Written Answers Nos. 113 - 134
113. Deputy Danny Healy-Rae asked the Minister for Finance to ensure that the 9% value added tax rate is retained for the hospitality sector to safeguard tourism; and if he will make a statement on the matter. [16718/16]
View answer116. Deputy Pearse Doherty asked the Minister for Finance further to the statement in the document, Minister's Brief 2016, about the reduced value added tax rate for the hospitality sector, the general recovery of the economy and increasing prices in the sector raises questions about its future, his plans in this regard; and if he will make a statement on the matter. [16729/16]
View answer126. Deputy Imelda Munster asked the Minister for Finance his plans to raise the rate of value added tax for the tourism sector. [16830/16]
View answerI propose to take Questions Nos. 113, 116 and 126 together.
The 9% reduced VAT rate for tourism related services was introduced in July 2011 as part of the Government Jobs Initiative. The measure was designed to boost tourism and create additional jobs in that sector. In my Budget Day speech last year, I suggested that while the case for retaining the measure for the hotel sector in Dublin is diminishing each year with room rates rising particularly during major events, the case for retention of the measure for the rest of the country remained. The Programme for a Partnership Government published in May, includes a commitment to retain the hugely successful 9% VAT rate on tourism related services, providing that prices remain competitive.
114. Deputy Pearse Doherty asked the Minister for Finance the number of companies which participated in the research and development tax credit scheme, the amounts they claimed and the number of jobs they created under the scheme in each of the years 2013 to 2015, in tabular form; and if he will make a statement on the matter. [16727/16]
View answerI am informed by Revenue that statistics regarding the tax cost and number of claims for the Research and Development tax credit are available on the Revenue Statistics webpage at
http://www.revenue.ie/en/about/statistics/costs-expenditures.html. Information for the tax year 2015 is not yet available as tax returns for this year are not due to be returned in many cases until later in 2016.
It is not possible to provide data on the number of jobs created as this information is not required on the tax return.
115. Deputy Pearse Doherty asked the Minister for Finance further to the statement in the document, Minister's Brief 2016, given its significance in revenue raising, that changes to the universal social charge would likely require the introduction of other discretionary revenue raising measures to fund it, what are these discretionary measures and when he envisages their implementation; and if he will make a statement on the matter. [16728/16]
View answerThe Summer Economic Statement published by Government today reflects the tax and spending priorities set out in the Programme for a Partnership Government (PPG). As the Deputy is aware, there is a commitment in the PPG to ask the Oireachtas to continue to phase out the USC as part of a wider medium-term income tax reform plan that keeps the tax base broad, reduces excessive tax rates for middle income earners, and limits the benefit for high earners. Reductions will be introduced on a fair basis with an emphasis on low and middle income earners.
The PPG states that reductions in personal tax rates - such as the phasing out of the USC needed to reward work and support enterprise and employment will be funded largely through:
- Extra revenues from not indexing personal tax credits and bands
- The removal of PAYE tax credit for high earners and other measures to ensure the tax system remains fair and progressive
- Higher excise duties on cigarettes and increased enforcement and sanctions on the illegal importation and sale of cigarettes
- Increased enforcement and sanctions on fuel laundering
- A new tax on sugar sweetened drinks
- Improving tax compliance
Work on development of the medium-term income tax reform plan is ongoing and as such the expected cost is not yet finalised. It is due to be published for consultation with the Oireachtas Committee on Finance in July, and for approval by the Oireachtas in October.
The revenue to be raised by planned offsetting tax changes, such as a sugar-sweetened drinks tax for example, will depend on, among other things, the rate at which the tax is set and the scope of its application. These issues are budgetary matters which will be determined through the budgetary process.
The income tax reform plan will aim to support job creation and reward work which is a key driver of growth and prosperity in the economy. In developing the plan, available resources will be a key consideration along with safeguarding the economic stability of the public finances and the wider economy.
117. Deputy Pearse Doherty asked the Minister for Finance further to the statement in the document, Minister's Brief 2016, about work his Department is doing on pensions, work on developing and introducing a workable system, including a tax or other State incentive, if he will elaborate on what he means by other State incentive and comment on his determination of the sustainability of current pension tax reliefs over the coming years; and if he will make a statement on the matter. [16730/16]
View answerThe context in which the particular references to the pension issues of interest to the Deputy were raised in the briefing document was in relation to the development of a universal retirement savings system for that half of the Irish workforce who do not have supplementary pension coverage.
