Written Answers Nos. 170-179
170. Deputy Thomas P. Broughan asked the Minister for Finance his plans to ease lending regulations on credit unions, particularly for loans of €1,000 or less; and if he will make a statement on the matter. [39011/15]
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. The imposition of lending restrictions is a matter for the Central Bank who have informed me that there are no credit unions with lending restrictions on loans of €1,000 or less.
Under the European Communities (Consumer Credit Agreements) Regulations 2010 (S.I. No 281 of 2010) transposed into Irish law on 11 June 2010, before concluding a credit agreement with a consumer, a creditor shall assess the consumer's creditworthiness on the basis of sufficient information. The scope of these regulations includes credit agreements where the loan amounts are between €200 and €75,000.
I have also been informed by the Central Bank that while the important role of credit unions within their communities and, of course, that many members have a demand for credit is fully accepted, from a regulatory perspective it is important that credit unions are prudent in how they lend money, particularly as it is the money of the saving members of credit unions that is ultimately lent to borrowing members. Ensuring that those borrowers can repay is paramount in the protection of those savings. Accordingly, the Central Bank expects credit unions to apply prudent lending standards to the granting of all new loans or top-ups of existing loans and to have systems in place to ensure that such applications are fully assessed to confirm the member's creditworthiness.
The Central Bank has further informed me 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. The majority of lending restrictions in place enable credit unions to lend amounts in the range of €10,000 to €30,000 and these are reviewed on a regular basis to determine whether or not they are still set at appropriate levels.
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, could apply for a review of their lending restriction. The closing date for receipt of applications to review lending restrictions under this initiative was 30 September 2015. 59% of those applications received have been reviewed by the Central Bank. Of the applications which have been fully reviewed, 83% have had their lending restriction lifted and are now operating under the board's stated credit risk appetite. Approximately 40% of credit unions that applied, submitted their application in September. These applications are currently under review.
Currently approximately 39% of credit unions have a lending restriction compared with 52% at the start of the review process.
Separately, a pilot to test the effectiveness of a microloan scheme is soon to be launched and will run for six months. The scheme involves offering people receiving social welfare payments small affordable loans from credit unions as an alternative to moneylenders. A Personal Microcredit Implementation Group under the Department of Social Protection is progressing this initiative and over 30 credit unions from around the country are expected to participate. The Department of Finance is represented on this group. Loans will range from €500 - €2,000 in value and will be repayable over 6-24 months with loan repayments deducted automatically from the household budget scheme operated by the Department of Social Protection in conjunction with An Post. The interest rate will be a maximum of 12% a year.
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 continue to support a strengthened and growing credit union movement.
171. Deputy Thomas P. Broughan asked the Minister for Finance if he will increase the lending limit of €25,000 for credit unions; if his officials have examined the possibility and implications of this; and if he will make a statement on the matter. [39012/15]
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. The imposition of lending restrictions is a matter for the Central Bank.
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.
Section 35 of the Credit Union Act, 1997 contains a lending large exposure limit of the greater of €39,000 or 1.5% of total assets. On commencement of new regulations, published in July, the maximum exposure a credit union may have to a borrower, or a group of borrowers who are connected, will be the greater of €39,000 or 10% of the credit union's regulatory reserve.
I have been informed by the Central Bank that while the important role of credit unions within their communities and, of course, that many members have a demand for credit is fully accepted, from a regulatory perspective it is important that credit unions are prudent in how they lend money, particularly as it is the money of the saving members of credit unions that is ultimately lent to borrowing members. Ensuring that those borrowers can repay is paramount in the protection of those savings. Accordingly, the Central Bank expects credit unions to apply prudent lending standards to the granting of all new loans or top-ups of existing loans and to have systems in place to ensure that such applications are fully assessed to confirm the member's creditworthiness.
The Central Bank has further informed me 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. The majority of lending restrictions in place enable credit unions to lend amounts in the range of €10,000 to €30,000 and these are reviewed on a regular basis to determine whether or not they are still set at appropriate levels.
