Written Answers Nos. 196-210
196. Deputy Joan Burton asked the Minister for Finance the progress he has made in the establishment of the credit union advisory committee; when the first meeting of the implementation group will take place; and if he will make a statement on the matter. [16368/17]
View answerThe Credit Union Advisory Committee (CUAC) in its Review of Implementation of the Recommendations in the Commission on Credit Unions Report (the Report) recommended the establishment of an Implementation Group for a specified period of time to oversee and monitor implementation of its recommendations in a methodical manner and to advise the Minister for Finance on progress.
Publication of the Report in July 2016 was just the beginning of the process. From September 2016 onwards CUAC continued working to enable a coherent implementation plan be devised and the Department worked closely with CUAC on this.
In line with CUAC's recommendations, the Department invited one nominee from each of the stakeholder groups. The Implementation Group consists of one representative from each of the following: Irish League of Credit Unions; Credit Union Development Association; Credit Union Managers' Association; National Supervisors Forum; and the Central Bank. The Implementation Group also has a CUAC representative and is chaired by the Department. This broad membership will ensure participation and contribution from all credit union perspectives.
The Implementation Group has held two meeting to date, with the first on 20 February 2017 which was attended by all CUAC members and the second on 22 March 2017. It is intended that each CUAC recommendation will be addressed separately with a view to implementation at the appropriate time. Meetings will continue to meet on a monthly basis with the next meeting scheduled for late April 2017. The term of the Implementation Group is for one year which may be extended at the discretion of the Minister. I look forward to receiving regular progress reports on the implementation of these very important recommendations.
197. Deputy Joan Burton asked the Minister for Finance the progress his Department has made with the Central Bank on the request by a number of credit unions to expand their debit card and mortgage services; and if he will make a statement on the matter. [16369/17]
View answerThe Credit Union Act, 1997 (1997 Act) sets out the services that a credit union may provide to its members. In addition, the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 (2016 Regulations) set out services exempt from additional services requirements. Where a credit union wishes to provide services to its members, other than those services that are provided for under the 1997 Act or the list of services exempt from the additional services requirements set out in the 2016 Regulations, an application may be made to the Central Bank for approval to provide such additional services in accordance with the provisions set out in sections 48-52 of the 1997 Act.
Debit card provision (and the necessary underlying payment account service) is an additional service and as such requires Central Bank approval. The Central Bank has recently approved a suite of additional services known as a Member Personal Current Account Service (MPCAS) under the Additional Services Framework set out in sections 48-52 of the 1997 Act. This service, which was recently approved for a number of credit unions, provides for credit unions to offer debit cards, overdrafts and a full range of payment services within an appropriate risk framework. The Central Bank is currently processing a significant number of additional applications for this service. Details of MPCAS and the approval process, along with the application requirements and related guidance are on the Central Bank's website. In its communication to the sector on MPCAS on 9 December 2016, the Central Bank highlighted that it will continue to consider all applications for provision of additional services including debit cards.
Currently credit unions can provide mortgages to members, within certain maturity limits contained in the 2016 Regulations. The 2016 Regulations set out the percentage of a credit union's loan book that can be outstanding for periods exceeding both five and ten years, as well as limits on the maximum outstanding liability to an individual member. Under the 2016 Regulations, issued by the Central Bank in January 2016, credit unions continue to be allowed to lend up to 30% of their loan book over five years and up to 10% of their loan book over 10 years, subject to a maximum maturity of 25 years. In addition, credit unions are able to apply to the Central Bank for an extension to their longer term lending limits (up to 40% of their loan book over 5 years and up to 15% of their loan book over 10 years). Approval is subject to conditions set by the Central Bank. There are currently 11 credit unions approved to avail of increased longer term lending limits.
The Central Bank informs me that the December 2016 Prudential Return indicates that for the sector overall, total gross loans over 10 years amount to c. 2.7% of total loans in the credit union sector compared to the limit of 10% (and in some cases 15%).
