Written Answers Nos. 1-27
12. Deputy Éamon Ó Cuív asked the Minister for Finance the purpose of his attendance at the Bilderberg conference held in Germany in 2016; what was discussed there; if there is an official report available of the conclusions of the conference; and if he will make a statement on the matter. [17489/16]
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 focused 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.
13. Deputy Michael McGrath asked the Minister for Finance if it is logistically possible to introduce a tax on sugar sweetened drinks in 2017, in the event of a decision being made to proceed with such a tax; and if he will make a statement on the matter. [17529/16]
View answerThe introduction of a tax on sugar-sweetened drinks (SSDs) is part of the Programme for a Partnership Government. The tax will contribute towards important public health goals, as well providing a new source of revenue for public spending and contribute towards funding the reduction in personal taxes.
My officials, together with officials from the Department of Health and the Revenue Commissioners are considering the design and application of the tax on SSDs in order to achieve the goals set out in the Programme for a Partnership Government. This consideration will also include the implementation issues which would arise in introducing an SSD tax in Ireland. As the Deputy may be aware, unlike alcohol and tobacco, SSDs are not a controlled product under the EU general excises directive, and therefore cannot be stored in tax warehouses for release and tracking so that raises issues in itself. Therefore, it will be crucial that effective compliance measures are incorporated in the design of the tax to support collection in a Single Market environment in which the free movement of products cannot be impeded and products cannot be made subject to cross-border or excise movement controls.
It should be noted that the UK announced the introduction of a soft drinks industry levy in March 2016, with an extensive period of industry and stakeholder consultation, before the levy is actually imposed from April 2018. Given the border that is shared between Ireland the UK, and the supermarket chains which operate and supply SSDs in both jurisdictions, it is important that we examine carefully how the UK tax will operate, and consider the effects that the design and timing of the introduction of the UK tax may have on an Irish tax on SSDs.
At this point I have confidence that a tax on SSDs can be introduced from 2017. However, I will want to carefully consider all aspects of the design and the implementation plan before making my decision. If I find that the compliance and trade distortion risks that could arise, by applying such a tax in Ireland without a similar measure in the UK, are too high, I may decide to wait until the UK Soft Drinks Industry Levy is in place before I introduce the tax. Whether the tax is introduced in 2017 or not will ultimately be a matter for Budget 2017.
14. Deputy Maurice Quinlivan asked the Minister for Finance why he supported the exorbitant salary of the chief executive of Bank of Ireland at the bank's recent annual general meeting, given the State's 14% shareholding in the bank; the rationale behind his position; and if he will enforce the policy of the Government pay cap at the bank's next annual general meeting. [17486/16]
View answerIn the first instance, I wish to confirm for the Deputy that the Government policy on remuneration at the banks which has been in place since mid-2011 is fully enforced. The central plank of this policy, which is the pay cap of €500,000, was subject to pre-existing contractual rights. The current remuneration of Bank of Ireland's CEO, which has not been increased since that date, reflects this.
In relation to voting at the recent Annual General Court of Bank of Ireland, the Deputy will be aware of the strong set of financial results posted by the bank for 2015 which built on the progress made in 2014 when the bank returned to profitability. This progress directly benefits the State given its financial interest in Bank of Ireland and indeed some of its peers.
Against this positive backdrop, to take the significant and unusual step of voting against any of the proposed resolutions could have been perceived as an attempt by the State to interfere in a commercial entity, in which the State is a 14% minority shareholder. This could have done damage to Ireland in the eyes of the international investment community. Accordingly I deemed it appropriate to direct the ISIF to vote in favour of all resolutions, including the resolution relating to Directors' remuneration. I would also note that ISS Proxy Advisory Services - an expert independent firm which advises institutional shareholders on General Meeting voting matters - produced a recommendation that shareholders vote in favour of each of the resolutions. Overall, the vote in favour of this particular resolution represented more than 99% of all eligible votes.