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, could apply for a review of their lending restriction. The closing date for receipt of applications to review lending restrictions under this initiative was 30 September 2015.
59% of applications received have been reviewed by the Central Bank. Of the applications which have been fully reviewed, 83% have had their lending restriction lifted and are now operating under the board's stated credit risk appetite. c.40% of credit unions that applied made their application in September. These applications are currently under review.
Currently approximately 39% of credit unions have a lending restriction compared with 52% at the start of the review process.
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 continue to support a strengthened and growing credit union movement.
172. Deputy Thomas P. Broughan asked the Minister for Finance if he will defer regulation Consultation Paper 88 for credit unions; and if he will make a statement on the matter. [39013/15]
View answer187. Deputy Gabrielle McFadden asked the Minister for Finance if he will address the concerns of a credit union (details supplied) in County Westmeath regarding the planned Consultation Paper 88 regulations which it believes will seriously damage credit unions, restrict their ability to provide services to their members, and restrict their ability to compete with other financial institutions; and if he will make a statement on the matter. [39389/15]
View answerI propose to take Questions Nos. 172 and 187 together.
The Government recognises the distinct and important role that credit unions play in Irish society and the financial sector and is committed, with the Central Bank, to achieving our vision of financially strong, well governed credit unions providing services to current and future members.
Commencement of all sections of the Credit union and Co-operation with Overseas Regulators Act 2012 (2012 Act) has been aligned with the credit union financial year and the introduction of the underpinning Central Bank regulations, with a view to implementation of the 2012 Act in a coherent and cohesive manner. The publication of the regulations marks another important step in the development of a strengthened regulatory framework for credit unions. It is considered that the commencement of the remaining sections of the 2012 Act and implementation of these regulations, combined with and the prudential and governance requirements already in place, provide an appropriate regulatory framework for the credit union sector at this time.
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. I have asked the Registrar of Credit Unions to consider the views of the credit union movement as regards the draft regulations and their implementation and report back to me before I 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 Credit Union Act 1997.
The provision of regulation making powers to the Central Bank on commencement of the remaining sections of the 2012 Act provides flexibility where the Central Bank can, in the future, review and update the regulations as appropriate on a timely basis following consultation. The Central Bank is keen to ensure that the regulations remain appropriate for the credit union sector and in the future, 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 need for credit unions to grow income has been recognised as a requirement for sector viability. While developing new products and services is a necessary element of this, the Central Bank has highlighted the importance of credit unions ensuring that they are in a position to grow their income from their traditional lending business. It is also recognised that there is a level of change in the sector arising from the voluntary restructuring programme.
The Central Bank has informed me that since 2010 it has received less than 10 applications for approval of additional services under sections 48 to 52 of the Credit Union Act 1997. These applications have all been received in recent months and are currently at a various stages of the approval process. The Central Bank further informed me that it is open to working with the credit union sector to ensure that prudent and appropriate development can be facilitated within the regulatory framework. In supporting the sustainable and prudent development of the sector, the Central Bank is working to ensure that proposed changes to the business model are prudently structured and implemented. To that effect the Central Bank has invited a number of interested parties in the credit union sector to participate in focused dialogue in November 2015 with a view to gaining a better understanding of how credit unions want to develop their business model and to identify changes that may be required to the regulatory framework to facilitate prudent development.
I am aware of the concerns highlighted by the credit union sector in relation to the cap on savings of €100,000 and I have requested that the Central Bank provides a clear process for credit unions to follow regarding the application process. I am satisfied that the Central Bank is developing a clear application process with detailed information being made available before end 2015.
Regarding lending restrictions placed on certain credit unions by the Central Bank, the Registrar of Credit Unions announced a review of lending restrictions in February 2015 with a closing date for applications of 30 September 2015. The Central Bank has informed me that 59% of applications received have been reviewed. Of the applications which have been fully reviewed, 83% have had their lending restriction lifted and are now operating under the board's stated credit risk appetite. As of this week c. 40% of credit unions are now subject to a lending restriction. 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 continue to support a strengthened and growing credit union movement.