The Central Bank has indicated that while it can see longer term lending, including mortgages, as part of a balanced portfolio of total lending, in their analyses, credit unions need to consider the impact of longer term lending on interest margins, return on assets and on balance sheet structure, the issue of funding longer term lending with short term funding is a challenge for the credit union business model. The Central Bank further informs me that consumer mortgage lending is an activity that has its own unique risk profile, and proposals to become involved in mortgage lending in a significant way must be supported by an evidenced based business case.
The Credit Union Advisory Committee's (CUAC) recent report provides a number of recommendations, one of which is to conduct a full review of lending limits. I have established an Implementation Group which is due to meet for the third time later this month. The Implementation Group is currently assessing each of those recommendations with a view to implementation as appropriate. Central to its work is ensuring a full examination of lending limits and concentration limits as recommended. I look forward to regular progress reports from the Implementation Group as these recommendations are developed and implemented.
198. Deputy Colm Brophy asked the Minister for Finance the number of requests his Department received for material to be made available in Braille format in each of the years 2014 - 2016; the number of these requests which were accommodated by his Department; the cost implication and the person or body which provided the translation service. [16379/17]
View answerMy Department provides assistance to staff and members of the public with a disability through the Disability Liaison Officer, and Access Officers as required under the Disability Act 2005.
The Department has not received any requests for information to be supplied through braille between 2014-2016 from staff or members of the public. In terms of communicating with persons with disabilities who need assistance with accessing information, the Department has an Access Officer for Information, who's details are on my Department's website, (www.finance.gov.ie). The website strives to achieve "Triple-A" accessibility of the World Wide Web Consortium's (W3C) Web Content Accessibility Guidelines 1.0.
199. Deputy Eugene Murphy asked the Minister for Finance his views on a matter (details supplied); and if he will make a statement on the matter. [16393/17]
View answerThe Deputy will be aware that the Code of Conduct on Mortgage Arrears (CCMA) provides a strong consumer protection framework to ensure that borrowers in financial difficulty are treated in a timely, transparent, and fair manner by regulated entities. It applies to the mortgage loan of a borrower which is secured by his/her primary residence. It sets out how regulated entities must treat borrowers in or facing mortgage arrears, with due regard to the fact that each case of mortgage arrears is unique and needs to be considered on its own merits. All such cases must be handled sympathetically and positively by the lender, with the objective at all times of assisting the borrower to meet his/her mortgage obligations.
I am informed by the Central Bank that while the CCMA does not provide a definition for "own merits", a regulated entity must use the standard financial statement prescribed in the CCMA to obtain financial information from a borrower in arrears or in pre-arrears. The CCMA requires that a regulated entity's Arrears Support Unit must base its assessment on the full circumstances of each individual borrower, including:
- personal circumstances;
- overall indebtedness;
- the information provided in the standard financial statement;
- current repayment capacity; and
- previous repayment history
In addition, each regulated entity must consider the borrower's situation in the context of the solutions they provide. I draw the Deputy's attention to the most recent Mortgage Arrears and Restructures Data released by the Central Bank on 16 March, which showed that to end-Q4 2016, the number of Principal Dwelling House (PDH) mortgage accounts in arrears has declined for the past fourteen quarters. Almost 121,000 PDH accounts were also classified as restructured, of which 87% were reported to be meeting the terms of their arrangement. This indicates that where borrowers actively engage with their lender under the CCMA, it is more likely that an equitable arrangement will be found and that the borrower will be able to remain in their family home.
200. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 125 of 31 January 2017, if he will provide an update on his reply; and if he will make a statement on the matter. [16436/17]
View answerI am advised by Revenue that the CJEU in the National Roads Authority v The Revenue Commissioners judgment decided key questions of principle in relation to the liability to VAT on tolls charged to road users by a public authority for the making available of road infrastructure (the Dublin Tunnel and the Westlink (M50) toll road), which were referred by the Appeal Commissioners. However, the case has not yet been concluded.
