the matter. [32857/15]
View answerAs the Deputy will be aware the Irish banking system is now in a much stronger position than it has been in recent years. Profits are recovering, balance sheets have been restructured and we have started the process of returning cash to the taxpayer following the huge investments that were made over the 2009-11 period.
In relation to AIB, the State received a cash dividend of €280m in relation to its holding of €3.5 billion of 2009 Preference Shares for the first time in 2015. The State also received interest on its €1.6 billion holdings of Contingent Capital Notes (CoCo) of €160m. The CoCo is scheduled to mature in July 2016 at which point the State will receive its final interest payment of €160m and redemption proceeds of €1.6 billion in capital.
In relation to the Preference Shares, at present we are assuming a further cash dividend of €280m to be received in May 2016 however, as the Deputy will be aware, work is continuing in relation to potential capital restructuring options and sequencing in order to maximise the return of cash to the State from our AIB investments over time. These decisions include considerations around the potential restructuring of the Preference Shares. Any decision in relation to the capital restructuring will have an impact on the expected returns from AIB in the coming year. While this is just the start of the process, it is an essential first step on the road to recovering value for the taxpayer through our remaining shareholding in the bank. I have already confirmed that I will not take any decision in relation to the sale of ordinary shares in AIB in advance of the upcoming election.
In relation to PTSB, in 2015 the State recouped €509 million in capital receipts from the sale of shares (€98m) and the repurchase of the Contingent Capital Notes or CoCos (€411m) bringing the total capital receipts to c. €1.8 billion since our investment in 2011-2012 and our current shareholding to 74.92%. I have no current plans to sell any of the State's ordinary shareholding in PTSB.
In relation to future ordinary dividends in respect of our outstanding shareholdings in each of the banks, these are a matter for the boards of those institutions having regard to their financial performance and outlook along with their on-going capital and regulatory requirements.
132. Deputy Michael McGrath asked the Minister for Finance if he has signed the remaining provisions of the Credit Union Act 2012 into law; his views on the concerns expressed by the credit union sector in relation to these provisions, particularly regarding the cap on deposits; and if he will make a statement on the matter. [32867/15]
View answerThe Credit Union and Co-operation with Overseas Regulators Act 2012 was signed into law by the President of Ireland on 19 December 2012. Following enactment, different parts of the 2012 Act have been commenced in tranches at different times. This approach was taken, as the Department is cognisant of the fact that credit unions needed time to implement all aspects of the 2012 Act and so has informed the timeline for implementation of the various measures on different dates.
I have been informed by the Central Bank that the draft regulations set out in Consultation Paper 88 (CP88), will be introduced at end December 2015. It is my intention to commence the remaining sections of the 2012 Act on 31 December 2015 in line with the introduction of the regulations. These sections of the 2012 Act, when commenced, will replace, amend or supplement existing sections of the 1997 Act.
My 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.
While it is important to distinguish this division of roles, it is equally important to recognise that both the Registrar of Credit Unions and myself, as Minister for Finance are working together for the safety of members' savings and the security of the credit union sector.
The regulations introduce a maximum individual member's savings limit of €100,000 which will ensure the protection of members' savings and continue to ensure that credit unions' funding is sufficiently diversified and is not dependent on a small number of members.
Following consultation with the credit union sector and representative bodies, the Central Bank amended the transitional arrangement for the savings regulations to provide for credit unions that have individual member savings in excess of €100,000 at the commencement of the regulations to apply to the Central Bank to retain these savings where they can demonstrate that it is appropriate and prudent for them to do so.
As outlined in the Central Bank's feedback statement on CP88, as part of the consultation process I proposed that in the interests of clarity and fairness, credit unions are provided with details of the process of applying for a retention of savings above the limit amount. I have been informed by the Registry of Credit Unions that all credit unions have been contacted giving further information on its application criteria for the retention of savings in excess of €100,000. I welcome the steps that have been taken to provide clarity for credit unions on the criteria for the retention of savings over €100,000 and also welcome the proposed engagement with the representative bodies to seek their comments on the application process.
