Tuesday, 16 Jan 2018

Written Answers Nos. 194-215

House Prices

Questions (194)

Michael McGrath

Question:

194. Deputy Michael McGrath asked the Minister for Finance his Department's forecast for house price inflation in 2018; and if he will make a statement on the matter. [54705/17]

Written answers

Minister for Finance

My Department produces macroeconomic forecasts twice a year. As part of the forecast process my Department produces a forecast for overall investment (gross domestic fixed capital formation), and in line with the national accounts approach, this involves forecasting the overall volume and price changes for newly built residential units. The sale of existing houses is not included in the national accounts as it is simply the change of ownership of an existing asset, though the value created as part of the sale process is included - for example, the conveyancing activity. As the Deputy will appreciate, estimates of price inflation for newly built units in the context of the national accounts framework are not the same as forecasts for overall house price inflation. With this in mind, the current forecast for price inflation of newly built units in 2018, on a national accounts basis, is 5 per cent.  

In its annual review of residential mortgage lending requirements, the Central Bank concluded that both actual and expected price dynamics are heavily influenced by the current low levels of housing supply. Increasing supply is key to addressing the current difficulties in the housing market, and the Government has taken a significant number of measures in this area through Rebuilding Ireland – Action Plan for Housing and Homelessness. As you will be aware, Budget 2018 provided significant increases in funding for a number of initiatives aimed at increasing the supply of new homes. These measures include funding of €750 million for a new vehicle – Home Building Finance Ireland – to boost the supply of debt funding to residential development. An additional €500 million was allocated to build a further 3,000 social housing units by 2021. An extra €75 million is also being provided under the Local Infrastructure Housing Activation Fund. I also announced an increase to the rate applicable under the vacant site levy in the second and subsequent years of continued vacancy. This will provide a strong incentive to owners of these lands to either develop them or sell them for the purpose of development.

Although admittedly coming from a low base, the latest figures from the Department of Housing show significant increases in residential construction activity, with Commencement Notices and ESB connections up 36% and 28% respectively to November 2017. My Department will continue to work with the Department of Housing, Planning and Local Government and all other stakeholders to ensure housing supply maintains this growth. Increasing the supply of homes is the most effective method of easing inflationary pressure in the housing market.

Ireland Strategic Investment Fund Investments

Questions (195)

Michael McGrath

Question:

195. Deputy Michael McGrath asked the Minister for Finance the investments including lending made by the Ireland Strategic Investment Fund in the area of residential and non-residential property since its inception; and if he will make a statement on the matter. [54706/17]

Written answers

Minister for Finance

I am informed by the Ireland Strategic Investment Fund (“ISIF”) that as at 31 December 2017 ISIF has a number of commitments in the area of residential and non-residential property. These commitments are outlined in tabular form below.

I am also informed by ISIF that the Fund has committed a further €25 million to a real estate debt structure, the detail of which will be announced in due course.

	ISIF investment	Purpose
Activate Capital	€325m	Lending on commercial basis to residential development projects in Ireland.
Ardstone Residential Partners Fund	€30m	Residential equity investment fund.
Cherrywood	€52m	Site infrastructure funding to unlock 360 acres of development land at Cherrywood, South County Dublin, for residential and commercial development.
DCU Student accommodation	€54m	ISIF has leveraged DCU’s existing student accommodation programme to help unlock funding for the overall Campus Development Programme.
DAD Property Fund (Bancroft)	€8m	Investment partnership acquiring apartments in Tallaght, to provide mix of open market and social/affordable housing.
WLR Cardinal	€75m	Provides development and refinance capital. Focus on multiple real estate sectors, providing both pure finance & development capital. Some residential housing elements.
Quadrant	€50m	Focus on office development projects. Provides development and refinance capital. Some residential housing elements.
Kilkenny Regeneration	€2m	Providing seed investment for a major urban regeneration project in the heart of Kilkenny City.
Finegrain	€25m	Invests in offices, business parks, logistics facilities and industrial properties. Primarily in regional locations.

Departmental Funding

Questions (196)

Peadar Tóibín

Question:

196. Deputy Peadar Tóibín asked the Minister for Finance the name and number of organisations here that are in receipt of funding from his Department that have expended resources seeking the repeal of the eighth amendment; the amount of funding these organisations have received from the State in the last five years; the amount of money that they have spent on this particular campaign during that time; the number of organisations here that are in receipt of funding from his Department that have expended resources seeking the retention of the eighth amendment; the amount of funding these organisations have received from the State in the last five years; and the amount of money that they have spent on this particular campaign during that time. [54766/17]

Written answers

Minister for Finance

Under the Ministerial and Parliamentary Offices Act, 1938, as amended most recently by the Oireachtas (Ministerial and Parliamentary Offices) (Amendment) Act, 2014, and the Electoral Act 1997 certain payments are made from the Central Fund to political parties. The payments are contingent on the request/approval of the Department of Public Expenditure and Reform in accordance with the Ministers and Secretaries (Amendment) Act, 2011.

Apart from payments made under the above legislation, no funding was provided from the Department of Finance to political organisations.

My Department has no role in monitoring the use made by parties of funds received under the above legislation.