Officials of my Department, together with those of other Government Departments and Agencies (as well as representatives from other organisations), have been involved in the work of the Universal Retirement Savings Group (URSG) which was established last year under the aegis of the Department of Social Protection to develop a roadmap and timeline for the introduction of a new retirement savings system to progressively achieve universal pension with particular focus on the lower paid. The scope and direction of the work of the URSG is a matter, in the first instance, for the new Minister for Social Protection, Mr. Leo Varadkar TD, who has indicated that the development of a universal retirement savings system will be a priority for his Department.
The development of a system, as referred to above, would be a long-term project which, in order to be successful, would have to involve appropriate decisions being taken by Government over time on detailed key design, operational and administrative structures. Among the many issues that would have to be decided, in this context, is the extent and nature of any State support for pension savers in such a system. While I see no reason, at this point, to change from the marginal rate relief incentive on pension contributions which applies for current pension savers, arguments have been put forward in the past, for example, for a system of direct subvention or matching contributions to pension savings to be made by the State as opposed to the provision of tax relief. I would be open to examining and considering, without prejudice, any case that might be made in this regard and this is what the reference to "other State incentive" in the briefing document is getting at.
As regards the sustainability of current pension tax reliefs, I would point out that the estimated annual cost of tax reliefs on pension contributions, based on the statistical data published by the Revenue Commissioners and available on the Revenue website, has fallen considerably in the period since 2008. Among the reasons for this, is the range of measures taken over the years to restrict the reliefs on pension contributions, particularly for higher earners.
118. Deputy Joan Collins asked the Minister for Finance the details of the Bilderberg meeting held recently in Germany, including who attended, what was discussed, the minutes of the meeting and if he attended on behalf of the Government. [16733/16]
View answerI attended the Bilderberg meeting from 10-12 June 2016 in Dresden, Germany. I, like a number of European ministers, was invited to attend given my position as Minister for Finance. For further information, I would point the Deputy to the Bilderberg Meetings website (www.bilderbergmeetings.org) which includes information on the organisation's governance, steering committee, meetings, attendees, agendas and associated press releases. At this meeting and its workshops I took the opportunity to set out to my fellow attendees the opportunities that exist in Ireland for investors and multinational companies.
The Government is focussed on encouraging and supporting foreign direct investment into Ireland to provide jobs and continue to support economic growth. In January of this year, the IDA announced the highest level of employment in its client companies in its 67 year history. IDA client companies created 18,983 new jobs in 2015. These results mean that more than one-in-five private sector jobs in the economy are as a result of government supported FDI. I would point out to the Deputy that a number of the business attendees represented companies which have very significant investments in Ireland that support thousands of Irish jobs.
119. Deputy Pearse Doherty asked the Minister for Finance the meetings he held at the Bilderberg conference in 2016 including their agendas and who attended; and if he will make a statement on the matter. [16766/16]
View answerI attended the Bilderberg meeting from 10-12 June 2016 in Dresden, Germany. I, like a number of European ministers, was invited to attend given my position as Minister for Finance. For further information, I would point the Deputy to the Bilderberg Meetings website (www.bilderbergmeetings.org) which includes information on the organisation's governance, steering committee, meetings, attendees, agendas and associated press releases. At this meeting and its workshops I took the opportunity to set out to my fellow attendees the opportunities that exist in Ireland for investors and multinational companies.
The Government is focussed on encouraging and supporting foreign direct investment into Ireland to provide jobs and continue to support economic growth. In January of this year, the IDA announced the highest level of employment in its client companies in its 67 year history. IDA client companies created 18,983 new jobs in 2015. These results mean that more than one-in-five private sector jobs in the economy are as a result of government supported FDI. I would point out to the Deputy that a number of the business attendees represented companies which have very significant investments in Ireland that support thousands of Irish jobs.
120. Deputy Michael McGrath asked the Minister for Finance the number of settlements the Revenue Commissioners reached in 2014 and 2015 with high-net-worth individuals, HNWI, that contained a clause guaranteeing that the details of the settlement would not be published; why the Revenue Commissioners enter into non-disclosure agreements; his plans to review the policy in relation to non-disclosure of large settlements; and if he will make a statement on the matter. [16796/16]
View answerI am informed by Revenue that non-publication of a tax settlement applies only where the details of the settlement are specifically excluded from publication by virtue of provisions of Section 1086 of the Taxes Consolidation Act, 1997 as set out in Revenue's Code of Practice for Revenue Audit http://www.revenue.ie/en/practitioner/codes-practice.html. I am advised by Revenue that there is no separate non-publication procedure operated by them for any particular class of taxpayer.