The Central Bank has further informed me that it is open to working with the credit union sector to ensure that prudent and appropriate business development can be facilitated within the regulatory framework. As set out in the feedback statement on CP88, the Central Bank intends to invite interested parties to discuss business model development in the coming months.
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.
133. Deputy Thomas P. Broughan asked the Minister for Finance the expected interest payments on Irish national debt in 2015 and the projections for the years 2016 to 2020; and if he will make a statement on the matter. [32828/15]
View answerThe most recent forecasts of both National Debt interest and General Government interest expenditure for the period 2015 to 2020 are contained in the 2015 Stability Programme Update (SPU), published by my Department in April of this year.
The relevant information is contained in Table A3, Annex 1 of the SPU and is replicated in the following table for the Deputy's convenience.
|
€ million |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
|
National Debt Interest |
7,142 |
7,194 |
6,941 |
7,050 |
7,008 |
6,879 |
|
General Government Interest |
6,861 |
6,751 |
6,891 |
6,951 |
6,889 |
6,679 |
The National debt interest figures outlined in the table represent the projected cash interest cost of the National debt. National debt interest expenditure for 2015 was projected in April at just over €7.1 billion, a reduction of over €300 million or 4.4 per cent on the 2014 outturn. Notably, this will be the first year-on-year reduction in National debt interest expenditure since 2008 and is largely due to the early repayment of the more expensive portion of loans from the IMF and its replacement with cheaper, market based funding.
National Debt interest expenditure in the first eight months of 2015 was just over €4.5 billion. This represented a year-on-year decline of €306 million or 6.3 per cent primarily because of the reduction in interest payable to the IMF arising from the early repayments. Interest payments to the IMF in the first eight months of this year were over 60 per cent lower than the same period in 2014.
Interest expenditure was €396 million or 8.1 per cent below the Budget 2015 consistent profile at end-August. The early repayment of the full amount of IMF loans subject to the highest rate of charge as well as the pace of those repayments is a significant reason for interest expenditure being below profile. The minimal cash cost in 2015 from this year's bond issuance is another contributory factor.
General Government interest figures on the other hand are prepared on an ESA10 accrual basis and represent the projected interest cost of the wider General Government measure of debt.
Budget 2016 which will be published by my Department next month will contain updated projections for both National Debt interest and General Government interest expenditure.
134. Deputy Pearse Doherty asked the Minister for Finance if he will report on his recent meetings with the banks on the issue of the high standard variable rates paid by Irish mortgage holders; and if he will make a statement on the matter. [32858/15]
View answerAs the Deputy will be aware, I have taken a number of steps to ensure the banks provide real options for mortgage holders facing high repayments. Most recently, I concluded a second series of meetings with the six main lenders on this issue last week.
As you know, back in May I first met with senior management of the six main mortgage lenders and outlined my view that the interest rates being charged to Irish customers were too high. The banks agreed to review their rates and products and, by the beginning of July, to have simple options to reduce monthly mortgage payments for SVR customers. Some of the potential products include lower standard variable rates for existing and new customers, competitive fixed rate products and lower variable rates taking account of loan to value for new and existing customers.
At the subsequent set of meetings which concluded last week I discussed a number of topics with the banks, including a review of the progress that has been made on this issue. The reality is that the majority of the lenders have now put options in place to allow borrowers to reduce their monthly repayments.
I would therefore encourage borrowers to contact their bank to see what is available to them in their particular circumstances or consider moving to another bank if the offer is not satisfactory.
Central Bank research suggests that 21% of existing PDH variable rate mortgage customers could save by switching their provider. I expect that if financial institutions are convinced that there is a threat that they will lose existing customers, they will reduce the rates that they currently charge such customers. In this regard, the Competition and Consumer Protection Commission website www.consumerhelp.ie is a valuable source of information on the rates charged by various financial institutions.