I am also advised by Revenue that the effect of the judgment is that VAT does not apply to tolls collected from road users by a body governed by public law which carries on an activity consisting in providing access to a road on payment of a toll. Prior to the judgment, Revenue's position was that tolls were liable to VAT at the rate of 23%, which was collected from road users by toll operators regardless of whether they were a public body or a private operator.
Regardless of the judgment it remains that tolls collected by a body other than a body governed by public law which is engaged in the activity of making road infrastructure available on payment of a toll under national statutory provisions are still liable to VAT.
201. Deputy Clare Daly asked the Minister for Finance if he will review recent measures, including the introduction of the help to buy tax scheme and the relaxation of the Central Bank's lending rules, in view of the fact that since those measures were taken there has been a 3.9% increase in house prices in Dublin (details supplied); and if he will make a statement on the matter. [16441/17]
View answerAs the Deputy will be aware, the Help to Buy incentive was initially announced on 19 July 2016 as part of 'Rebuilding Ireland: Action Plan for Housing and Homelessness'. This plan contains a significant volume of responses to the current housing crisis, of which the Help to Buy incentive is one. This comprehensive Action Plan takes a holistic approach in addressing the many interacting structural constraints affecting the housing market in areas such as planning and land use, as well as regulation and skills deficits in the construction sector. While the primary focus of the Action Plan is to tackle structural constraints, fiscal supports can play a supporting and time-bound role in addressing the current problems in the housing sector.
It is in this context that the Help to Buy incentive should be considered. Its role is to complement the other measures in the Action Plan. The extent to which the scheme could lead to an increase in residential property prices will very much depend on the speed and efficiency with which structural supply constraints are eliminated and residential building activity increases. Therefore, the impact of the Help to Buy incentive on property prices cannot be considered in isolation from the impact of other measures contained in the Action Plan, which are primarily designed to increase supply.
Regarding the Central Bank's macro-prudential rules, these were initially introduced for residential mortgage lending by financial institutions regulated by the Central Bank in February 2015, as part of its independent mandate to preserve and protect financial stability in Ireland. These macro-prudential measures apply certain loan-to-value (LTV) and loan-to-income (LTI) restrictions to residential mortgage lending.
Following a review carried out last year, the Central Bank has made some limited adjustments to these rules which came into effect on 1 January 2017. The main change related to first-time buyers and provided that the maximum LTV of 90% would now apply to the total value of the of the property (previously the 90 per cent limit was up to the first €220,000 value of the property and an 80 per cent LTV limit applied to any value above that threshold). The maximum LTV mortgage limit for second and subsequent buyers of a primary home remained unchanged at 80 per cent of the value of the property, as did the LTI threshold limit of 3.5 times gross annual income. These macro-prudential rules, however, do not remove the requirement on lenders to carry out appropriate credit worthiness assessments on all mortgage applications in line with the Consumer Protection Code and other consumer protection regulatory requirements. The Central Bank is independent in these matters.
I wish to assure the Deputy that my Department continues to monitor developments in the property market including property prices on an ongoing basis. I have already committed to commissioning an independent economic impact assessment of the Help to Buy incentive which will look at, among other issues, the impact on property prices. However, it should be remembered that the high rates of house prices reflect the supply constrained nature of the Irish residential market, and price increases were a feature of the market long before the Help to Buy incentive was introduced.
In addition, the Help to Buy incentive has been introduced for two reasons - to assist first time buyers in putting together the requisite deposit to buy a home, and to encourage the construction of new homes. As such, I am not in a position to consider changes to the scheme so soon after implementing the Help to Buy incentive, as this would disrupt the incentive effect which is designed to create the conditions to encourage the construction of new homes.