I am also advised by Revenue that their records relating to tax settlements where non-publication arose by virtue of the provisions of Section 1086 of the Taxes Consolidation Act 1997 do not separately identify settlements with individuals who may be described as high net worth individuals.
121. Deputy Pearse Doherty asked the Minister for Finance the number of prosecutions which have been brought against lenders for irresponsible lending in breach of Article 8(1) of the credit agreements for consumers' directive; and if he will make a statement on the matter. [16798/16]
View answerI presume the Deputy is referring to Statutory Instrument 281 of 2010 European Communities (Consumer Credit Agreements) Regulation 2010 (which transposed Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC). Regulation 11 of the Statutory Instrument transposed Article 8(1) the "Obligation to assess creditworthiness of consumers".
I am advised by the Central Bank that it has not taken any sanctions against lenders for breaches of Regulation 11.
122. Deputy Fergus O'Dowd asked the Minister for Finance his views on a matter (details supplied) regarding tax relief on social housing loans; and if he will make a statement on the matter. [16816/16]
View answerSome of the details supplied in connection with this question are unclear. However, it would appear to refer primarily to a proposal to allow tax relief on the capital repayment element of a loan for new social housing.
The Deputy will be aware that I introduced a new tax relief in Finance Act 2015 which allows a full 100% mortgage interest deduction where a landlord undertakes, for a period of at least three years, to provide accommodation to tenants in receipt of social housing supports. This is in place of the 75% cap on mortgage interest relief deductibility which normally applies in respect of rented residential properties. The relief is designed to incentivise landlords to commit to letting their property to tenants in receipt of social housing supports over the longer term, thereby improving the stability of supply of property to such tenants.
This relief was one element of an overall package of measures designed by the Government aimed at stabilising rent and boosting supply in the housing market which, in my view, is the most appropriate and effective route to addressing rental price increases driven by supply constraints. To extend this relief further to allow for a deduction for the capital repayment element of a mortgage, as proposed in the Deputy's question, would in effect see the State fully subsidise the purchase by a private individual of a residential rental investment property. I do not believe that this would be an appropriate use of State resources at this time.
In relation to social housing, the Deputy will be aware that there are a number of non-tax commitments in the Programme for a Partnership Government, including a commitment to significantly increase and expedite the delivery of social housing units.
123. Deputy Peadar Tóibín asked the Minister for Finance if he will broaden the criteria for granting a tax relief (details supplied). [16821/16]
View answerThe Disabled Drivers and Disabled Passengers (Tax Concessions) Scheme provides relief from VAT and VRT (up to a certain limit) on the purchase of an adapted car for transport of a person with specific severe and permanent physical disabilities, payment of a fuel grant, and an exemption from Motor Tax.
To qualify for the Scheme an applicant must be in possession of a Primary Medical Certificate. To qualify for a Primary Medical Certificate, an applicant must be permanently and severely disabled within the terms of the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994 and satisfy one of the following conditions:
- be wholly or almost wholly without the use of both legs;
- be wholly without the use of one leg and almost wholly without the use of the other leg such that the applicant is severely restricted as to movement of the lower limbs;
- be without both hands or without both arms;
- be without one or both legs;
- be wholly or almost wholly without the use of both hands or arms and wholly or almost wholly without the use of one leg;
- have the medical condition of dwarfism and have serious difficulties of movement of the lower limbs.
The Senior Medical Officer for the relevant local Health Service Executive administrative area makes a professional clinical determination as to whether an individual applicant satisfies the medical criteria. A successful applicant is provided with a Primary Medical Certificate, which is required under the Regulations to claim the reliefs provided for in the Scheme. An unsuccessful applicant can appeal the decision of the Senior Medical Officer to the Disabled Drivers Medical Board of Appeal, which makes a new clinical determination in respect of the individual. The Regulations mandate that the Medical Board of Appeal is independent in the exercise of its functions to ensure the integrity of its clinical determinations. After six months a citizen can reapply if there is a deterioration in their condition.
The Scheme represents a significant tax expenditure. Between the Vehicle Registration Tax and VAT foregone, and the repayment of excise on fuel used by members of the Scheme, the Scheme represented a cost of €50.3 million to the Exchequer in 2015, an increase from €48.6 million in 2014. These figures do not include the revenue foregone to the Local Government Fund in the respect of the relief from Motor Tax provided to members of the Scheme.