135. Deputy Pearse Doherty asked the Minister for Finance if he will seek a social and economic impact assessment of the Central Bank of Ireland's new rules on mortgage lending; and if he will make a statement on the matter. [32860/15]
View answerThe Central Bank of Ireland, having regard to its mandate to safeguard financial stability, has put in place new macro-prudential measures for residential mortgage lending effective from 9 February 2015. These measures apply proportionate loan-to-value and loan-to-income limits to mortgage lending by regulated financial service providers in the Irish market. The key objective of these regulations is to increase the resilience of the banking and household sectors to the property market and to reduce the risk of bank credit and house price spirals from developing in the future. This is of particular significance for Ireland given that mortgage lending constitutes a large part of overall bank lending. However, it should also be noted that these new macro prudential measures do not reduce the responsibility of lenders to appropriately assess applications for credit nor their requirement to act in the best interests of their customers.
In its submission to the public consultation process undertaken by the Central Bank on its proposals last year, my Department recognised that there was a sound rationale for the introduction of macro-prudential measures in Ireland, but also indicated that it would also be appropriate to keep the particular measures as adopted under review from time to time. While the Central Bank is independent in the setting of such macro prudential measures, this was a point that was recognised by the Bank and it indicated from the outset that it would monitor the impact of the implemented measures ongoing basis, in particular with regard to achieving the stated objectives of the measures and monitoring any unintended consequences. While the macro prudential measures are currently in place for only a short period, I am informed by the Central Bank that this monitoring is on-going and that it will inform any future consideration and decisions in this area. This will require an ongoing evaluation of relevant data and information, including the particular data on residential mortgage lending that lenders are required to submit to the Central Bank under these macro new prudential regulations. Also, on a more general level, the Central Bank will also maintain a continuing research effort to evaluate macro prudential policy to help ensure its optimum deployment.
136. Deputy Pearse Doherty asked the Minister for Finance if he will seek the repayment of tax owed if the European Union Commission finds that Ireland and Apple were engaged in arrangements that amount to State aid or in a scheme to lower the tax liability for Apple in contravention of European Union rules. [32859/15]
View answerLast year, the Competition Directorate of the European Commission announced their intention to open formal state aid investigations into tax rulings provided to a number of companies in various Member States of the European Union.
This announcement is part of a much wider review of tax ruling practice that is currently being undertaken by the European Commission and earlier this year the Commission announced that it was broadening its enquiries to include all Member States.
As the Commission have acknowledged, Ireland has co-operated fully with the process to date and we will continue to do so.
I would like to emphasise that, while the Commission has opened a formal investigation in relation to one particular case involving Ireland, it has not made a final determination in the matter. Ireland provided a detailed and comprehensive response to the Commission investigation demonstrating that the appropriate amount of Irish tax was charged in accordance with the relevant legislation, that no selective advantage was given and that there was no state aid.
While it would not be appropriate to speculate on the outcome at this stage, or on whether the Commission would seek recovery in the event of its making a finding of State aid, I remain of the view that there was no breach of State aid rules in this case and that the legislative provisions were correctly applied.
However, in the event that the Commission forms the view that there was state aid, Ireland is entitled to challenge this decision in the European Courts. As I and my colleagues in Government have already indicated, we will take that course of action, if necessary, to continue to vigorously defend the Irish position.
137. Deputy Richard Boyd Barrett asked the Minister for Finance the meetings his Department has had with the Clearing House Group; if the group has submitted a budget submission to his Department; if so, if it will be made publicly available; and if he will make a statement on the matter. [31770/15]
View answerIFS 2020 which is the Government's strategy for the development of the international financial services industry was launched in March 2015. As part of the implementation of the IFS 2020 strategy new implementation structures were established and the Clearing House Group no longer exists. An Industry Advisory Committee (IAC) represents the financial services industry and a High Level Implementation Committee (HLIC) which is a senior group of civil and public servants represents the public sector. My Department is represented on the HLIC. Minister of State Simon Harris TD chaired a joint quarterly meeting of the IAC and HLIC on 21 September, 2015. No pre-Budget submission has been received from the IAC though individual financial services organisations are free to make such submissions. My Department intends to publish Pre-Budget Submissions once the Budget and Finance Bill process is completed.