Tracker Mortgage Examination

Questions (197)

Stephen Donnelly

Question:

197. Deputy Stephen S. Donnelly asked the Minister for Finance his plans to commission a report on the net aggregate position of each bank involved in the recent tracker mortgage scandal, including the benefits to the banks of moving persons to higher interest rates; the cost of the redress schemes; and if he will make a statement on the matter. [54905/17]

Written answers

Minister for Finance

As the Deputy is aware, the Central Bank’s Tracker Mortgage Examination requires all mortgage lenders that provided tracker interest rate mortgages in the Irish market to conduct a complete review of their mortgage loan books to assess compliance with both contractual and regulatory requirements relating to tracker mortgages. Lenders’ reviews are required to be conducted in accordance with the Central Bank’s framework for completion of the Examination (the “Framework”) issued in December 2015. The Framework requires lenders to identify all impacted customers and to address customer detriment in line with the Central Bank’s Principles for Redress. Steps being taken by lenders to address customer detriment identified during the course of the Examination include putting customers on the correct interest rates (rate rectification) in order to stop the immediate harm caused to them, and providing redress and compensation.

While the Central Bank is not in a position, due to confidentiality requirements under Central Bank legislation, to comment on the position of individual regulated entities, it has provided aggregated information to the public in relation to the Tracker Examination. The Bank published its most recent aggregate update on progress of the Tracker Mortgage Examination on 20 December 2017. As per the update, as at mid-December, following Central Bank challenge, lenders have included around 33,700 customers as affected by tracker mortgage failings with €297 million paid to that point in redress and compensation. (This includes impacted mortgages identified before the commencement of the industry wide examination.) 

While the Central Bank’s view is that the vast majority of customers have now been identified, the Bank will continue to review, challenge and verify the work undertaken by the lenders, and complete its intrusive on-site inspection programme. The Central Bank will submit a further progress report to me on the basis of end-March 2018 data.  In addition, I have requested the Central Bank to undertake an assessment of the current culture, behaviour and associated risks in Irish retail banks and to consider the further actions that may be taken to ensure that banks prioritise customer interests in the future.   Work is underway on this and I expect it will be finalised by the end of June.  The findings of the report will determine whether any additional legislative or regulatory changes are required to enhance accountability in the banks and to ensure that consumer interests are prioritized.

Departmental Schemes

Questions (198)

Pearse Doherty

Question:

198. Deputy Pearse Doherty asked the Minister for Finance his views on whether the Home Building Finance Ireland scheme will be successful in lending to developers to build homes in view of the fact that it has to operate within market conditions; and if he will make a statement on the matter. [54993/17]

Written answers

Minister for Finance

As announced in my Budget speech on 10 October 2017, it is my intention to establish Home Building Finance Ireland (HBFI) to increase the availability of debt funding on market terms to commercially viable residential development projects in the State.

The purpose of HBFI is to address the concerns raised by many developers and other participants in the residential development market that the relative scarcity and cost of development debt funding is proving to be a major contributory factor to the shortfall in residential supply. While appetite is increasing both by the main banks and alternative funding providers to fund residential development there is evidence of emerging supply constraints which could be exacerbated as house building levels increase to meet the economy’s required levels in the coming years.

Given this policy objective it was never the intention of the Government to provide cheap or subsidised funding to developers, nor would it be appropriate to do so. It has always been envisaged that HBFI would lend on commercial, market-equivalent terms and conditions, which would depend on the risk profile of each individual project, the quality of collateral and the creditworthiness of the borrower. This approach would be akin to a bank or private equity investor, in that HBFI would not be directly involved in development – its role would be solely as a commercial lender. In taking this approach HBFI will be also be designed to comply with State aid rules and its onoing lending activity is not expected to impact the General Government Balance.

With a proposed allocation of up to €750m, it is estimated that HBFI could have capacity to fund up to 6,000 homes in the coming years. The current estimated shortfall in residential supply is 15,000 – 20,000 units per annum and, accordingly, HBFI, with an annual average delivery of 2,000 homes, would reduce this shortfall by about 10% (assuming a three year horizon). This would be a significant contribution but it would not make HBFI a dominant player in the residential funding market and it would clearly leave room for banks and other finance providers to increase their contribution to funding much-needed residential development.

Clearly housing finance alone will not deliver houses. However, the Government, through its agencies, will do what it can to provide finance on a commercial basis for housing development. As set out in Rebuilding Ireland, policy actions are required in other areas and the construction sector must play its part in adopting innovative delivery approaches that can boost the productivity of the sector.

Credit Availability

Questions (199, 200)

Pearse Doherty

Question:

199. Deputy Pearse Doherty asked the Minister for Finance the reason the banking sector is not providing sufficient credit to developers to build homes; and if he will make a statement on the matter. [54994/17]

Pearse Doherty

Question:

200. Deputy Pearse Doherty asked the Minister for Finance his views on whether a lack of sufficient affordable credit to developers is stunting the supply of housing; and if he will make a statement on the matter. [54995/17]

Written answers

Minister for Finance

I propose to take Questions Nos. 199 and 200 together.