202. Deputy Maureen O'Sullivan asked the Minister for Finance if his attention has been drawn to current problems faced by potential home buyers in traditionally flood prone areas that have had substantial remedial works to tackle flooding, in receiving quotes for home insurance; the outcomes that have come from talks between his Department, the OPW and the Irish Insurance Federation; and if he will make a statement on the matter. [16444/17]
View answerI am conscious of the difficulties that the absence of flood cover can cause to householders and businesses alike.
However, the provision of insurance is a commercial matter for insurance companies and is based on an assessment of the risks they are willing to accept and then ensuring that they have adequate provisioning to meet those risks.
Insurance Ireland has informed me that its members, since 1 June 2014, have factored data on 16 completed flood defence schemes, provided by the OPW, into its overall assessment of flood risk. In the last number of weeks, information on the completed scheme in Waterford has also been provided to Insurance Ireland. This information has been provided as part of the information sharing arrangement entered into between OPW and Insurance Ireland (Memorandum of Understanding). The nature of this arrangement is such that it should lead to a greater availability of flood cover in previously higher risk areas, and at better prices. In this regard, the Insurance Ireland/OPW working group, which the Department of Finance attends, now meets on a quarterly basis to support the information flow and to improve the understanding of issues between both parties.
The most recent Insurance Ireland survey of approximately 85% of the property insurance market in Ireland indicates that of the 16 completed defence schemes, 90% of policies in areas benefitting from permanent flood defences include flood cover, while there has been an increase from 66% to 77% of policies in areas benefitting from demountable defences including flood cover.
A sub-group has also been set up to explore the technical and administrative arrangements that may allow for the further sharing of data on flood insurance cover for those 300 areas where OPW has mapped flood risk through the CFRAM programme. The first meeting of this sub-group was held in January.
Following a meeting last July between Minister of State Canney and Insurance Ireland it was agreed that information and data on the deployment protocols, warning systems and emergency response systems in place where demountable defences are utilised would be provided to industry. The purpose of this information is to enable the industry reassess the overall level of risk with demountable flood defences in this context. It is hoped that this data will provide the robust information required for industry to reduce the risk it has associated with demountable defences and increase the levels of cover for these areas. It should be noted that this information has in the last number of weeks been provided to Insurance Ireland. The provision of information and data relating to other areas are subject to ongoing discussions.
Finally, you should be aware that a consumer can make a complaint to the Financial Services Ombudsman in relation to any dealings with a Financial Services or Insurance provider during which they feel they have been unfairly treated. In addition, individuals who are experiencing difficulty in obtaining flood insurance or believe that they are being treated unfairly may contact Insurance Ireland which operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to insurance.
203. Deputy Pearse Doherty asked the Minister for Finance the tax changes that are already programmed through legislation, such as the decrease in DIRT year on year; the way these changes are factored into the fiscal space; the cost of each change per year, in tabular form; and if he will make a statement on the matter. [16476/17]
View answerAs the Deputy is aware, discretionary revenue measures increase or decrease fiscal space depending on whether they raise or lower tax revenue. Where tax expenditures are due to end, fiscal space in the following year will increase. Similarly, fiscal space will decrease if a revenue raising measure ends. The key point of contact with the European Commission on these matters is the draft budgetary plan submitted for the year ahead by the 15th of October each year. It includes a table in which the detail of measures worth more than 0.05% of GDP should be set out.
The table below sets out the tax changes which are already legislated for and will have an impact on fiscal space in 2018 or beyond. As Deputy is aware, measures which were introduced in Budget 2017 and took effect in 2017, will have a carryover effect into 2018 and use 2018 fiscal space. However, for the purpose of this reply these measures have been excluded as they have already been provided to the Deputy as part of the reply to Parliamentary Question 109 (Ref number 14875/17) of the 28 March 2017. In addition, tax measures which have already been legislated for but include a sunset clause have also been excluded from the reply. These measures will be reviewed as part of the budgetary process each year to determine whether the provisions will be extended.