I am aware that the Ombudsman has made comments regarding the eligibility criteria of the Disabled Driver and Disabled Passengers Scheme. The Ombudsman stated that, in his opinion, the criteria were narrowly focused and prescriptive. The Scheme and qualifying criteria were designed specifically for those with severe physical disabilities and are, therefore, necessarily precise.
I recognise the important role that the Scheme plays in expanding the mobility of citizens with disabilities. I have managed to maintain the relief at current levels throughout the crisis despite the requirement for significant fiscal consolidation. From time to time I receive representations from individuals who feel they would benefit from the Scheme but do not qualify under the six criteria. While I have sympathy for these cases, given the scale and scope of the Scheme, I have no plans to expand the medical criteria beyond the six currently provided for in the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994.
124. Deputy Pearse Doherty asked the Minister for Finance if he still intends to appeal the decision in the event of the European Union ruling that a company (details supplied) should repay tax to Ireland; and if he will make a statement on the matter. [16828/16]
View answer125. Deputy Pearse Doherty asked the Minister for Finance if he has met directly with the European Commission regarding its ongoing investigation into the tax affairs of a company (details supplied) here; and if he will make a statement on the matter. [16829/16]
View answerI propose to take Questions Nos. 124 and 125 together.
In June 2014, the Competition Directorate of the European Commission announced its intention to open formal state aid investigations into tax rulings provided to a number of companies in various Member States of the European Union. Since October 2015, investigations in three other Member States have concluded. In each of these cases the Commission found that the Member States granted an illegal State Aid to the companies in question.
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. While there is no formal timeline for a when the final decision will be made in our case, I am aware of speculation about a possible decision in July.
This a priority matter and Ireland has co-operated fully with the process to date and will continue to do so. My Department has engaged closely with the Commission throughout this process. Detailed and comprehensive responses have been provided to the Commission 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.
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. 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 the Government has already indicated, we will take that course of action, if necessary, to continue to vigorously defend the Irish position.
127. Deputy Pearse Doherty asked the Minister for Finance if he has analysed the impact on gross domestic product of a British withdrawal from the European Union; and if he will make a statement on the matter. [16839/16]
View answerThere are numerous sources of uncertainty at present which pose risks to the central forecast set out in the Stability Programme Update 2016. Principal among them is the prospect of the UK voting to leave the European Union.
An assessment of the potential economic impact of such an outcome is set out below.
Recently published work by both the UK Treasury and the UK's National Institute of Economic and Social Research (NIESR) using model based analysis suggest that a vote to leave the EU could reduce UK GDP by between 2.3 and 6.0 per cent, relative to baseline, under a range of scenarios.
In relation to the impact for Ireland, estimates made using the ESRI HERMES model suggest that a 1 per cent reduction in UK GDP would reduce Irish GDP by approximately 0.2 per cent, relative to baseline, over two years. This implies a possible fall in Irish GDP relative to baseline in the range of 0.5 to 1.2 per cent based on Treasury and NIESR estimates.
A shock to UK GDP would also be expected to impact on our other trading partners. Estimates from the ESRI HERMES model suggest that if euro area GDP were to also fall by 1 per cent, a level estimated in the Treasury's "severe scenario", Irish GDP would fall by a further 0.4 per cent relative to baseline.
Separately, both UK reports predict a depreciation of sterling in the event of a vote to leave. An assessment of the impact of a 5 per cent sterling depreciation, was presented in the 2016 Stability Programme Update published in April, and indicated a loss in Irish GDP of 1 per cent after 2 years. This result also incorporates the impact on Ireland of wider spillover effects on the global economic environment from a sterling depreciation.
In addition to the macroeconomic assessments set out above, it must also be recognised that a UK decision to leave the EU will increase short term uncertainty and volatility in the financial markets potentially leading to negative outcomes internationally and in Ireland beyond those set out above.
128. Deputy Pearse Doherty asked the Minister for Finance the effects of a longer period of very low inflation on debt profile; and if he will make a statement on the matter. [16840/16]
View answerThe debt profile, the ratio of general government debt to GDP, is driven by developments in the stock of general government debt and nominal, or current prices, GDP. Nominal GDP, in turn, is determined by both real economic activity and the GDP deflator - which measures price changes in the economy as whole. All else being equal, a lower than expected pace of inflation will lower the GDP deflator which, for any given level of debt, will mechanically increase the debt-to-GDP ratio relative to baseline i.e. compared to what it would have been otherwise.