As the Deputy is aware, Government policy is focused on ensuring that all viable small and medium sized businesses have access to an appropriate supply of credit from a diverse range of bank and non-bank sources.  The Deputy will also be aware that, in my role as Minister for Finance, I have no direct function in the relationship between the banks and their customers.  Also, I have no statutory function in relation to the banking decisions made by individual lending institutions at any particular time and these are taken by the board and management of the relevant institution. This includes decisions in relation to products as determined by the banks.

However, officials from my Department collate and examine data from AIB and Bank of Ireland on a monthly basis, including data pertaining to the various sectors. Furthermore, my officials meet the banks on a quarterly basis to ensure an informed understanding of the wider SME bank lending environment which assists the development and implementation of policies aimed at ensuring SME access to finance and increased competition in the SME lending sector.

It should also be noted that the data published by the Central Bank of Ireland in its Quarterly Trends in Business Credit and Deposits series shows that new lending to Construction enterprises for year-end Q3 2017 totaled €141 million in drawdowns, a growth of almost 20% when compared to the same period in 2016.

Separately, ISIF is making a very substantial contribution to new private housing supply which is critical in terms of meeting the pent up demand for housing across all sectors of the market. In line with its double bottom line mandate, ISIF has already invested in a number of significant financing platforms and projects in the construction sector, and is actively examining other investment opportunities. 

The Government remains committed to the SME sector, including those involved in Construction, and sees it as the key engine of ongoing economic growth.

Legislative Programme

Questions (201)

Pearse Doherty

Question:

201. Deputy Pearse Doherty asked the Minister for Finance his plans to bring forward technical amendments to the Financial Services and Pensions Ombudsman Act 2017; and if he will make a statement on the matter. [55004/17]

Written answers

Minister for Finance

As the Deputy will be aware, matching definitions for long-term financial service were used in both the Government legislation and the Sinn Féin legislation passed by the Oireachtas last year in relation to this Ombudsman.

The Financial Services and Pensions Ombudsman Act 2017 provides that

"long-term financial service" means— 

(a) subject to paragraph (b), a financial service the duration of which is a fixed term of 5 years and one month, or more, but, notwithstanding that the aggregate term of them may be 5 years and one month (or more), there does not fall within this paragraph a series of consecutive terms in respect of a financial service's duration (provided no individual one of them is 5 years and one month, or more, in length); or 

(b) a financial service that is life assurance to which, by virtue of Regulation 4 of those Regulations, the European Communities (Life Assurance) Framework Regulations 1994 (S.I. No. 360 of 1994) apply (not being life assurance falling within Class VII defined in the first Annex thereto) and regardless of whether the term of which life assurance is fixed at a specified calendar period or not;"

The policy intent of paragraph (b) was to capture life assurance contracts of all durations, including open ended products. 

However, it has emerged that the wording used will not achieve the policy objective because the European Union (Insurance and Reinsurance) Regulations 2015 implementing the Solvency II Directive superseded the 1994 Regulations for many insurance undertakings. 

I accept that primary legislation will be required to resolve this issue and I hope to be able to address this as part of the MIFID implementation legislation shortly. I am also considering a possible further technical amendment to address an issue already raised by the Deputy.

Insurance Industry Regulation

Questions (202)

Michael McGrath

Question:

202. Deputy Michael McGrath asked the Minister for Finance the rules governing the practice of certain insurance firms automatically renewing a home insurance policy and taking payment from a person's bank account in the absence of receiving communication from the customer; if he plans to renew the policy; and if he will make a statement on the matter. [55010/17]

Written answers

Minister for Finance

As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation.  I have no role in day to day supervision of the insurance industry, as this is the responsibility of the Central Bank of Ireland.

Consequently, I submitted this question to the Central Bank of Ireland for its observations. It has informed me that all regulated entities, including insurance undertakings and insurance intermediaries, must comply with the Central Bank’s Consumer Protection Code (“the Code”).  The Code provides that a regulated entity must act honestly, fairly and professionally in the best interests of its customers and the integrity of the market, and must make full disclosure of all relevant material information, including all charges, in a way that seeks to inform the customer.  A regulated entity must ensure that all information it provides to a consumer is clear, accurate, up to date, and written in plain English.  Key information must be brought to the attention of the consumer, and the method of presentation must not disguise, diminish or obscure important information.

Provision 4.30 and 4.31 of the Code provide that: “A regulated entity providing an insurance quotation to a consumer must include the following information in the quotation, assuming that all details provided by the consumer are correct and do not change: a) the monetary amount of the quotation; b) the length of time for which the quotation is valid; and c) the full legal name of the relevant underwriter.” and “A regulated entity must set out clearly in the quotation provided to the consumer any warranties or endorsements that apply to the policy. Where the quotation is provided on paper or on another durable medium, this information must not be in a smaller font size than other information provided in the document.”

In addition, the Non-Life Insurance (Provision of Information) (Renewal of Policy of Insurance) Regulations 2007 provides that the insurer shall, not less than 15 working days prior to the date of expiry of a policy of insurance, where the insurer wishes to invite a renewal, issue to the client in writing a notification of renewal of the policy of insurance, or issue to the client in writing a notification that it does not wish to invite a renewal unless the insurer has reason to believe that the client would not wish to renew the policy.  Finally, Schedule 3 of the Unfair Terms in Consumer Contracts Regulations 1995 sets out the indicative list of terms which may be regarded as unfair. Part (h) cites terms “automatically extending a contract of fixed duration where the consumer does not indicate otherwise, when the deadline fixed for the consumer to express this desire not to extend the contract is unreasonably early” as being unfair.