138. Deputy Thomas P. Broughan asked the Minister for Finance the position regarding the Lux leaks tax scandal; the inquiries his Department has made in relation to Irish-based account holders in the decade prior to 2010 and in the years since 2011; and if he will make a statement on the matter. [32827/15]
View answerIn November and December 2014, the International Consortium of Investigative Journalists ('ICIJ') published a large volume of confidential documentation relating to agreements approved by the Luxembourg Authorities on behalf of more than 340 companies worldwide. The documents cover the period from 2003 to 2011. The published documentation is very extensive and includes materials relating to 42 Irish entities (that is, Irish companies or Irish subsidiaries or branches of foreign multinationals).
Following the revelations the Revenue Commissioners decided to look at the material relating to the Irish based entities and enquire into the circumstances of the transactions to see if they could ascertain whether the Irish tax system was being abused in any fashion (either by way of tax evasion or tax avoidance or to see if the transactions gave rise to any tax policy concerns that might need to be addressed through legislative action).
I understand that Revenue reviewed the documentation on the ICIJ website and issued enquiry letters to every Irish entity mentioned in the documentation.
I am informed by the Revenue Commissioners that they are currently examining the relevant transactions, the responses received from the Irish entities and any tax issues arising. When this examination is finished, Revenue will decide on what further action is necessary (for example, if a Revenue audit is appropriate in any of the cases).
In addition, I am informed by the Revenue Commissioners that they propose to write to my Department and provide it with a high level outline of the outcome of their enquiries, with a particular emphasis on highlighting any tax policy issues for Ireland that might be identified.
Naturally, Revenue, for confidentiality reasons, will not be in a position to provide me with specific details in respect of individual companies. However, I am assured by the Revenue Commissioners that they will provide sufficient anonymised descriptions of the types of transactions involved and the possible impacts, if any, that such transactions could pose to the Irish tax system.
The ICIJ documentation relates to certain (not all) tax rulings provided by the Luxembourg tax authorities up to the year 2011. As respects any possible additional tax rulings made by the Luxembourg tax authorities for, or in connection with, Irish related entities since 2011, under current legislation Revenue cannot identify or investigate such rulings, unless further information is made public.
However, the EU Council is currently discussing a proposed Directive for the automatic exchange of information on advance cross-border rulings (that is, tax rulings made by one Member State that may impact on the tax base of another Member State). Discussions on this proposal are now at an advanced stage and Ireland fully supports the proposal. Part of the proposal is for a look back period of 5 years to apply. In other words, the directive would apply to cross border tax rulings made in the 5 year period immediately before the Directive comes into force.
139. Deputy Clare Daly asked the Minister for Finance the specific measures he has taken to amend section 10A of the Local Property Tax Act, as amended in 2012, in order that residents can access their local property tax exemption for pyrite without having to carry out an infill test, a criterion which he is on record for over a year as stating would be addressed. [32832/15]
View answerSection 10A of the Finance (Local Property Tax) Act 2012 (as amended) provides for a temporary exemption of at least three years from the charge to Local Property Tax (LPT) for residential properties that have been certified under Regulations made by the Minister for the Environment, Community and Local Government (S.I. No 147 of 2013) as having "significant pyritic damage".
Revenue administers applications for exemption from LPT for residential properties that have been certified as having "significant pyritic damage". The property owner is specifically required to support a claim for the exemption by submitting a certificate, to Revenue, issued by a competent person as detailed in I.S. 398 Reactive pyrite in sub-floor hardcore material Part 1: Testing and categorisation protocol, published by the NSAI.
As the Deputy is aware, I initiated a review of the operation of the Local Property Tax (LPT) earlier this year. The Review was carried out by Dr Don Thornhill who chaired the Inter-Departmental Group on the Design of a local property tax in 2012. While Dr Thornhill's current review focussed mainly on the issue of property price developments, it also considered and made recommendations on a limited number of other issues relating to the efficient and effective operation of LPT. I considered it appropriate that Dr Thornhill's review included the operation of the pyrite exemption for Local Property Tax.
It was made clear during the passage of the Finance (Local Property Tax) (Amendment) Act in 2013 that the exemption would be restricted to properties with significant pyritic damage, and that not all damaged properties could avail of the exemption. Regulations made by the Minister for the Environment, Community & Local Government in relation to testing/certification and the NSAI protocol were published in May 2013 and these restricted the LPT exemption to properties with 'significant pyritic damage' where such damage had been proven by the appropriate testing and subsequently certified.
