Written Answers Nos. 433-457
433. Deputy Neasa Hourigan asked the Minister for Finance if the transfer of loans from a bank (details supplied) to a domestic or non-domestic financial institution will require his approval; and if he will make a statement on the matter. [14140/21]
View answer434. Deputy Neasa Hourigan asked the Minister for Finance the nature of the process of due diligence for his Department in taking a position on the transfer of loans from a bank (details supplied) to a domestic or non-domestic financial institution; and if he will make a statement on the matter. [14141/21]
View answerI propose to take Questions Nos. 433 and 434 together.
First of all, it is important to highlight that, as Minister for Finance, I have no direct role to play in the strategic decisions made by any corporate entity, including those relating to acquisitions and disposals of entire businesses or individual business units. Decisions in such matters are the sole responsibility of the boards and management of the entities.
This extends to the banks in which the State has a shareholding, which are run on an independent and commercial basis. The independence of these banks is protected by Relationship Frameworks which are legally binding documents and which cannot be changed unilaterally. These frameworks, which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market.
Under section 33 of the Central Bank Act, 1971, as amended, the Minister for Finance must give his approval for any transfer of authorised banking business in the State.
A guidance note on the process has been published on the Department’s website and is available at the link below.
https://www.gov.ie/en/publication/a5f5b3-transfer-of-banking-business-guidance-note/
A key consideration when reviewing proposals to transfer banking business is that in promoting the industry it is important that there is fair entry to and exit from the financial services sector in Ireland, and the Government has no desire to cause undue difficulty to firms wishing to enter or withdraw from the market. Moreover, we recognise that mergers and acquisitions play an important role in the growth of firms, and transfers of banking business often take place in such a context. Also, as banks with a global footprint enter the Irish market using branch or subsidiary structures, when there is a restructuring at group level, it may be necessary for the bank to transfer its business internally from one part of the group to another.
It is not in the spirit of the legislation to prohibit any transfer of banking business, unless there were serious concerns about the regulatory or prudential impact of a proposed transfer, or it would be likely to have a significant negative impact on the Irish economy or financial stability.
With regard to Ulster Bank’s withdrawal from the Irish market, it is anticipated that this will take place over a number of years and I would expect that matters such as the transfer of loans will be addressed in due course. It should be noted that NatWest has committed to seeking solutions where:
- Customers and colleagues are well supported;
- Job losses are minimised with no new compulsory redundancy departures this year;
- Stability is maintained in the sector; and
- NatWest’s withdrawal from the Irish banking sector is achieved in an orderly manner.
As part of this process, NatWest confirmed that it is negotiations with Permanent TSB (PTSB) and other strategic banking partners in relation to certain retail and SME assets, liabilities and operations. NatWest is also in negotiation with AIB in relation to the sale of a c. €4bn portfolio of performing commercial loans, and that staff wholly or mainly assigned to this loan book will transfer with the loan book. NatWest and AIB have signed a Memorandum of Understanding in this regard.
These announcements signal a potentially important development for the Irish banking sector. However, NatWest highlighted that, at this stage, these discussions have some way to go before final transactions are agreed. NatWest, PTSB and AIB have confirmed that they will provide further updates to the market as negotiations progress in this regard.
If a successful proposal emerges from these discussions and is put to me that requires the Irish Government’s backing as shareholder then:
- Given the likely monetary size off a transaction, and the public interest, I would anticipate that any transaction involving PTSB or AIB, would require consultation with me in line with the Relationship Frameworks. Should this be the case, the consultation process would take place in advance of any binding contract being signed.
- It is important to note the consultation process gives me the opportunity to express my views, but I have no right of veto.
I am advised by the Central Bank of Ireland that Ulster Bank’s withdrawal from the Irish market must be undertaken in accordance with the provisions of Irish financial services legislation, including the Central Bank of Ireland’s codes of conduct.
The Central Bank of Ireland has clear requirements that apply when firms cease operations or transfer operations to another entity. Customers must be informed about these decisions and given at least two months’ notice to move to alternative providers. If their loans are transferred, they must be given full details of the arrangements.
Where a loan is sold or transferred to another regulated entity, the protections that were available to borrowers prior to the transaction continue to be in place with the new owner. There is a strong consumer protection framework in place for mortgage borrowers which provides the same protections for borrowers regardless of the regulated entity with whom they are dealing, be that a bank, retail credit firm or credit servicing firm.