In light of the above, I am satisfied that the legal framework provides sufficient protection to consumers that such practices, as described in the question, are covered under the existing framework.

Banking Sector Regulation

Questions (203)

Pearse Doherty

Question:

203. Deputy Pearse Doherty asked the Minister for Finance if his attention has been drawn to a tactic used by at least one vulture fund in which it pressures a borrower to appoint an agent to collect all rent to be passed on to the fund but avoid formally appointing a receiver, thereby keeping the tax liabilities upon the borrower; his plans to address such behaviour; and if he will make a statement on the matter. [55015/17]

Written answers

Minister for Finance

I am advised by Revenue that Section 1049 of the Taxes Consolidation Act (TCA) 1997 sets out that a receiver appointed by a court in the State which has the direction and control of property is assessed and charged to income tax or corporation tax, as appropriate, on the property as if the property were not under the direction and control of the court. Such a receiver is answerable for doing all matters required under the Tax Acts for the assessment and payment of income tax or corporation tax, as appropriate.

In other cases, where a receiver has not been appointed by the court, but property is in receivership or a mortgagee has taken possession, section 96(3) of the TCA 1997 provides that tax on net rental income from the property, is chargeable on the mortgagee. This means that in these circumstances the mortgagee, and not the receiver, has to make a return in respect of, and pay the tax liability on, such income.

In each case it is the legal nature of the possession of the property that determines the person liable to tax on any income arising in respect of that property.

Motor Insurance Costs

Questions (204)

Niamh Smyth

Question:

204. Deputy Niamh Smyth asked the Minister for Finance the steps he is taking to ease the rising costs of motor insurance; when he last met officials on this matter; the persons he has met; and if he will make a statement on the matter. [55022/17]

Written answers

Minister for Finance

The Deputy should note at the outset that in my role as Minister for Finance I am responsible for the development of the legal framework governing financial regulation. Neither I nor the Central Bank can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on the risks they are willing to accept.

However, it is acknowledged that pricing in the motor insurance sector has been subject to a lot of volatility in recent years, from a point where some premiums appeared to be priced at an unsustainably low level to the more recent experience, particularly during 2015/2016, of large increases.

Indeed, the problem of rising motor insurance premiums was the main impetus for the establishment of the Cost of Insurance Working Group in July 2016. Its Report on the Cost of Motor Insurance was published in January 2017 (http://www.finance.gov.ie/wp-content/uploads/2017/07/170110-Report-on-the-Cost-of-Motor-Insurance-2017.pdf).  The Report makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, which are set out in an Action Plan. 

Work has been ongoing on the implementation of the recommendations by the relevant Government Departments and Agencies and there is a commitment within the Report that the Working Group will prepare quarterly updates on its progress.  The third such update was published on the Department's website on 23 October 2017 and shows the progress to date on the overall implementation of the recommendations.

32 actions were due for completion in the first three quarters of the year in total and 29 of those actions have been completed to date.  Substantial work has also been undertaken in respect of the nine action points categorised as “ongoing”. The fourth quarterly update is scheduled to be published within the next few weeks and will focus on the 14 actions which were due for completion in the final quarter of 2017.

It should be noted that the most recent CSO data (for November 2017) indicates that private motor insurance premiums have decreased by 16.3% since peaking in July 2016.  While the CSO statistics indicate a greater degree of stability on an overall basis, these figures represent a broad average and therefore there are many people who may still be seeing increases.  However, I am hopeful that this greater stability in pricing will be maintained and that premiums should continue to fall from the very high levels of mid-2016.

The Cost of Insurance Working Group is now chaired by Mr. Michael D’Arcy T.D., the Minister of State for Financial Services and Insurance.  The Working Group met in full session on a total of 15 occasions during 2017, most recently on 6 December, and will continue to meet regularly throughout 2018.  In parallel with the ongoing implementation of the recommendations from the Report on the Cost of Motor Insurance, the Working Group has also been undertaking an examination of the employer liability and public liability insurance sectors. 

As part of its preparation of the Motor Report, the Working Group consulted with a wide range of relevant stakeholders (see Appendix 4 of Report for list).  In addition, in his role as Minister of State for Financial Services and Insurance, Minister D’Arcy has met on a regular basis with insurance companies and a wide range of bodies associated with the insurance sector generally, while my officials – particularly those within the Insurance Policy section – maintain good day-to-day working relationships with relevant stakeholders including, for example, Insurance Ireland.

In response to the “details supplied” section of the Deputy’s question, the Deputy should be aware that policy in respect of the NCT lies with the Minister for Transport, Tourism and Sport.  The NCT was introduced to comply with an EU Roadworthiness Testing Directive aimed at improving road safety and environmental protection. While the NCT is one component of having safer vehicles on our roads, every vehicle owner has a personal and legal responsibility to ensure that their vehicles are roadworthy and well maintained.  The NCT is an inspection or general “health check” of what is visible and accessible on the day of the test and includes a check of the roadworthiness of such safety features as, amongst others, lighting, brakes and tyres.