However, it is important to point out that as part of the annual Budget documentation, all tax measures which are announced, regardless of whether the measures have been legislated for, are assumed to take place and therefore included in the fiscal space arithmetic.
|
Tax measure |
2018 |
2019 |
2020 |
2021 |
2022 |
|
Interest Relief Rented Residential Property. Section 97 (2) of the Taxes Consolidation Act 1997 provides for the restoration of full interest deductibility in respect of interest on loans used in the purchase, improvement or repair of rented residential property over a 5 year period by way of annual increments of 5 percentage points. |
-8 |
-14 |
-14 |
-14 |
-6
|
|
DIRT The rate of DIRT will be decreased by 2% each year until it reaches 33% |
-9 |
-9 |
-9 |
- |
- |
204. Deputy Pearse Doherty asked the Minister for Finance the cost of retaining mortgage interest relief in its current form post 2017; and if he will make a statement on the matter. [16477/17]
View answerI am advised by the Revenue Commissioners that any estimates related to the cost of mortgage interest relief (MIR) beyond 2017 must be very tentative because they depend on a number of factors including the extent of mortgage redemption, mortgage interest arrears and mortgage interest rates.
Bearing in mind such caveats and on the basis of retaining the same rates of relief, maintaining the same ceilings on allowable interest and a comparable uptake of the relief to previous years, it is tentatively estimated that the cost of retaining MIR beyond 2017 would be in the order of €184 million per annum. This figure is based on the cost of tax relief at source for mortgage interest in 2016, the latest year for which figures are available.
In my Budget speech last October, I confirmed my intention to extend MIR beyond the current end date on a tapered basis to 2020, in line with the commitment in the programme for Government. The details of the extension will be set out in Budget 2018. A review of policy considerations and potential costs of such an extension was contained in the Income Tax Reform Plan published by my Department in July last year and may be of interest to the Deputy. The plan is available at:
www.finance.gov.ie/sites/default/files/Income%20Tax%20Reform%20Plan-FINAL_0.pdf.
205. Deputy John Brassil asked the Minister for Finance if there is a €1,520 fine for the submission of the F11 self return tax form in paper format; if a person is fined this amount if they do not have access to electronic submission; and if he will make a statement on the matter. [16521/17]
View answerI am advised by Revenue that one of Revenue's objectives in providing an efficient and cost effective service to taxpayers is to establish the use of electronic channels as the normal way of conducting business with them.
Revenue on-line service (ROS) is a quick and secure facility for taxpayers to pay tax liabilities, file tax returns, access tax details and claim repayments. The ROS facilities are available 24 hours a day, 365 days a year. Taxpayers using ROS to both pay their tax liability and file their return can benefit from an extension to existing deadlines.
A Form 11 is the prescribed form to be used by self assessed income taxpayers in returning their income. Since 1 January 2015 it has been mandatory for newly registering/re-registering income taxpayers to file their Form 11 via ROS. Taxpayers in these categories no longer receive paper return forms in the post. They are notified of their mandatory obligations by letter on registration and their agents are notified by email.
A person may apply to Revenue to be excluded from the requirement to pay and file electronically on the grounds of a lack of capacity to fulfil their obligations. In this context "capacity" means sufficient access to the internet to both file a return, and pay any liability online. An exclusion can also be sought where an individual is prevented by reason of age, or mental or physical infirmity from filing online.
Application for an exclusion should be made in writing stating the reason(s) to the taxpayer's local tax office. Details of local tax offices are available on the Revenue website, www.revenue.ie. If Revenue refuse the exclusion request that refusal decision can be formally appealed to the Tax Appeals Commission for determination.
Section 917EA Taxes Consolidation Act 1997 provides for a penalty of €1,520 for failure to file a return or pay a liability online for a taxpayer who is obliged to do so.