Under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018, if a loan is transferred or sold, the holder of the legal title to the credit must be authorised by the Central Bank and must comply with the Irish financial services law applicable to regulated financial service providers. This ensures that borrowers whose loans are sold or transferred, maintain the same regulatory protections, including under the various Central Bank’s statutory codes of conduct, such as the Consumer Protection Code 2012 and the Code of Conduct on Mortgage Arrears 2013 (CCMA).
435. Deputy Neasa Hourigan asked the Minister for Finance if the transfer of loans from a bank (details supplied) to a domestic or non-domestic financial institution will require approval from the Strategic Banking Corporation of Ireland; and if he will make a statement on the matter. [14142/21]
View answer436. Deputy Neasa Hourigan asked the Minister for Finance the nature of the process of due diligence for the Strategic Banking Corporation of Ireland in taking a position on the transfer of loans from a bank (details supplied) to domestic or non-domestic financial institutions; and if he will make a statement on the matter. [14143/21]
View answerI propose to take Questions Nos. 435 and 436 together.
As I am sure the Deputy knows, the Strategic Banking Corporation of Ireland (SBCI) is, subject to the Strategic Banking Corporation of Ireland Act 2014, independent in the performance of its functions. This includes any due diligence procedures.
SBCI operates a number of loan guarantee schemes on behalf of the Department of Enterprise, Trade and Employment and the Department of Agriculture, Food and the Marine. These are the Agricultural Cashflow Support Loan Scheme, the Brexit Loan Scheme/Covid-19 SBCI Working Capital Scheme and the Future Growth Loan Scheme. All of these schemes, under which Ulster Bank is an on-lender, involve SBCI providing an 80% guarantee to on-lenders in respect of each loan. In turn the SBCI receives counter-guarantees from the European Investment Fund.
I am informed by the SBCI that SBCI’s on-lenders are prohibited from selling or transferring the rights of any loans covered by the agreements under each of these schemes without the prior written consent of SBCI.
The Deputy should also be aware that the Covid-19 Credit Guarantee Scheme (CGS) which SBCI implements on behalf of the Department of Enterprise, Trade and Employment involves a direct guarantee from the Minister for Enterprise, Trade and Employment. Under the bilateral guarantee agreements between the Minister and each on-lender, the consent of the Minister is required in respect of any transfer of loan agreements, which may only be to another on-lender participating in the CGS.
However, I am further informed that it is the understanding of the SBCI that transfer of business from one licenced bank to another under section 33 of the Central Bank Act 1971 would not require any further action, including obtaining SBCI consent under contracts governing those loans.
To date, the SBCI has not received any requests to the transfer of loans from one on-lender to another.
The provision of facilities to on-lenders requires careful credit assessment and operational considerations. I understand that controls are put in place by the SBCI to ensure the creditworthiness of on-lenders is robustly assessed. The SBCI implements a thorough on-lender due diligence, assessment and set-up process ensuring compliance with the governance, credit, legal and tax obligations of the SBCI. All new on-lending facilities require approval from the SBCI Board.
The due diligence which the SBCI applies to new potential on-lenders includes the assessment of the on-lender credit approval processes and operational governance structures to confirm the adequacy of oversight and control and the capability of the financial institution to manage and report on SBCI backed facilities.
SBCI also undertakes an Independent due diligence assessment for unrated counterparties from a panel of professional firms to confirm the accuracy of the information provided by the prospective counterparty as part of the SBCI due diligence process.
There is a process of ongoing monitoring and review of on-lending facilities with regular review of compliance with covenants and undertakings, and any terms and conditions imposed by the SBCI.
The internal audit report (December 2020) on SBCI due diligence process noted the positive attributes of the design and operation of SBCI due diligence process.
437. Deputy Neale Richmond asked the Minister for Finance if he has considered reducing tax rates such as the exit tax rate and capital gains tax for young investors to encourage more young people to enter the market; and if he will make a statement on the matter. [14175/21]
View answerAt the outset, the Deputy should note that it is not possible to accurately estimate changes in behaviour arising from for instance a change in the rate of exit tax applicable to investment products. These investments tend to be long term investments and any investment decisions in relation to them are driven by multiple factors and not solely by taxation.
The normal tax treatment afforded to Irish collective investment funds is that the funds invested are allowed to grow on a tax-free basis within the fund. The income is taxed at the level of the investor rather than the fund, as is standard international practice.
In order to ensure that the appropriate tax is collected from Irish investors, funds are obliged to operate an exit tax regime and remit the tax deducted in this manner to Revenue. The exit tax rate applicable is 41%. This charge to tax does not apply in the case of unit holders who are non-resident as their liability to tax on gains from the fund will be determined in their home jurisdiction.