15. Deputy Clare Daly asked the Minister for Finance if he has full confidence in the operation of the National Asset Management Agency, particularly following recent developments in relation to those involved with Project Eagle; and if he will make a statement on the matter. [17494/16]
View answerNAMA's continued progress is evident in the recently published 2015 Annual Report and Accounts. NAMA's results highlight the continued achievements of NAMA and the positive impact NAMA is having on Ireland's sustained recovery in carrying out its mandate both in terms of debt redemption, the delivery of the Dublin Docklands SDZ and the commercial funding of residential housing delivery.
NAMA's continued strong performance since inception means that Board now expects to achieve a surplus of up to €2.3bn over its life, subject to market conditions, which will be returned to State.
I commend NAMA on its work to date and I have full confidence in NAMA's Board.
Regarding the Deputy's reference to recent developments - I reiterate that, despite all the confusion and conflation in the coverage of this matter, it remains the case that allegations of wrongdoing have not been directed at NAMA. All known allegations of wrongdoing are currently being investigated by the appropriate authorities. We support these investigations and stand ready to assist in any way that is helpful and should remain careful not to compromise these investigations in any way.
The most notable investigation is being carried out by the UK National Crime Agency a criminal investigation by the appropriate authorities in the appropriate jurisdiction. Importantly, NAMA advises me that the NCA has confirmed that no aspect of the Agency's activities are under investigation.
NAMA also has appeared twice before the Public Accounts Committee to discuss Project Eagle. Based on recent comments of the PAC Chairman, I understand NAMA may soon appear for a third time to discuss these issues. In that context the C&AG is conducting a value for money review of Project Eagle which will be published and discussed in due course. A report such as this should not be rushed and should allow the C&AG the time required to conduct a fair and balanced examination of the issues in forming his opinions.
If appropriate lines of inquiry do arise which could usefully be pursued they will be brought forward for consideration. However, I do not believe that it is appropriate to launch an investigation based purely on speculation.
16. Deputy Dessie Ellis asked the Minister for Finance for an update on the Central Bank’s tracker mortgage investigation, including an update of the number of cases being investigated by financial institutions and a timeline for its conclusion; and if he will make a statement on the matter. [17525/16]
View answerAs the Deputy will be aware, the Central Bank examination of tracker mortgage related issues covers all lenders which offered tracker mortgages to customers, including both for the family home and investment properties from when the lenders started to offer such mortgages, up to the end of 2015.
The purpose of the Examination is to identify any cases where:
- customers' contractual rights under the terms of their mortgage agreements were not fully honoured; and/or
- lenders did not fully comply with the various requirements and standards regarding disclosure and transparency for the customer.
The Central Bank has stated that each lender is required to conduct a comprehensive and robust review of its mortgage book, which achieves a fair outcome for all customers. While the Central Bank wants to have the Examination completed as soon as possible, it also recognises that this is a significant undertaking for lenders and it is important that they are given the necessary time to complete it. As such, I have been informed that it will be some time before the final number of impacted customers is known. Nonetheless, I understand that the Central Bank expects significant progress to be made by all lenders before the end of 2016 and has affirmed that the examination will remain a priority for as long as it takes to address all issues and deliver the right outcomes for customers. In addition, the Central Bank has confirmed that during the Examination all lenders are to establish a dedicated unit to deal with any queries, complaints, and/or concerns that customers may have during the course of the Examination. Nonetheless, I have been informed by the Central Bank that if a customer has a tracker related query they should continue to contact their lender through the regular contact channels. As the Deputy will know, the Central Bank will be providing public updates on their website throughout the Examination. I understand that the next update is due to be issued at the end of July.