206. Deputy Catherine Connolly asked the Minister for Finance further to his Department’s press release on 23 March 2017, the criteria applied during the tender competition for the firms selected as bookrunners; the expertise each individual firm will offer; the reason so many global firms are required when each firm selected has local expertise; the reason five firms are required to act as bookrunners; the fees each firm will charge for their services; and if he will make a statement on the matter. [16555/17]
View answer207. Deputy Catherine Connolly asked the Minister for Finance the fees already paid to banks and institutions (details supplied) since their appointments as joint global co-ordinators and bookrunners in December 2016; the work they have carried out since their appointment; the reason for the appointment of five more bookrunners when three global firms were already in the position; and if he will make a statement on the matter. [16556/17]
View answerI propose to take Questions Nos. 206 and 207 together.
In December 2016, following a competitive procurement process, I announced that three firms were appointed to act as joint global co-ordinators to lead a selling syndicate in preparation for a possible AIB IPO. On the 23rd of March this year I further announced the addition of five joint bookrunners and a co-lead manager to the syndicate. The syndicate banks have been appointed until July 2018. This provides the State with optionality on the timing of any such transaction through 2017 and 2018.
A banking syndicate is a group of investment banks who are appointed to plan, structure and execute an IPO on behalf of a selling shareholder, in this case the sale of the State's shares in AIB in line with the provisions set out in the Programme for a Partnership Government. The three global coordinators lead the transaction, performing most of the work, while the bookrunners and co-lead manager will help to ensure coverage of the broadest possible range of relevant investors both by type and geography when it comes to the marketing and sales effort. A strong banking syndicate is critical to the successful design and execution of an IPO, building investor interest in the shares and ultimately maximising value for the taxpayer.
An IPO is a complex and specialised undertaking, and my Department and their advisors have made significant progress in their preparations. Work done by the global coordinators so far includes analysis of the bank's business plan and potential 'equity story' which involved engagement with the bank's management team, planning a comprehensive marketing programme to international investors, due diligence, offer structuring as well as other necessary workstreams.
Fees are only payable to the syndicate on the completion of a successful transaction (i.e. no fees have been paid to date), and are proportional to the value of the transaction. As such it is not possible to provide the exact quantum of fees that would be paid as no transaction has occurred. The fees that have been negotiated by my officials are very competitive by reference to comparable transactions and are capped, while the number of banks appointed is also within precedent for an equity capital market transaction of this nature and size and does not affect the overall fee level payable.
Further, the Deputy should be aware that in line with the State agreements with AIB, that all fees incurred by the State in relation to any capital transaction will be paid by the bank.
208. Deputy Dara Calleary asked the Minister for Finance the total expected profits arising from NAMA by the time it winds up; if the proceeds will be used to repay the national debt; his other plans for the use of the profits; and if he will make a statement on the matter. [16573/17]
View answerI would like to refer the Deputy to Parliamentary Question No. 126 of 21 February 2017 which also address these questions.
Currently NAMA expects to redeem 100% of its guaranteed senior debt by the end of 2017 and expects to redeem its subordinated debt in March 2020. NAMA will focus on completing its ongoing deleveraging, its Dublin Docklands SDZ and residential funding programmes in the interim period to 2020. NAMA's most recent annual statement which provides further insight into the Agency's expectations regarding these activities was laid before the Dail on 2 November 2016 and is also available on NAMA's website. As the Deputy will be aware, it is through the successful completion of these objectives that NAMA currently projects a surplus in the region of €2.3bn to be returned to the State once it completes it work.
As per section 60(2) of the NAMA Act 2009, NAMA may use surplus funds to redeem and cancel its debt. Surplus funds may only be returned to the Central Fund once NAMA's debt has been redeemed in full.
Any NAMA surplus paid into the Exchequer will be recorded in line with EUROSTAT rules and would likely be deemed a once-off capital receipt under non-tax revenue in the Financial Statements of the Exchequer.
It will be a decision for the Government as to how any surplus returned by NAMA will be utilised.