The broad rationale for exempting such funds from direct taxation is to facilitate individuals to invest collectively, without suffering double taxation (that is, taxation both within the fund and in the hands of the investor on distribution). Most OECD countries now have a tax system that provides for neutrality between direct investments and investments through a Collective Investment Vehicle/Fund.
There is a charge to tax on Irish residents on the happening of a “chargeable event”. In order to prevent the deferral of a chargeable event (and therefore an exit charge) a deemed 8 year disposal rule was introduced. A disposal of units at market value is deemed to occur on the ending of an eight-year period following the acquisition of the units. Exit tax is payable on the deemed gain. This rule ensures taxes are collected from funds and cannot grow without triggering a chargeable event indefinitely. On the ultimate disposal of the investment, any tax paid which arose as a result of a deemed disposal is allowed as a credit against any final tax liability on disposal.
In relation to capital gains, in general, gains on the disposal of assets are charged to capital gains tax (CGT) at the rate of 33%. The first €1,270 of chargeable gains of an individual in a tax year is exempt from CGT.
My Department has undertaken research, examining the differential in savings and investments products subject to DIRT and those subject to the life assurance exit tax. The Tax Strategy Group 2020 paper identified a number of non-tax reasons, including age, as to why investors may prefer to invest in financial products subject to DIRT rather than life assurance products subject to exit tax (LAET), including:
- investor fees/costs
- level of risk attached to the investment
- the motivation for saving/investing (and the ability to do so)
- the lower level of complexity associated with such products.
Finally, as the Deputy will be aware, as with all taxes, both CGT and exit tax are subject to ongoing review which includes the consideration and assessment of the rate along with any associated reliefs and exemptions. CGT and exit tax policy and legislation are reviewed by the Tax Strategy Group as part of the annual Budget and Finance Bill process and are considered in the wider tax policy context.
438. Deputy Bríd Smith asked the Minister for Finance if the code of conduct for mortgage arrears is a voluntary code; if not, if a regulatory body in the State will enforce its application; the mechanism the State has to ensure financial and corporate bodies abide by the code and engage with persons in arrears; his policy on dealing with threats to family homes as a result of such arears; and if he will make a statement on the matter. [14186/21]
View answerThe Central Bank of Ireland Code of Conduct on Mortgage Arrears 2013 (CCMA) was introduced to ensure that regulated entities have fair and transparent processes in place for dealing with borrowers in or facing arrears on a mortgage which is secured on a primary residence, and it is part of the national policy framework of supports and protections available to assist borrowers in financial difficulties.
The CCMA is a statutory code issued under Section 117 of the Central Bank Act 1989. The provisions of the CCMA are legally binding on regulated entities, and the Central Bank has the power to administer sanctions on regulated entities for a contravention of the CCMA under Part IIIC of the Central Bank Act 1942. Also a failure to comply with a written direction from the Bank to secure the observance of the CCMA will constitute an offence.
The CCMA sets out the process that entities must follow when a borrower is in or facing difficulties with their mortgage payments. Due regard must be given to the fact that each case is unique and needs to be considered on its own merits. All cases must be handled sympathetically and positively by the regulated entity, with the objective at all times of assisting the borrower to meet his or her mortgage obligations. Furthermore, regulated entities must explore all of the options for alternative repayment arrangements (ARAs) offered by that entity, in order to determine which ARA, if any, is appropriate and sustainable for the borrower’s individual circumstances. Under the CCMA, a regulated entity may only commence legal proceedings for repossession where it has made every reasonable effort to agree an ARA with the borrower and other clear requirements are met, or the borrower has been classified as not co-operating. The CCMA also provides for an appeals mechanism, including where the regulated entity declines to offer an ARA, where the borrower is not willing to enter into an ARA offered, or where the entity classifies the borrower as not co-operating.
The Central Bank advises that the protection of mortgage loan borrowers, including those in arrears, is a key priority and that its engagement with regulated entities is very intrusive to ensure that they meet its expectations and regulatory requirements. It also advises that it will continue to assertively supervise compliance with the CCMA and will investigate any issues that arise, including patterns of behaviour which suggest that the CCMA process is not being followed.
The Deputy may also wish to know that the Central Bank has launched a public consultation on possible improvements to the Standard Financial Statement that is set out in the CCMA, and to also give people an opportunity to provide comments more generally on the CCMA and the requirements of the mortgage arrears resolution process as provided for in the CCMA (see attached:- https://www.centralbank.ie/docs/default-source/publications/consultation-papers/cp139/cp139---review-of-the-standard-financial-statement.pdf.). Submissions may be made to the Central Bank at consumerprotectionpolicy@centralbank.ie and the closing date is 20 April next.