My Department's macroeconomic and fiscal forecasts, as published in the Stability Programme Update (SPU) in April of this year, show overall nominal GDP growth of 7.6 per cent this year and 4 ¾ per cent over the medium term, with the GDP deflator increasing by 2.6 per cent and 1¼ per cent, respectively, over the same period. This is consistent with continued improvements in the debt-to-GDP ratio over the forecast period.
129. Deputy Pearse Doherty asked the Minister for Finance when he will report on the proposal to tackle the difficulty in some cases of acquiring flood insurance; and if he will make a statement on the matter. [16841/16]
View answerThe provision of insurance cover is a commercial matter for insurance companies and is based on an assessment of the risks they are willing to accept and adequate provisioning to meet those risks.
In my role as Minister for Finance, I have responsibility for the development of the legal framework governing financial regulation. Neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products or have the power to direct insurance companies to provide flood cover to specific individuals or businesses.
I am aware of the difficulties that the absence or withdrawal of flood insurance cover can cause to homeowners and the flooding crisis last winter has raised issues in relation to insurance and flooding. To examine the issue of flooding an Inter-Departmental Flood Policy Co-ordination Group has been established to ensure a whole of Government approach in the area of Flood Policy. The OPW are the lead agency and have responsibility for submitting the final report of the group to Government. Each Department involved will submit a report to the OPW with policy proposals in their own area which can directly improve preparation and response to flooding or strategic policies which impact on people's risk and experience of dealing with flooding.
The Department of Finance is actively engaged with the Inter-Departmental Flood Policy Co-ordination Group and will contribute to the report in the area of a review of flood insurance with a particular focus on the strategies that other jurisdictions have implemented to increase the availability of flood insurance cover. This work is examining a number of policy options and within the coming weeks will feed into the final report of the Inter-Departmental Group, chaired by Seán Canney TD, Minister of State with special responsibility for the Office of Public Works and Flood Relief.
130. Deputy Pearse Doherty asked the Minister for Finance his views on the financial transaction tax, including why he is opposed to it; if this position is open to review; and if he will make a statement on the matter. [16844/16]
View answerIreland already has a tax on financial transactions, a Stamp Duty on transfers of shares in Irish incorporated companies, which currently stands at 1%. I am informed by the Revenue Commissioners that the yield from this charge in 2015 was €424.13 million.
The Financial Institutions Levy I announced as part of Budget 2014 is a revenue raising measure which provides for a contribution from the banking sector to Ireland's economic recovery. The levy is in place for the years 2014 to 2016 inclusive with an anticipated annual yield of €150 million. As the levy is a percentage of an institution's DIRT liability in 2011, liability to the levy relates to the size of an institution's Irish operation. The entire banking system has been underpinned by the strong Government support provided both here and abroad and I believe it is appropriate therefore that the banking sector should make a contribution to the State's economic recovery. Accordingly, I announced in my Budget 2016 statement that I propose to extend the levy out to 2021, subject to a review taking place of the methodology used to calculate the levy. This will bring in an additional €750 million over the period, which is a very significant additional contribution to the Exchequer.
In relation to discussions at EU level, the Government's position is that a Financial Transactions Tax would be best applied on a wide international basis to include the major financial centres to prevent the danger of activities gravitating to jurisdictions where taxes are not levied on financial transactions. Notwithstanding this, the Government is not prepared to stand in the way of EU Member States that wish to work together to implement a Financial Transactions Tax and in this regard adoption of a decision formally authorising enhanced cooperation took place during the Irish Presidency of the EU in January 2013.
The proposal for a Directive from the European Commission in the area of financial transaction tax was published in February 2013. Ireland had many concerns about the proposal as drafted, not least of which were the potential impacts on, and the trading of, Irish Sovereign debt in the secondary market and in total, the potential negative impact on the liquidity of the financial sector as a whole. Members of the Economic and Financial Sub-Committee on EU Sovereign Debt Markets have stated that the introduction of the FTT would have a significantly negative effect on Sovereign Debt Markets and may impair the good-functioning of secondary markets for sovereign debt resulting in reduced liquidity, reduced investor demand and therefore higher financing costs for States.