The NCT is a minimum requirement of roadworthiness and is therefore not the only rating factor taken into account in the provision of motor insurance.  Insurers will generally require that a vehicle has a valid NCT in order to be covered.  However, in making their individual decisions on whether to offer cover and what terms to apply, they will also use a combination of other rating factors, including the age of the vehicle, as well as the vehicle type, the age of the driver, the claims record and driving experience, the number of drivers, how the vehicle is used, etc.  My understanding is that insurers do not all use the same combination of rating factors, and as a result prices and availability of cover varies across the market.  In addition, insurance companies will price in accordance with their own past claims experience, meaning that in relation to the age of a vehicle and the availability/price of cover, different insurance companies will use different age thresholds.

Banking Sector Regulation

Questions (205, 206)

James Lawless

Question:

205. Deputy James Lawless asked the Minister for Finance the actions his Department is taking to monitor the use and investment of cryptocurrencies such as Bitcoin here; the way in which these currencies affect the financial industry; the studies his Department is conducting to analyse the potential problems and risks involved in using and investing in these currencies; the regulatory frameworks required in the near future or that are currently in place in relation to crypto currency; if he is liaising with the Central Bank on these matters; and if he will make a statement on the matter. [55025/17]

James Lawless

Question:

206. Deputy James Lawless asked the Minister for Finance the safeguards in place to protect Irish investors that invest in cryptocurrency; and if he will make a statement on the matter. [55026/17]

Written answers

Minister for Finance

I propose to take Questions Nos. 205 and 206 together.

Cryptocurrencies and their exchanges or platforms are currently not regulated and do not currently require an authorisation or licence from the Central Bank of Ireland.  On 12 December 2013 the EBA published a warning to consumers on virtual currencies, and on 4 July 2014 issued an opinion recommending that national supervisory authorities discourage credit institutions, payment institutions and e-money institutions from buying, holding or selling virtual currencies.

The Central Bank subsequently published a notice on its website, warning consumers that no regulatory protections exist for consumers when holding, buying or selling virtual currencies. In addition, the Central Bank last month published an information notice to alert consumers to the high risks associated with Initial Coin Offerings, which are frequently associated with virtual currencies.

The Fifth EU Anti-Money Laundering Directive (5AMLD) will introduce measures to mitigate some of the money laundering and terrorist financing risks presented by cryptocurrencies. Agreement has been reached at EU level on the 5AMLD proposals but the legal text has not yet been published in the Official Journal of the European Union.

As part of the measures proposed under 5AMLD, Virtual Currency Exchanges and Custodian Wallet Providers will be required to register with a competent authority and will be subject to regulatory supervision and oversight in respect of their anti-money laundering and counter-terrorist financing obligations. 

The Central Bank contributes to the work of the European Supervisory Authorities on cryptocurrencies. It has also been liaising with my Department on cryptocurrencies in the context of the National Money Laundering and Terrorist Financing Risk Assessment.   

The Anti-Money Laundering Committee, chaired by the Department of Finance, is undertaking a risk assessment of new technologies, to include e-money and virtual currencies, from the point of view of anti-money laundering and combating the financing of terrorism. This is expected to be concluded by Q3 2018.

Insurance Costs

Questions (207)

Ruth Coppinger

Question:

207. Deputy Ruth Coppinger asked the Minister for Finance the measures he will take to reduce the cost of insurance for taxis; and if he will make a statement on the matter. [55075/17]

Written answers

Minister for Finance

As Minister for Finance, I am responsible 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, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept.  This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products.  Consequently, I am not in a position to review individual cases as to the pricing level or terms or conditions that should apply in such cases. 

However, it is acknowledged that pricing in the motor insurance sector has been subject to a lot of volatility in recent years, from a point where some premiums appeared to be priced at an unsustainably low level to the more recent experience of large increases.  Rising motor insurance premiums was the main impetus for the establishment of the Cost of Insurance Working Group in July 2016. Its Report on the Cost of Motor Insurance was published in January 2017.  The Report makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, which are set out in an Action Plan.  These recommendations were formulated to address the issue of increasing motor insurance costs for taxi drivers and other motorists, whilst taking account of the need to ensure a financially stable insurance sector.  Work is ongoing on the implementation of the recommendations by the relevant Government Departments and Agencies and there is a commitment within the Report that the Working Group will prepare quarterly updates on its progress.  The most recent of these was published in October 2017 and is available on my Department’s website at http://www.finance.gov.ie/updates/cost-of-insurance-working-group-3rd-progress-report-2017/ .  The fourth quarterly update will be published shortly.

With regard to the taxi sector in particular, I am advised that insurers use a combination of rating factors in making their individual decisions on whether to offer cover and what terms to apply.  These terms can include the age of the driver, as well as the type and age of car, the claims record, driving experience and penalty points of the driver, the number of drivers, how the car is used, etc.  My understanding is that insurers do not all use the same combination of rating factors, and as a result prices and availability of cover varies across the market. In addition, insurance companies will price in accordance with their own past claims experience.  In the case of taxi drivers, I understand that insurers take into account the nature of the taxi business, which involves driving for hire or reward extensively, and in their view has a much higher risk of injury claims from passengers and other road-users as a result.