Before its establishment, it would have been envisaged that the Pyrite Remediation Board (PRB) would have remediated those properties that would have qualified for a LPT exemption and that the requirement to have the level of pyrite damage verified and certified would be a pre-condition for remediation. However, it transpired that only properties with a damage condition rating of 2 are being accepted for remediation by the PRB. Also, I understand that the PRB is not testing and certifying all properties that are being remediated. This gives rise to two issues; firstly, properties with a damage condition rating of 1 (with progression) are not being accepted for remediation by the PRB and, secondly, not all properties that are accepted for remediation are tested and certified. A property owner who might have only a damage condition rating of 1, or 1 (with progression established by a second test), and who wants to claim the LPT exemption has to spend €1,500 to €2,000 on testing and certification. Properties with a damage condition rating of 2 are accepted for remediation but are not eligible for the LPT exemption unless as they have the required certificate.
The outcome of Dr. Thornhill's Review has been presented to me in report form and is currently being considered and will be published on Budget day. I will outline my response to this very important issue on Budget Day.
Any resolution to the pyrite issues may necessitate a change in the relevant provisions of the Finance (Local Property Tax) Act 2012 (as amended) and/or the Finance (Local Property Tax) (Pyrite Exemption) Regulations 2013. If legislative change is required, then I will examine the possibilities for its advance application on an administrative basis with the Revenue Commissioners.
140. Deputy Michael McGrath asked the Minister for Finance his views regarding the Supreme Court ruling as a result of which a financial institution may be granted an order for home repossession, even if that institution has failed to comply with the code of conduct on mortgage arrears; and if he will make a statement on the matter. [32865/15]
View answerI hope the Deputy will allow a longer than usual answer to this PQ, but he has raised an important issue and I think it is important to address it fully.
The Code of Conduct on Mortgage Arrears (CCMA) is a statutory code issued under Section 117 of the Central Bank Act, 1989. It is worth noting that the statutory regime pursuant to which the CCMA was made has since been updated, as indeed has the version of the CCMA which was applicable in this case. The CCMA applies to all regulated mortgage lenders operating in the State when dealing with borrowers facing or in mortgage arrears on their primary residence, including any mortgage lending activities outsourced by these lenders.
Where breaches of any regulatory requirements occur, firms and/or individuals can expect vigorous investigation and follow through by the Central Bank. The Central Bank regularly conducts themed inspections to ensure compliance with all of its codes of conduct, including the CCMA. Breaches of regulatory requirements are dealt with using appropriate supervisory powers, including Administrative Sanctions powers, where appropriate.
There is no legal issue, therefore, over whether or not regulated entities are to comply with this statutory code. Lenders are required to comply with all aspects of the CCMA and non-compliance with the CCMA is enforceable against regulated entities by the Central Bank. The precise issue that arose before the Courts was the extent to which non-compliance with the CCMA could be adjudicated by the Courts in a repossession case between a lender plaintiff and a borrower defendant. In that regard, the Supreme Court found that where a breach of the CCMA involves a failure of the lender to abide with the moratorium referred in the CCMA, but in no other circumstances, non-compliance with the CCMA affects a relevant lender's entitlement to obtain an order for possession. Following on from this, a breach of any other aspect of the CCMA does not in itself adversely affect a lender's contractual right to possession in the circumstances of mortgage default.
The Supreme Court found that the CCMA prohibited lenders from seeking an order for possession where the moratorium was not complied with but that it did not prohibit the seeking of an order for possession in other circumstances. The Supreme Court has therefore ruled that where the Code of conduct prohibits the seeking of an order for possession the Courts will enforce that prohibition. To quote from the judgement of the Supreme Court:
"A financial institution which, entirely ignoring the provisions of the Code in that regard, simply went ahead and sought possession as soon as it was legally entitled so to do would be doing the very thing which the Code is designed to prevent. For a court to entertain an application for possession which was brought in circumstances of clear breach of the moratorium would be for a court to act in aid of the actions of a financial institution which were clearly unlawful (by being in breach of the Code) and in circumstances where the very act of the financial institution concerned in seeking possession was contrary to the intention or purpose behind the Code itself."