Our concerns are widely shared amongst the Member States, including some of the participating countries. These concerns have led to the issuing of a communique by the participating Member States, announcing that they have agreed to implement a financial transaction tax in a progressive manner, with the first step being a charge on shares and some derivatives.
More recently on 17th June 2016 the ECOFIN Council discussed the current state of play with regard to the proposal of a number of Member States to introduce a financial transaction tax. In the context of this discussion, ten of the original eleven Member States (Estonia has indicated that it no longer supports the proposal), issued a statement setting out their agreement on the core design principles of an FTT. The statement indicates that further reassurances were needed on two issues in particular, for which two task forces will be immediately set up. First, taxation of derivatives should not have a negative impact on public borrowing costs. Second, tax collection should be cost-effective. The outcome of these two task forces will be discussed in September.
There is still uncertainty therefore as to the form the FTT might take and more detail would be needed on the final shape of the tax before a definitive conclusion could be reached about its impact on Irish taxation revenue.
131. Deputy Pearse Doherty asked the Minister for Finance the options he is considering regarding his shares in Permanent TSB and the overall strategy for the bank; and if he will make a statement on the matter. [16845/16]
View answerOur strategy envisages Permanent TSB ("PTSB") playing an important role in the future of Irish retail banking as a retail bank bringing competition to the marketplace which has consolidated significantly since 2008. PTSB is an important bank in a highly concentrated Irish market lending approximately €460 million in 2015.
PTSB has fundamentally de-risked its balance sheet under the intensive oversight of various authorities since 2011 through deleverage, improved funding profile and increased capital levels (fully loaded CET1 of 15.4% at Q1, 2016). It has made positive progress on arrears reductions, with great than 90 day arrears in Homeloans c. 46% below peak levels in 2013. PTSB returned to underlying profitability in 2015 for the first time since 2007 and it announced that it was profitable and capital generative in Q1, 2016 (€39m Profit Before Tax).
Notwithstanding the positive progress made PTSB in many areas its share price has fallen c. 57% to date in 2016. The share price has been under pressure for a myriad of reasons including, but not limited to, the lower interest rate environment, the delayed disposal of CHL due to the UK referendum, increasing regulatory costs, the Central Bank tracker mortgage review, extension of the Bank Levy and higher provisions and lower growth in new lending than the market anticipated. I have also been informed that some investors are concerned about the policy that might be pursued by the new Government in relation to banking and the attitude of the Oireachtas to issues around mortgage interest rates. Equity research analysts covering PTSB have written about this topic in detail recently.
I am of the view that the best way to protect the value of the State's shareholding is to ensure PTSB continues the progress it has made with a view to reaching sustainable operating profitability and an adequate Return on Equity (ROE) as soon as possible while striving to meet the terms of the European Commission restructuring plan.
While I am strongly supportive of Permanent TSB in the delivery of their strategy I cannot discount the possibility that a strategic transaction could arise opportunistically at any time involving PTSB which could be in the best interests of the State. As part of their day-to-day role officials in the Shareholding Management Unit will consider all credible proposals and develop strategic options relating to our banking investments and will also consider from time to time whether the sale of shares by way of placing would be beneficial for the State. Having said that I have no current plans to sell shares in PTSB, notwithstanding the flexibility to do so within the Programme for Government.
As I have stated previously I would like to see more competition in the domestic banking system to provide the lending required for our growing economy and this could be achieved through new entrants or the continued growth of our domestic banks.
132. Deputy Pearse Doherty asked the Minister for Finance his plans to simplify and consolidate financial consumer protection legislation. [16846/16]
View answerMy Department continues to keep financial legislation relating to consumer protection under review to ensure consumers are protected. Given that financial consumer protection law is contained within national and European legislation, its consolidation would be an extremely large and complex piece of work and is not something that is currently planned.
The Deputy should also be aware that there is already a large and heavy agenda in the area of consumer protection legislation.
By way of example, as you know the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated entity.
In the area of residential mortgages, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (SI 142/16) have transposed the Mortgage Credit Directive into Irish law. This Directive provides that certain minimum consumer information and protection measures such as the provision of standardised pre-contractual information, common requirements for the calculation of the APRC, the requirement on a lender to conduct a credit worthiness assessment prior to offering mortgage credit are to apply across the EU. The Deputy may wish note that Directive also places an onus on the EU Commission to undertake a review of the effectiveness and appropriateness of the Directive's provisions on consumers and the internal market by 2019.