I understand that taxi sector representatives made representations to my Department and the Cost of Insurance Working Group and these were taken into consideration during the review.  The position of the taxi sector was acknowledged by the inclusion in the Report of a recommendation for the Advisory Committee on Small Public Service Vehicles (commonly referred to as the Taxi Advisory Committee (TAC)) to enter discussions with Insurance Ireland in order to explore solutions for drivers in the sector.  I understand that the TAC met with Insurance Ireland on May 22nd last year to explore solutions for drivers in the sector and reported to the Minister for Transport, Tourism and Sport that it agreed that it will continue to engage with Insurance Ireland on this issue in addition to providing a platform for relevant representative groups to provide their views on the cost of insurance. 

It should be noted that the issues raised by the taxi sector were in the main similar to those affecting consumers generally, notwithstanding that there are risks that are specific to the sector.  While there is no silver bullet to reduce the cost of insurance, I believe that with the cooperation and commitment of all parties, fairer premiums for consumers, including taxi drivers can be delivered over the implementation period of the Cost of Motor Insurance Report.  I would note that the most recent CSO data (for November) indicates that private motor insurance premiums have reduced by 16.3% from the peak in July 2016.  While the CSO statistics indicate a greater degree of stability on an overall basis, these figures represent a broad average and therefore there are many people who may still be seeing increases.  However, I am hopeful that this greater stability in pricing will be maintained and that premiums should continue to fall from the very high level of the last years.

IBRC Liquidation

Questions (208)

Michael McGrath

Question:

208. Deputy Michael McGrath asked the Minister for Finance the refunds made or compensation issued by the special liquidator of Irish Bank Resolution Corporation, IBRC in respect of payment protection insurance wrongly charged by a building society (details supplied); the recourse customers and former customers have in this regard; and if he will make a statement on the matter. [55079/17]

Written answers

Minister for Finance

I am advised by the Special Liquidators of IBRC that no refunds have been made or compensation issued by them in respect of payment protection insurance charged by the former building society referred to in your question.

The Special Liquidators further advise that former customers may contact the Office of the Financial Services and Pensions Ombudsman to request that office to review and investigate any such matters.

Departmental Expenditure

Questions (209)

Pearse Doherty

Question:

209. Deputy Pearse Doherty asked the Minister for Finance the cost to date in appealing the EU state aid ruling on a case (details supplied); the cost to date in the establishment of an escrow account and other costs related to the collection of the €13 billion plus interest from the company; and if he will make a statement on the matter. [55082/17]

Written answers

Minister for Finance

The Government disagrees profoundly with the Commission's analysis in the Apple State aid case and is challenging the Commission's decision before the European Courts.

The Irish authorities engaged fully with the Commission throughout the State aid investigation. This involved a significant degree of legal and technical complexity, and additional expertise has been engaged where required. During the investigation, detailed and comprehensive responses were provided to the Commission to demonstrate 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. This has continued with the annulment application that has been lodged in the General Court of the European Union.

Notwithstanding the appeal in the Apple State aid case and the difference in view between Ireland and the Commission on the issue, the Government is committed to complying with the binding legal obligations the Commission’s Final Decision places on Ireland. 

Significant progress has been made on this complex issue and the establishment of an escrow fund, in compliance with all relevant Irish constitutional and European Union law requirements, is close to completion. Officials and experts from across the State have been engaged in intensive work to ensure that Ireland complies with all its recovery obligations as soon as possible.

Over the past four years approximately €5 million (including VAT) has been paid in total, of which approximately €2.5 million relates to the recovery process. This includes all legal costs, consultancy fees and other associated costs. These fees have been paid by the Department of Finance, Revenue Commissioners, NTMA, Central Bank of Ireland, Attorney General's Office and Chief State Solicitor's Office.

This case has involved a significant degree of legal and technical complexity, and additional expertise has been engaged where required. As it is and will continue to be an important issue for the State, it will continue to be appropriately resourced.

State Aid Investigations

Questions (210)

Pearse Doherty

Question:

210. Deputy Pearse Doherty asked the Minister for Finance the amount that will be deposited in the escrow account established to hold the moneys recouped from a company (details supplied) following the EU's state aid ruling; and if he will make a statement on the matter. [55083/17]

Written answers

Minister for Finance

Notwithstanding the appeal in the Apple State Aid case and the difference in view between Ireland and the Commission on the issue, the Government is committed to complying with the binding legal obligations the Commission’s Final Decision places on Ireland.

Apple therefore must be deprived of the benefit of the alleged aid and this involves two actions:

- The calculation of the amount of aid

- The process by which Apple are denied this amount of money

The Commission have estimated that this will amount to €13 billion but the precise sum is to be calculated using the methodology set out in the Decision, which is then subject to interest as set out in EU Regulations on the recovery of State Aid.

These sums will be placed into an escrow fund with the proceeds being released only when there has been a final determination in the European Courts over the validity of the Commission’s Decision.