17. Deputy Mattie McGrath asked the Minister for Finance to make a special short-term provision, to allow grass and silage harvesting activities by farm contractors to be zero rated for a period of two years to allow the sector get the benefit of a 13.5% addition to cashflow on farms, and to support the opportunities that this will provide for reinvestment in additional higher genetic worth dairy and beef animals; and if he will make a statement on the matter. [17491/16]
View answerThe VAT treatment of goods and services is subject to the requirements of EU VAT law (primarily Council Directive 2006/112/EC) with which Irish VAT law must comply. Article 110 of the EU VAT Directive permits Member States to retain historical zero-rated VAT treatment where a good or service was zero rated on and from 1 January 1991, but no new zero rates can be introduced. As a result, Ireland currently applies the zero rate to a range of goods and services including most foods, children's clothes and shoes, and oral medicines. As agricultural services such as grass and silage harvesting were not charged at the zero rate on 1 January 1991, it is not possible under EU VAT law for Ireland to apply a zero rate to these activities, even on a short-term basis as the Deputy proposes. However, I would point out that the 'combined supply and sowing/planting of seeds/plants etc. for the production of food, including animal feed' is zero-rated for VAT which in turn helps to achieve the aim of higher genetic worth dairy and beef animals as mentioned by the Deputy.
Furthermore, I would point out that farmers who are registered for VAT can recover their VAT costs, including the VAT on services provided by agricultural contractors. Unregistered farmers are compensated by payment of the flat rate addition, currently 5.2%, in addition to the consideration they receive for their supplies of agricultural produce.
Agricultural contractors are obliged to be VAT-registered if they provide contracting services in excess of €37,500 in a year. VAT-registered traders are obliged to issue VAT invoices in relation to their supplies and to submit VAT returns. Flat-rate farmers are not required to register for VAT unless they are engaged in other activities (e.g. farm contracting services) and the turnover from that other activity exceeds the VAT registration threshold; €37,500 for supply of services and €75,000 for supply of goods.
18. Deputy Eugene Murphy asked the Minister for Finance if he is concerned by the relatively low level of lending undertaken by the Strategic Banking Corporation of Ireland to date, and the corresponding average loan size; and if he will make a statement on the matter. [17534/16]
View answerSmall and Medium Enterprises (SMEs) are the lifeblood of the Irish Economy. They make up the vast majority of businesses in Ireland and account for approximately seven in every ten jobs. Supporting the finance needs of these businesses is therefore a priority for this Government.
The Strategic Banking Corporation of Ireland (SBCI) was incorporated in September 2014 and its goal is to ensure access to flexible and lower cost funding for Irish SMEs. The SBCI launched its first product programme in February 2015 and lending to SMEs commenced in early March 2015 through its initial on-lending partners, AIB and Bank of Ireland.
Up to the end of December 2015, in its first nine months of operation, the SBCI lent some €172 million to approximately 4600 SMEs. The loans have been taken up by Irish SMEs for a variety of purposes and across a range of sectors in the economy. 84% of loans were for investment purposes and the average loan size is approximately €37,000. There is a wide geographical spread and the vast majority of loans are to regionally based SMEs outside Dublin.
To further meet the financing needs of SMEs, the SBCI has expanded the number of on-lending partners through which its funds can be accessed. The SBCI now has a total of six on-lending partners. These are AIB, Bank of Ireland, Ulster Bank, Merrion Fleet, Finance Ireland and First Citizen.
The increased number of on-lenders is a key step in creating greater competition for SME lending in the Irish market, by supporting smaller indigenous providers of finance and providing funding for a broader range of products, including Asset Finance, Leasing and Contract Hire. The SBCI is in advanced discussions with a number of other potential on-lenders.
I am pleased to note that of the SBCI's initial funding capacity of €800 million, €791 million has now been committed to its on-lending partners to support the financing needs of SMEs. The SBCI is currently in the process of securing additional funding from domestic and international sources to enable it to increase the amount of funds it can make available to SMEs.
The SBCI is committed to leveraging existing and new relationships with on-lending partners to support SME growth and investment. The SBCI has made significant progress to date, both in terms of providing funding to SMEs, and in building a strong infrastructure to provide long term support to SMEs.