It has always been the Government's intention to use such receipts from the resolution of the financial sector crisis to pay down our debt and help reduce our debt servicing costs. Given the uncertainty around the specific timing of or the amount that will be realised, such receipts have not been included in our debt forecasts. Debt reduction underpinned by our lower national debt target of 45 per cent of GDP, will increase the resilience of the public finances to deal with any potential shocks which may emerge in the future.
209. Deputy Mattie McGrath asked the Minister for Finance the number of income taxpayers; the total income and total tax paid across the earnings and income tax bands based on the most recent information that is available; and if he will make a statement on the matter. [16588/17]
View answerI am advised by Revenue that Income Tax statistics are available on the Revenue Statistics webpage located at www.revenue.ie/en/about/statistics/income-tax.html. These tables show for 2014 (the latest year for which data are presently available) the number, the total gross income and tax paid across exempt, standard and higher rate income tax bands as requested by the Deputy. The tables additionally provides a breakdown of the distribution of the number of income earners, the total taxable income and tax, by tax band for married, single and widowed income tax cases. Updates for 2015 will be available in the coming months.
210. Deputy Michael Healy-Rae asked the Minister for Finance the reason Irish citizens have to pay almost double the average European interest rates; and if he will make a statement on the matter. [16614/17]
View answer220. Deputy Bernard J. Durkan asked the Minister for Finance if the banks here are justified in charging higher mortgage interest rates than throughout the rest of Europe in view of the fact that taxpayers here are instrumental in bailing out the lending institutions; and if he will make a statement on the matter. [16739/17]
View answerI propose to take Questions Nos. 210 and 220 together.
There are a number of factors, such as differences in national legal and housing systems, cultural preferences, the proximity of lenders to borrowers, which will impact on the levels of interest rates in different countries. More directly, credit and market conditions, mortgage default rates and the funding of mortgage credit will also be relevant factors.
In particular legacy issues, such as a high level of non-performing loans on the balance sheets of Irish banks, together with other input costs were outlined in a report published by the Central Bank of Ireland in May 2015 as factors which impact upon the pricing of variable rate mortgages in Ireland. These legacy issues include higher costs from credit losses, higher funding costs, higher levels of capital resulting from regulatory changes, higher required capital per euro of risk given the severe loss experience in the crisis, higher operating cost per euro of loans given falling balance sheets and the fixed cost base that comes with the infrastructure requirements of large retail banks.
It is very important to ensure that new mortgages are sold to borrowers in a transparent manner. The Central Bank, therefore, requires that all mortgages are advertised and sold in accordance with the requirements of financial services legislation (including Central Bank Codes), and that consumers who choose a given mortgage product (or to switch to a new product) are treated in accordance with these requirements in the context of the product they have chosen. Additionally, the Central Bank has carried out research which showed that there is scope for borrowers to save money by switching mortgages. The Competition and Consumer Protection Commission has launched a mortgage switching tool for consumers (which itself notes the findings of the Central Bank research of cases where borrowers could make savings) and also recent changes have been made to the Consumer Protection Code which, inter alia, places an onus on a lender to provide information on other mortgage products offered by that lender which could provide savings to the borrower.
The issue of mortgage interest rates is a significant one for this Government. In overall terms, the Government is of the opinion that increased competition is the best way to ensure that retail lending rates are driven down in a sustainable way for the market as a whole and thereby promote overall consumer welfare.
To that end, the Competition and Consumer Protection Commission (CCPC) is reviewing the mortgage market with a view to setting out options for Government in terms of market structure, legislation and regulation to lower the cost of secured mortgage lending and to improve the degree of competition and consumer protection. In liaison with the Central Bank, the CCPC has now commenced this work and announced a public consultation to gather views about the future of the Irish mortgage market. It is expected that the CCPC will produce the report outlining their proposals by the end of May 2017.
This is a policy area that the Government will keep under active review in its ongoing engagement with mortgage lenders and in implementing the Programme for Government commitments to help deliver on a long term basis better outcomes for all mortgage borrowers.