VAT Rebates

Questions (211)

Paul Kehoe

Question:

211. Deputy Paul Kehoe asked the Minister for Finance when value added tax, VAT, will be repaid under the tax relief for drivers and passengers with disabilities in case of a person (details supplied); and if he will make a statement on the matter. [55118/17]

Written answers

Minister for Finance

I am advised by Revenue that the VAT refund to the person concerned was paid into his bank account on 9 January 2018.

Tax Code

Questions (212)

Seán Crowe

Question:

212. Deputy Seán Crowe asked the Minister for Finance his plans to amend legislation regarding the taxation requirements and inheritance implications for siblings living together in the same home or at the same address. [55128/17]

Written answers

Minister for Finance

I am informed by Revenue that for inheritance tax purposes, the relationship between the person who provides the inheritance (i.e. the disponer) and the person who receives the inheritance (i.e. the beneficiary) determines the maximum amount known as the “Group threshold” below which inheritance tax does not arise.

There are three separate Group thresholds based on the relationship of the beneficiary to the disponer. The Group A threshold (currently €310,000) applies, inter alia, where the beneficiary is a child (including adopted child, step-child and certain foster children) or minor child of a deceased child of the disponer. The Group B threshold (currently €32,500) applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer. The Group C threshold (currently €16,250) applies in all other cases.

Any prior gift or inheritance received by a beneficiary since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether any tax is payable on a benefit. Where a person receives gifts or inheritances which are in excess of their relevant tax free threshold, CAT at a rate of 33% applies on the excess over the tax free threshold.

Section 86 of the Capital Acquisitions Tax Consolidation Act (CATCA) 2003 provides for a dwelling house exemption which allows for property to be inherited tax free where the inheritor is already living in the home subject to certain conditions. Firstly the inherited dwelling house must have been the deceased person’s principal private residence at the date of his or her death. This requirement is relaxed in situations where the deceased person had to leave the house before the date of death because of ill health; for example, to live in in a nursing home. In addition the beneficiary must not have a beneficial interest in another residential property. Finally the beneficiary must have lived in the house for 3 years prior to the date of the inheritance and must continue to live in the dwelling house for 6 years after the date of the inheritance.

If a beneficiary qualifies as a ‘dependent relative’ then there is no requirement that the dwelling house be the principal private residence of the disponer or that the beneficiary remain in the dwelling house for 6 years after the date of the inheritance. For this purpose, a dependent relative is a direct relative of the disponer, or of the disponer’s spouse or civil partner, who is permanently and totally incapacitated because of physical or mental infirmity from maintaining himself or herself or who is over the age of 65.

As the dwelling house exemption applies equally to siblings as to any other persons residing together, I therefore have no plans to amend this legislation.

House Sales

Questions (213)

Tom Neville

Question:

213. Deputy Tom Neville asked the Minister for Finance if a person can volunteer their house for sale if they are in negative equity and have a bank write off the debt; and if he will make a statement on the matter. [55176/17]

Written answers

Minister for Finance

I assume from the question asked that the person in question is in arrears.  The Central Bank has informed me that its approach to mortgage arrears resolution is focused on ensuring the fair treatment of borrowers through a strong consumer protection framework and ensuring that lenders have appropriate arrears resolution strategies and operations in place. 

The Code of Conduct on Mortgage Arrears (CCMA) is a key part of the Central Bank’s Consumer Protection Framework in this regard.  It is a statutory Code first introduced by the Central Bank in February 2009, with the current CCMA becoming effective from 1 July 2013.   The CCMA provides a strong consumer protection framework, aimed specifically at the process to be followed by relevant firms with each borrower by reference to that borrower’s individual circumstances, to ensure borrowers in arrears or pre-arrears in respect of a mortgage loan secured on a primary residence are treated in a timely, transparent and fair manner by reference to that borrower’s individual circumstances.

Each regulated entity must consider the borrower’s situation in the context of the solutions they provide, which may differ from firm to firm.  The CCMA does not prescribe the solution which must be offered.  Rather, the CCMA includes requirements to ensure that any alternative repayment arrangement agreed between a lender and borrower is appropriate and sustainable and based on a full assessment of the individual circumstances of that borrower.

If a lender does not offer a borrower an alternative repayment arrangement, the lender must provide the reasons to the borrower and inform the borrower of the other options available and the implications of each option for the borrower, which may include voluntary surrender. Similarly, if a borrower is not willing to enter into an alternative repayment arrangement offered by the lender, the lender must also inform the borrower of other options available to the borrower, such as voluntary surrender, and the implications of these for the borrower and the borrower’s mortgage loan account.

However, as outlined above, the CCMA does not prescribe the solution which must be offered.  The decision on a voluntary sale and whether to write off any residual debt is a commercial decision for the lender.

Financial Services Regulation

Questions (214)

Michael McGrath

Question:

214. Deputy Michael McGrath asked the Minister for Finance if he has made a decision to prohibit the payment of fees, commissions or non-monetary benefits to third parties, including brokers and independent financial advisors, in the provision of independent financial advice associated with the sale of certain financial products; the details of such a decision including the products it relates to and when it takes effect; and if he will make a statement on the matter. [55200/17]

Written answers

Minister for Finance

For the purpose of this reply, I assume that the Deputy is referring to financial activities governed by the Insurance Distribution Directive (the IDD), the Markets in Financial Instruments Directive (MiFID) and the Central Bank of Ireland’s Consumer Protection Code 2012 (the CPC).