Finally, the Deputy may be interested to note that the SBCI publishes information on its lending volumes to SMEs on a bi-annual basis. The figures to end June 2016 will be published in July 2016 and it is expected that the lending volumes will have increased significantly.
19. Deputy John Brady asked the Minister for Finance if he believes amending NAMA’s mandate to include a more explicit goal of contributing to social and affordable housing here, would benefit the State economically and socially; and if he will make a statement on the matter. [17513/16]
View answerIt is important not to confuse Section 2, the purposes of the NAMA Act, with Section 10, the purposes of NAMA and that the purposes of NAMA were established in fulfilment of the purposes of the Act. It is precisely through the establishment of NAMA's commercial mandate that the purposes of the Act, including "to contribute to the social and economic development of the State", are achieved.
The European Commission approved the establishment of NAMA and its mandate under EU state aid rules. Any changes to the NAMA Act would require approval from the European Commission as being consistent with their approval of the establishment of NAMA and its original mandate.
Such a change would prevent NAMA from achieving the best financial return for the State and could lead to an exchequer payment under the Government Guarantee of NAMA's senior debt. It is also likely that such a change would result in NAMA being considered "within government" resulting in NAMA's debt coming onto the State's balance sheet. This would mean that all NAMA debt and expenditure would be included as Government debt and expenditure which would seriously limit NAMA's ability to fund both its housing and SDZ commitments that it has already entered into.
Remember that NAMA acquired loans, not land and not properties. What are commonly dubbed "NAMA assets" or "NAMA properties" are in fact assets and properties owned by NAMA debtors which have been pledged as security for debts owed to NAMA. Any action taken which reduced the proceeds from the sale of an asset securing a NAMA debt would reduce the amount a debtor is able to repay to NAMA, would deviate from NAMA's mandate, would likely breach debtor property rights and would not withstand legal challenge.
Where the provision of social or affordable housing is consistent with NAMA's commercial mandate, NAMA has made a substantial contribution in the social housing sector. Through its debtors and receivers, NAMA has established NARPs as an innovative model which has significantly reduced the up-front capital costs for local authorities in the delivery of over 2,000 residential units for social housing. I understand NAMA is reviewing its remaining portfolio for any further units which may be offered under this initiative.
I would also point out NAMA's ambition to fund, on a value maximising basis, the delivery of 20,000 homes by end 2020. This initiative is entirely consistent with NAMA's mandate. The Agency is playing an important role in funding commercially viable residential construction - including a significant proportion of starter homes - in areas of acute demand.
In adhering to its existing mandate, NAMA already contributes to the social and economic development of the State and I do not propose to amend that mandate.
20. Deputy Dara Calleary asked the Minister for Finance his estimate for the fiscal space in 2017 and 2018; the factors which may cause this to change prior to budget 2017; and if he will make a statement on the matter. [13036/16]
View answerThe current estimates of the net fiscal space available for 2017 and 2018, are €1 billion and €1.2 billion respectively. These are published in Table 2 on page 15 of the Summer Economic Statement and are consistent with compliance to our obligations under the expenditure benchmark which calculates fiscal space in line with the potential growth rate of GDP less a convergence margin as Ireland is not yet at its medium term budgetary objective of a structural deficit of 0.5 per cent of GDP. It should be noted that revenue is not relevant to the calculation of fiscal space unless it arises from a discretionary policy decision. Additional revenue arising from discretionary measures increases the overall fiscal space while the converse in relation to revenue reductions also applies.
The fiscal space projections in the Summer Economic Statement are not final and are likely to change between now and Budget 2017 as they are based on a number of moving parts. These include GDP deflators, reference rates and convergence margins set each year by the European Commission and general government expenditure values produced by the Central Statistics Office (CSO) for the National Income and Expenditure (NIE) and Government Finance Statistics (GFS).