173. Deputy Thomas P. Broughan asked the Minister for Finance if his Department has met with the Irish League of Credit Unions to discuss the possibility of setting up a credit union-supported, State-backed fund for social housing; if he supports such an initiative in principle; and if he will make a statement on the matter. [39014/15]
View answer174. Deputy Thomas P. Broughan asked the Minister for Finance if his Department has met with the Irish League of Credit Unions to discuss the possibility of the setting up of a credit union-supported, State-backed fund for small and medium enterprises; if he supports such an initiative in principle; and if he will make a statement on the matter. [39015/15]
View answerI propose to take Questions Nos. 173 and 174 together.
I received a document entitled The Social Housing Funding Proposal from the Irish League of Credit Unions (ILCU) on 22 October 2015. Officials from my Department are currently assessing the proposal. I am not aware of any proposal having been received by my Department from the ILCU in relation to credit unions lending to small and medium enterprises.
I have not met with the ILCU regarding these matters. However, officials from my Department are in regular contact with the credit union representative bodies and are always available should the ILCU wish to discuss such matters.
In relation to credit unions establishing such a fund, section 44 of the Credit Union Act, 1997 provides that a credit union may establish a special fund to be used by the credit union for, social, cultural or charitable purposes by a resolution passed by a majority of its members present and voting at a general meeting. Where individual credit unions intend to establish such a fund the Central Bank would expect the credit union to take account of the need to ensure the protection of the funds of its members.
Commencement of the remaining sections of the Credit Union and Co-operation with Overseas Regulators Act 2012 (2012 Act) will replace, amend or supplement existing sections of the 1997 Act and will, in effect, remove some of the requirements (including limits) that currently exist in certain sections and will provide regulation making powers to the Central Bank.
The power to make regulations in relation to investments in projects of a public nature is specifically referenced in legislation and therefore such investments could be facilitated by future regulations, where appropriate, when there are specific proposals put forward by the credit union sector. The Central Bank has informed me that, while to date no specific proposals regarding investment projects of a public nature have been received, the Central Bank is willing to consider such proposals including the type of regulations that would be required to facilitate such proposals.
The Central Bank has further informed me that it is open to working with the credit union sector to ensure that prudent and appropriate development can be facilitated within the regulatory framework. In its role of supporting the sustainable and prudent development of the sector, the Central Bank wants to ensure that any proposed changes to the business models of credit unions are prudently structured and implemented. In relation to development of the business model, as set out in the feedback statement on CP88 the Central Bank will be engaging interested parties in the credit union sector to participate in focused dialogue in the coming months with a view to gaining a better understanding of how credit unions want to develop their business model and to identify whether any changes are required to the regulatory framework to facilitate prudent development.
Given the areas identified in feedback received on CP88 and through other engagements with sector stakeholders the Central Bank proposes that this dialogue will initially focus on the following areas:
- the services credit unions wish to develop in the areas of card services and payment accounts; and
- credit unions' aims regarding longer term lending including further developments on the provision of mortgages to members.
The Central Bank has informed me that it is also open to considering other areas of business model development.
An initial meeting with a number of credit union stakeholders, including the representative bodies and a number of credit union has been scheduled by the Central Bank. The Annual Information Seminars for 2015 will also take place from mid to late November and these will also provide an opportunity for the Central Bank to engage with individual credit unions and hear their views on business development.
175. Deputy Michael McGrath asked the Minister for Finance if it is possible to calculate the amount of annual value added tax receipts from the sale of a certain good (details supplied). [39016/15]
View answer178. Deputy Michael McGrath asked the Minister for Finance if there is discretion at national level to change the age specified in paragraph 10 of Schedule 2 of the Value Added Tax Acts in relation to those goods which are subject to the zero rate, or whether European Union approval is required; and if he will make a statement on the matter. [39136/15]
View answer179. Deputy Michael McGrath asked the Minister for Finance the basis of a particular Revenue Guidance Note (details supplied); and if he will make a statement on the matter. [39137/15]
View answerI propose to take Questions Nos. 175, 178 and 179 together.
The VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. The zero rate of VAT applies to the supply of articles of:
- children's personal clothing not exceeding the size appropriate to children of average build of 10 years of age; and
- children's personal footwear not exceeding the size appropriate to children of average foot size of 10 years of age.
Certain items of children's clothing and footwear are excluded from the application of the zero rate and remain taxable at the standard rate of VAT.
In the practical administration of the measure, the zero rating applies according to the following criteria:
- children's clothing of sizes up to and including 32" chest or 26" waist; and
- children's footwear up to and including size 5½ (38 continental or equivalent).
These sizes were determined in 1984 after consultation with clothing and footwear trade interests at both manufacturing and distribution levels.
Ireland's application of the zero rate of VAT to children's clothing and footwear derives from the derogation under Article 110 of the EU VAT Directive. Under that provision Ireland may retain the zero rate on goods and services which were in place on 1 January 1991. EU VAT law precludes Ireland from extending the zero rate to new goods or services as this would increase the divergence of VAT rates among the Member States. It is not therefore possible to extend the application of the zero rate by raising the age limit of children to whom the zero rate could apply in respect of articles of clothing and footwear. If there were satisfactory evidence that average shoe and clothing sizes for 10 year olds have changed since 1984, then the Revenue Commissioners could review the matter and adjust them if warranted.
Furthermore, I am informed by the Revenue Commissioners that it is not possible to furnish precise figures of the amount of VAT received from the sale of footwear as outlined in the Deputy's question. This is due to the fact the information provided to Revenue on VAT returns does not require the yield from individual products or activities to be identified. While Revenue on occasion uses detailed Central Statistics Office consumption or expenditure information for VAT estimates, neither is this sufficiently detailed for the purpose requested by the Deputy.
176. Deputy Michael McGrath asked the Minister for Finance the amount of value added tax receipts from the sale of new residential units in 2013, 2014 and in 2015 to date. [39077/15]
View answerI am informed by the Revenue Commissioners that the approximate yield from VAT on new residential units for 2013, 2014 and to date in 2015 is as set out below.
Please note that VAT receipts are estimated based on stamp duty returns, as VAT returns do not require the yield from a particular activity or product to be identified.
|
Year |
Estimated VAT Yield €m |
|
2013 |
78 |
|
2014 |
135 |
|
2015, to date |
144 |
177. Deputy Áine Collins asked the Minister for Finance the options available for a couple in mortgage distress who have been working with the Irish Mortgage Holders Association for the past two years but who are unable to get a long-term payment plan. [39126/15]
View answer192. Deputy Brendan Griffin asked the Minister for Finance his views on the treatment of mortgage holders who are in arrears by lenders who persistently correspond with, call and pressurise customers, even though the customers have repayment agreements in place; and if he will make a statement on the matter. [39517/15]
View answerI propose to take Questions Nos. 177 and 192 together.
The Deputy will be aware that it is not appropriate for me to intervene directly in a dispute between an individual borrower and any financial institution. Having said that, the CCMA provides a strong consumer protection framework to ensure that each borrower who is struggling to keep up mortgage repayments is treated in a timely, transparent and fair manner. Consumers, and the Central Bank of Ireland (the 'Central Bank'), must have confidence that lenders will act in the best interests of consumers and that they will treat them fairly and with dignity and respect.
The essence of the CCMA framework is to ensure that borrowers in arrears are treated fairly by their lenders. It contains requirements around communications by lenders with borrowers, including that communications must not be aggressive, intimidating or harassing and that borrowers must be given sufficient time to complete an action they have committed to before follow-up communication is attempted.
Furthermore, under the Central Bank's Consumer Protection Code (the Code) all regulated entities must have a written procedure in place for the handling of complaints by consumers. If a borrower is dissatisfied with the way they have been treated by their lender, they should submit a formal complaint in writing to the institution. If the borrower remains dissatisfied with the outcome of the complaint investigation he/she may refer the issue to the Financial Services Ombudsman (FSO), a statutory officer who deals independently with unresolved complaints from consumers about their individual dealings with all regulated financial service providers.