In recent years, the European Commission has focused on Consumer Protection with regard the provision of financial services. This began with the updating of the rules for the sale of financial instruments under MiFID and is also a focus of the IDD legislation. The aim of European Legislation in these areas is to provide transparency and clarity to the consumer around the advice they are being given. A way of achieving this is to bring in more stringent requirements around how sellers of such products can receive fees or inducements from third parties. There is also a need to ensure a level playing field for all the providers of products, such as insurance or financial instruments, which can be interchangeable in a number of cases.

Ireland is implementing the improvements in consumer protection via the transposition of IDD, MiFID II and amendments to the Central Bank Consumer Protection Code 2012.

As the deadline for transposition of the Insurance Distribution Directive is 23 February 2018. The Directive is currently in the process of being transposed and it will replace the Insurance Mediation Directive (IMD) which currently regulates point of sale insurance products.

IDD contains a number of national discretions which are open to Member States to adopt if they so wish. My Department carried out a public consultation on these discretions in April 2017 and submissions were received from Insurance Ireland, Irish Life Group and Brokers Ireland.

The discretions set out in Articles 22 and 29 of the Directive, allow Member States to limit or prohibit the acceptance or retaining of fees, commissions or other non-monetary benefits. Following the consideration of the submissions received during the public consultation and consultations with the Central Bank of Ireland, I have decided to exercise part of a discretion contained in Article 29 to prohibit the acceptance and retaining of fees, commissions or other non-monetary benefits in relation to the provision of independent advice for insurance-based investment products.

I will further consider these discretions following the completion of the Central Bank's work in this area. The Bank issued a Consultation Paper in November, which contains proposals to enhance the protections for consumers when seeking advice from financial intermediaries. This includes proposals for stricter rules on how financial intermediaries can be paid commission (or other inducements) by the firms whose products they sell.

The proposed measures require firms to avoid conflicts of interest created by poorly designed inducement arrangements and provide greater transparency for consumers about how a financial intermediary, whose advice they are relying on, is getting paid.

This consultation will close on 22 March 2018 and I look forward to seeing the Central Banks’ analysis once they have completed their work.

It should also be noted that the Commission has recently published a proposal to postpone the implementation date of the IDD requirements to 1 October 2018. This proposal is subject to agreement by the Council, Commission and European Parliament in the normal way.

The framework on advice in IDD is also replicated in the Markets in Financial Instruments Directive or MiFID II, which gives protection for investors in financial instruments, such as shares, bonds or derivatives, and came into effect on 03 January 2018. Under the legislation, authorised investment firms are banned from accepting fees, commissions or other non-monetary benefits when giving “independent” investment advice. The exception is where the non-monetary benefit is minor and is of benefit to the quality of service that the firm provides.

Under MiFID II, I exercised the discretion to allow certain firms such as those authorised under the Investment Intermediaries Act 1995, many of whom are small brokers servicing local markets, to be exempt from the full MiFID II requirements. However, these firms must be subject to strict rules around consumer protection that are deemed “analogous” to the MiFID II rules including those around the acceptance of fees and commissions. To ensure that these firms are covered by analogous rules, the Central Bank updated its Consumer Protection Code (2012) in this area in November 2017. Under the Code, product producers must be able to demonstrate that any commission arrangements based on levels of business introduced do not impair the intermediary's duty to act in the best interests of the consumers and do not give rise to a conflict of interest between the intermediary and the consumer.

State Properties Data

Questions (215)

Peadar Tóibín

Question:

215. Deputy Peadar Tóibín asked the Minister for Finance the vacant properties and land not in use, owned, rented or leased by his Department or by bodies and agencies under the aegis of his Department by square footage for buildings and acres for land, in tabular form; the address and location of these properties; and the last date of occupancy or use of these properties. [55212/17]

Written answers

Minister for Finance

In response to the Deputy's question, my Department manages and controls the shared accommodation needs of both the Department of Finance and Department of Public Expenditure and Reform in respect of Departmental staff occupying accommodation within the State’s buildings portfolio.  My Department  is not involved in any direct rental of buildings occupied by staff. Departmental accommodation needs are provided for by the Office of Public Works via the OPW’s Property Management Services Section. In that regard, OPW are separately providing details of in respect of properties falling within the remit of the OPW Commissioners.

I am advised that one of the bodies under the aegis of my Department, the National Asset Management Agency (NAMA), has vacant land not in use.

This land consists of five sites totalling 4.5 acres located in the Dublin Docklands Strategic Development Zone. These sites are actively being progressed for development as part of NAMA’s Dublin Docklands Development programme.

NAMA has indicated that the addresses of the five sites cannot be released due to commercial sensitivities. NAMA estimates that the sites have been vacant since the mid-2000s. As the sites in question were unoccupied before coming into NAMA’s possession, it is unable to provide any further detail in relation to the last date of occupancy or use of these properties.