For 2017 the reference rates and convergence margins were set by the European Commission in their Spring forecast in May and will not change. However the GDP deflator used is an average of the Commission's Spring and Autumn deflators. As the Autumn deflator will not be finalised until after Budget 2017, a forecast will be produced by my Department to use in Budget projections. Similarly a final outturn for government expenditure in 2016 will not be available. However any changes to the profile of Exchequer spending in the meantime or revisions to the 2015 outturn in the CSO's Autumn EDP return will result in an update to my Department's forecast of the 2016 expenditure base.
For 2018 none of the inputs required will be known for Budget 2017. However any changes to 2016 and 2017 variables will result in revisions to the variables forecast by my Department for use in 2018 fiscal space calculations.
21. Deputy Caoimhghín Ó Caoláin asked the Minister for Finance if he believes the events around the sale of Project Eagle requires a commission of investigation; and if he will make a statement on the matter. [17514/16]
View answerThere have been a number of calls for a Commission of Investigation into Project Eagle. The allegations of wrongdoing that are being criminally investigated are extremely concerning. We continue to monitor the situation as these criminal investigations progress.
If appropriate lines of inquiry do come to light which could usefully be pursued by a Commission of Investigation they will be brought forward for consideration. However, all known allegations of wrongdoing are currently being investigated by the appropriate authorities. We support these investigations and stand ready to assist in any way that is helpful.
The most notable is being carried out by the UK National Crime Agency a criminal investigation by the appropriate authorities in the appropriate jurisdiction. Importantly, NAMA advises me that the NCA has confirmed that no aspect of the Agency's activities are under investigation.
NAMA also has appeared twice before the Public Accounts Committee to discuss Project Eagle. Based on recent comments of the PAC Chairman, I understand NAMA may soon appear for a third time to discuss these issues. In that context the C&AG is conducting a value for money review of Project Eagle which will be published and discussed in due course.
There has been much confusion and conflation of issues. However, it remains the case that allegations of wrongdoing have not been directed at NAMA.
Taking into account the investigations underway, it is not clear what additional specific line of inquiry could be usefully pursued by a Commission of Investigation at this juncture. I do not believe that it is appropriate to launch a Commission of Investigation based purely on speculation nor to interfere with current legitimate investigations. This position will of course be kept under review.
If the Deputy has specific allegations of wrongdoing, please make them known to the relevant authorities in the appropriate jurisdiction, whether that be the NCA or the Garda.
If the Deputy has specific allegations grounded in evidence that are not criminal in nature and are appropriate for a Commission of Investigation, I would suggest the Deputy makes them known for consideration by this House at the earliest opportunity.
22. Deputy Declan Breathnach asked the Minister for Finance his views on a rebate of value added tax on authorised works associated with protected structures. [11546/16]
View answerThe VAT treatment of goods and services is subject to the requirements of EU VAT law (primarily Council Directive 2006/112/EC) with which Irish VAT law must comply. Under the VAT Directive, construction services are liable to VAT and no exemptions are permitted, whether for specified purposes or otherwise.
In order to maintain the integrity of the VAT system Ireland has not introduced any new VAT refund orders since the 1980s and any changes to VAT refunds since then have been either by EU requirement or making minor changes to existing refund orders. The scope of such a scheme could prove to be very wide and there would be considerable risk of abuse as well as significant administrative costs.
However, where a protected structure is used for the purposes of making supplies that are liable to VAT, the trader can recover the VAT borne in respect of works on such a structure, provided he or she is registered for VAT.
23. Deputy Richard Boyd Barrett asked the Minister for Finance if the State expended public money on legal or other services; if so, the amount, in the context of the current European Union investigation into a company's tax dealings (details supplied) here; and if he will make a statement on the matter. [17505/16]
View answerIn 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 concerned 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 when the final decision will be made in our case, I am aware of speculation about a possible decision in July.
This is 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.
As part of this process, which involves a significant degree of legal and technical complexity, some €667,000 has been spent to date by my Department and the Revenue Commissioners on legal and other services. This figure does not incorporate any further legal costs or costs for other services pertaining to the Attorney General's Office.