Furthermore, there are a number of projects being progressed by my Department at present. By way of illustration, the Payment Accounts Directive must be transposed by 18 September 2016. The main elements of the Payment Accounts Directive focus on transparency and comparability of payment account fees, payment account switching, and access to payment accounts with basic features for all EU consumers. The Directive also allows Member States to take additional measures to ensure access to basic payment accounts for unbanked, vulnerable consumers.
In addition, the Payment Services Directive 2 (PSD2) aims to further develop the aims of the first Payment Services Directive (PSD1) by regulating new market players, enhancing consumer protection, ensuring competition within the industry whilst maintaining a level playing field, and harmonising the regulations across Europe. PSD2 is due to be transposed in all Member States by 13 January 2018.
133. Deputy Pearse Doherty asked the Minister for Finance his plans to amend the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015; and if he will make a statement on the matter. [16847/16]
View answerAs the Deputy will be aware, the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated firm. The 2015 Act introduced a regulatory regime for a new type of entity called a 'credit servicing firm'. Credit servicing firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'. This ensures that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the various statutory codes (such as the Consumer Protection Code, Code of Conduct on Mortgage Arrears, Code of Conduct for Business Lending to Small and Medium Enterprises and the Minimum Competency Code) issued by the Central Bank of Ireland and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which comes into operation on 1 July 2016.
Our continued commitment on this issue is underlined by the Programme for a Partnership Government which provides that "we will ask the Central Bank and the Oireachtas Committee on Housing to examine the legislation introduced last year that ensured that borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale. We will provide greater protection for mortgage holders and tenants and SMEs whose loans have been transferred to non-regulated entities ('vulture funds')." This is a Year 1 Action in the Programme. The nature of any proposed changes will be decided after further consideration of the issues.
134. Deputy Clare Daly asked the Minister for Finance his views on whether the incorrect valuation of loan assets is enriching wealthy hedge funds at the expense of small business owners, given that according to the Tomlinson report banks are deliberately closing down businesses and forcing small business owners to sell assets on distressed terms to favoured clients, including companies (details supplied); on the fact that a law firm has examined if an Irish bank is engaged in the same activities; on whether his assurances that banks are not systemically overvaluing assets are in direct contradiction of evidence to the banking inquiry in which bankers have admitted that by following International Accounting Standard 39 they are deliberately overvaluing assets. [16878/16]
View answerThe Deputy will be aware that the valuation of assets for accounting purposes must be in accordance with International Accounting Standards. IAS 39 provided that assets must be valued at a point in time and it did not allow for the provision of potential future losses which was highlighted by the financial crisis, as noted by the Banking Inquiry. I understand that IAS 39 is being replaced by IFRS 9. The package of improvements introduced by IFRS 9 includes a logical model for classification and measurement, a single, forward-looking 'expected loss' impairment model and a substantially-reformed approach to hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018.
The Deputy will also be aware that the Central Bank has issued regulations aimed at protecting SMEs when dealing with regulated and unregulated firms as set out below.
The Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. It was introduced to fill the consumer protection gap where loans were sold by the original lender to an unregulated firm. The 2015 Act introduced a regulatory regime for a new type of entity called a 'credit servicing firm'. Credit Servicing Firms are now subject to the provisions of Irish financial services law that apply to 'regulated financial service providers'. This ensures that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including under the various statutory codes (such as the Consumer Protection Code, the Code of Conduct on Mortgage Arrears, the Code of Conduct for Business Lending to Small and Medium Enterprises and the Minimum Competency Code) issued by the Central Bank of Ireland.
Also, following a review in 2015, the Code of Conduct for Business Lending to Small and Medium Enterprises, has been strengthened in certain areas resulting in the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015 which comes into operation on 1 July 2016.
It is widely recognised that the financial crisis of the previous decade uncovered significant deficiencies in the financial regulatory and supervisory framework and its operation. These have been the subject of extensive and objective analysis. The reports from Professor Patrick Honohan, Regling and Watson, and the Nyberg commission point out the problems to be addressed. A significant amount of legislation has been enacted at national and EU level to deal with these issues.
The Single Supervisory Mechanism (SSM) transfers key supervisory tasks for significant banks in the euro area to the European Central Bank, which means additional oversight beyond national Central Banks.
At a national level, there has been a substantial increase in the Central Bank's staff resources, particularly in the area of regulation and the revised Central Bank Acts have enhanced peer review and independent oversight arrangements for the Central Bank's operations.