Where the code does not so prohibit and where it is not illegal for an order of possession to be sought then it is not a matter in which the Courts will intervene: It should be noted that the purpose of the CCMA is primarily to regulate the behaviour of the lenders concerned and it is principally a matter for the Central Bank to enforce the code and to regulate that behaviour rather than for the Courts.
I am pleased to note that the Supreme Court decision has in fact recognised that the CCMA forms part of the law and that a regulated financial institution is obliged, as a matter of law, to obey it. However, it should also be noted that in a repossession case before the Courts a borrower's rights are not confined to the provisions of the CCMA.
The 2013 Land and Conveyancing Law Reform Act has provided a new statutory right to borrowers in a repossession case involving a primary dwelling to seek an adjournment of the repossession case to allow the borrower the opportunity to consider and, if so decided, to propose a Personal Insolvency Arrangement (PIA) to creditors in order to resolve an unsustainable debt position. If this is approved by the Court, the debtor would then be in a position to formally propose an alternative and sustainable payment arrangement irrespective of whether or not the primary home lender considered or rejected such an arrangement under the CCMA. Also, under a PIA there is an onus on the personal insolvency practitioner to, insofar as is reasonably practicable, formulate a proposal on terms that will not require the debtor to dispose of an interest in, or cease to occupy, a private principal residence. Even if such a PIA proposal is rejected by creditors, the Personal Insolvency Act has now been amended to provide that the proposal can then be submitted to a Court for adjudication.
I appreciate the genuine concerns Deputies may have regarding the implications of the particular decision for borrowers in genuine difficulty with a mortgage on their own home. While the full implications of the decision can be considered further, I think the effect that most concerns Deputies (that banks would not be obliged to consider any alternative repayment arrangements to address a mortgage difficulty), can be practically addressed by the Central Bank utilising its existing powers. In any event the recent changes to the Land and Conveyancing Act and the Personal Insolvency Act has given a statutory right to a borrower to propose a sustainable solution to creditors, or failing that a court, as an alternative to repossession.
141. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains confident that economic progress is set to continue over the next five years, with particular reference to the encouragement of a well-balanced and integrated economy spread evenly throughout the country; and if he will make a statement on the matter. [32882/15]
View answerIn the Spring Economic Statement, published in April of this year, my Department forecast that the economy would grow by 4 per cent in 2015 and 3.8 per cent in 2016. On the basis of strong quarterly national account results for the first and second quarters of this year, these projections will be revised upwards in the macroeconomic forecasts which will be published with the Budget in mid-October. Importantly, economic growth is now better balanced with exports and domestic demand set to make a strong positive contribution to growth, with growing employment and rising household incomes resulting in an increase in private consumption the sacrifices made are now paying dividends.
Over the medium term, my Department expects that the economy can grow by around 3 per cent per annum on a sustainable basis. Achieving these growth rates is contingent upon many factors including trading partner growth and continued improvements in competitiveness.
As set out in the Spring Economic Statement, the Government is using all policy instruments available to build sustainable public finances, improve access to credit and reform the income tax system. A carefully targeted capital investment plan will be used to alleviate supply side bottlenecks and barriers to growth. The Ireland Strategic Investment Fund and the Strategic Banking Corporation of Ireland will also contribute in this regard. We have laid the foundations for a solid recovery with strong gains in our international competitiveness. We are also stimulating employment growth through the Action Plan for Jobs and ensuring that as many of those jobs as possible are filled by the unemployed though the Pathways to Work programme which provides work experience , education and training for the jobs of tomorrow.
We can now clearly see an economy that is moving up a gear but I am conscious that economic recovery has not filtered through to all. The recently announced Village and Town Renewal Scheme is being introduced as part of a concerted effort to support the development and revitalisation of an integrated economy spread evenly throughout the country. A budget of €30m over 5 years from 2016 is a component of a broader approach to rural development but also to improve the environment of rural dwellers in a way that will increase their quality of life and simultaneously support potential economic activity in their area.
In summary, I am confident that significant economic progress can be made in the years ahead. But crucially, this is contingent upon implementing appropriate polices. That is what the Government intends to do.