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.
24. Deputy John Brady asked the Minister for Finance the progress made on the programme for Government commitment to support the credit union sector; and if he will make a statement on the matter. [17512/16]
View answerCredit unions have a key role to play in providing access to credit and other important services in local communities throughout the country. Progress has been made on a number of the Programme for a Partnership Government commitments including the following:
- The Implementation Group of the Personal Microcredit Scheme is committed to achieving the rollout and extension of the scheme and progress has already been made towards extending the geographical remit of the scheme and broadening the target audience beyond social welfare customers who have access to the Household Budgeting facility.
- In relation to assisting credit unions in making successful applications to retain members' savings in excess of €100,000, the Central Bank has consulted with my Department on the application process and my officials have met with the Registrar to discuss the details of the application process. Separately, the Registrar met with the representative bodies to obtain their feedback. Final application forms are now available on the Central Bank's website. It is up to individual credit unions to complete the application forms should they wish to make an application.
- In February 2015 the Central Bank commenced a lending restriction review initiative. The Central Bank has informed my Department that at this stage where a review has been completed 74% of the applicant credit unions have had their lending restriction lifted. The Central Bank has informed my Department that there is ongoing engagement with credit unions to lift lending restrictions. We will continue to monitor this matter.
- In December 2015 I invited the Credit Union Advisory Committee (CUAC) to carry out a review of the Implementation of the Recommendations set out in the Report of the Commission on Credit Unions. The final report is expected to be presented to me by 30 June 2016 for publication thereafter.
- My Department will continue to work with a range of stakeholders including the Representative Bodies, credit unions, the Central Bank and the Irish Council for Social Housing to facilitate and support credit unions' social housing initiatives.
The Government recognises the important role of credit unions as a volunteer co-operative movement in this country. The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and it is determined to support a strengthened and growing credit union movement.
25. Deputy Michael McGrath asked the Minister for Finance the current timeline he envisages for disposal of the State’s holding in banks (details supplied); the market conditions he believes would need to be in place, before proceeding with an initial public offering, IPO, and if he expects there to be a retail element to any IPO; and if he will make a statement on the matter. [17527/16]
View answerAs the deputy is aware, the State has a shareholding of 99.9% in AIB and of 14% in Bank of Ireland. These are valuable assets to the State and it is this Government's intention that the State would exit these investments in a measured and careful manner. As I have indicated on a number of occasions, my primary objective in the disposal of these assets will be recovering the maximum amount of money for the Irish taxpayer.
With regard to AIB in particular, I have indicated in the past that an IPO is likely to be the optimal route to recouping value from our investment. At the beginning of this year officials in my Department appointed an Independent Financial Adviser, following a tender process, to assist with analysis and planning related to our shareholding in AIB, and much of this initial preparation has now been completed. However, given the complex nature of an IPO process, the need to access certain IPO 'windows' and the recent volatility seen in stock markets, I would now deem it more likely that a market event involving AIB would occur in 2017, rather than 2016. Clearly in order for us to proceed with an IPO, we would need to be satisfied that the market is prepared to put a fair and reasonable value on the business bearing in mind its current performance and future prospects.
With regard to the Deputy's question on any retail element to an IPO, this option will be assessed along with many other considerations when deciding on how an IPO would be structured. No decision has been made in this regard.
BOI had a strong return to profitability in 2014 and built on this further in 2015. The bank has made significant progress in reducing NPLs and growing new business. Officials in my Department monitor market conditions and the performance of banking equities on an ongoing basis. When I deem conditions conducive to recovering value for the Irish taxpayer, I will direct the ISIF to exit our shareholding in a manner that best achieves this objective. As is the case with AIB, market conditions at this point are not supportive of any disposal.
26. Deputy Michael McGrath asked the Minister for Finance the status of the investigation into mistreatment of tracker mortgage customers by Irish financial institutions; the timetable for resolution of the matter; the interim measures that can be implemented to assist customers; and if he will make a statement on the matter. [17531/16]
View answerI have been informed by the Central Bank that the examination of tracker mortgage related issues covers all lenders which offered tracker mortgages to customers, including both for the family home and investment properties from when the lenders started to offer such mortgages, up to the end of 2015.
The Central Bank have stated that each lender is required to conduct a comprehensive and robust review of its mortgage book, which achieves a fair outcome for all customers.
While the Central Bank wants to have the Examination completed as soon as possible, it also recognises that this is a significant undertaking for lenders and it is important that they are given the necessary time to complete it. As such, I understand that it will be some time before the final number of impacted customers is known. The Central Bank expects significant progress to be made by all lenders before the end of 2016 and has affirmed that the examination will remain a priority for as long as it takes to address all issues and deliver the right outcomes for customers.
The Central Bank has confirmed that during the Examination all lenders are to establish a dedicated unit to deal with any queries, complaints, and/or concerns that customers may have during the course of the Examination. Nonetheless, I have been informed by the Central Bank that if a customer has a tracker related query they should continue to contact their lender through the regular contact channels.
The Central Bank has also informed me that when impacted customers are identified, the Examination framework provides that, in the first instance, lenders must stop charging the incorrect rate of interest on the customer's account to ensure that any further customer detriment is stopped as early as possible and communicate this to the customer. Once a full review of the customer's account is complete, I understand that lenders will issue a letter to the customer explaining the nature of the error, the correct rate to apply to the customer's account and information on the next steps in the Examination, including the redress and compensation process.
As the Deputy will be aware, the Central Bank will be providing public updates on their website throughout the Examination. I understand that the next update is due to be issued at the end of July.
27. Deputy Dessie Ellis asked the Minister for Finance if he will direct a bank (details supplied) and request that all other banks release information on the extent they have used or not used the 15% loan-to-value exceptions and 20% loan-to-income exceptions permissible under the Central Bank’s macro-prudential regulations; the reason they have not used the full leeway, where that is the case; and if he will make a statement on the matter. [17526/16]
View answerAs the Deputy is aware, the Central Bank's macro-prudential limits on mortgage lending came into effect on 9th February 2015. The policy sets restrictions on the loan-to-value (LTV) and Loan-to-Income (LTI) ratios on products that can be offered by mortgage providers. There are a number of exemptions allowed for within the CBI guidelines, for example, mortgage switchers or forbearance cases. The banks are at liberty to use these exceptions to the extent they see fit, and will likely do so with consideration to their risk appetite, lending policies and overall strategy.
As the deputy will understand, the macro-prudential limits on mortgage lending are designed, implemented and monitored by the Central Bank in its role as regulator of the Irish banking sector, and therefore fall outside of my remit as Minister for Finance. Moreover, the Central Bank does not currently provide prudential lending disclosures on an industry-wide or institutional basis and there is no regulatory requirement for any bank to publicly disclose the value of approved mortgages that are exceptions to the macro-prudential limits. My role as Minister of Finance, as set out in the Relationship Framework Agreements between the Minister and the banks in which the State is a shareholder, does not involve me in the relationship between the banks and their regulator. It would therefore be inappropriate, and beyond my remit, for me to direct the disclosure of the information sought by the Deputy.
However, I have received assurances from the banks in which the State has a shareholding that they have complied fully with Loan-to-Value (LTV) and Loan-to-Income (LTI) limits as set by the Central Bank during the year ending 31st December 2015, and that they continue to operate within the constraints set by their regulator.
As laid out in the Programme for Government, my Department will work with the Central Bank in the context of its up-coming review of the mortgage lending limits and my officials will write to the Central Bank to suggest that it would be helpful if the Central Bank could make available aggregated data on mortgage lending since the macro-prudential rules came into operation. This data, if available, would assist respondents in making evidence-based submissions to the Central Bank's consultation process.