440. Deputy Holly Cairns asked the Minister for Finance his views on retaining the 9% tourism VAT rate at least up until 2025 to assist recovery and provide certainty for tourism businesses; and if he will make a statement on the matter. [14307/21]
View answer453. Deputy Pádraig O'Sullivan asked the Minister for Finance if he will consider retaining the tourism VAT rate at 9% for a period of time to assist the recovery of the tourism sector post-Covid-19; and if he will make a statement on the matter. [14524/21]
View answer476. Deputy Brendan Griffin asked the Minister for Finance if he will consider extending the duration of the 9% VAT rate for the hospitality sector in response to the prolonged Covid-19 restrictions impacting the industry; if he will provide early certainty to the industry in this regard; and if he will make a statement on the matter. [15078/21]
View answerI propose to take Questions Nos. 440, 453 and 476 together.
In recognition of the unprecedented challenges facing the Hospitality and Tourism sector, I provided for a reduction in the VAT rate to supplies of certain goods and services which primarily relate to the hospitality and tourism sector in Budget 2021. The rate was reduced from 13.5% to 9% from 1 November 2020 to 31 December 2021.
These changes introduced in the context of the pandemic are kept under review by my Department. Separately, tax changes are generally taken in the context of the Budget. Deputies will be aware that my officials prepare a series of papers containing tax options for the Tax Strategy Group to be considered in the context of the budgetary process, alongside a wide range of submissions from various stakeholders and lobby groups.
441. Deputy Holly Cairns asked the Minister for Finance his views on extending the employment wage subsidy scheme until 31 January 2022; and if he will make a statement on the matter. [14309/21]
View answer469. Deputy Catherine Murphy asked the Minister for Finance if the employment wage subsidy scheme will continue for months after mass gatherings are permitted again in order to assist the live events sector scale up its activities and begin to trade again. [14991/21]
View answer491. Deputy Brendan Howlin asked the Minister for Finance if he has considered the admission of the events industry to supports and schemes (details supplied) until six months after mass gatherings are permitted again; and if he will make a statement on the matter. [15395/21]
View answer498. Deputy Cian O'Callaghan asked the Minister for Finance if he will consider extending the employment wage subsidy scheme for the events industry until six months after mass gatherings are permitted again; and if he will make a statement on the matter. [15508/21]
View answer501. Deputy Claire Kerrane asked the Minister for Finance if consideration has been given to the continuation of schemes such as the employment wage subsidy scheme and tax debt warehousing; and if he will make a statement on the matter. [15677/21]
View answerI propose to take Questions Nos. 441, 469, 491, 498 and 501 together.
I am aware of concerns that have been raised regarding the pace of recovery for the live events sector, and that it has been suggested that the level of support be increased and/or that the application of some of the new State supports should be delineated on the basis of explicit sectoral qualification criteria. However, the reality of COVID-19 is that our whole economy and labour market have been rapidly transformed by this unprecedented shock and nearly all sectors have been negatively impacted either directly or indirectly.
The objective of the Employment Wage Subsidy Scheme (EWSS) is to support all employment and maintain the link between the employer and employee insofar as is possible. The EWSS has been a key component of the Government’s response to the continued Covid-19 crisis to support viable firms and encourage employment in the midst of these very challenging times. To date, payments of over €2.3 billion and PRSI credit of at least €400 million have been granted to over 48,000 employers in respect of over 541,000 workers.
I have been clear that there will be no cliff-edge to the EWSS and, as the Deputies will be aware from announcements made on Tuesday 23 February, it has been decided that the scheme is now to be extended until the end of June 2021.
With the agreement by Government on the revised plan, COVID-19 Resilience and Recovery 2021: The Path Ahead, a cautious and measured approach will be taken as we lay the foundations for the full recovery of social life, public services and the economy. It is therefore appropriate that key business supports should remain in place until the end of June 2021.
As the revised plan is implemented, the EWSS will play an important role in getting people back to work as public health restrictions are eased, thereby reducing the numbers dependant on social welfare payments over time, including the Pandemic Unemployment Payment (PUP).
Consideration is being given to the fact that continued support could be necessary out to the end of 2021 to help maintain viable businesses and employment and to provide businesses with certainty to the maximum extent possible. Decisions on the form of such support will take account of emerging circumstances and economic conditions as they become clearer.
In relation to the tax debt warehousing, I would note that the legislation provides that Period 2 may be extended by Ministerial order but cannot extend beyond 31 December 2022. This is to ensure compliance with EU State Aid rules, provided for under the EU Temporary Framework for State Aid measures to support the economy in the current COVID-19 outbreak.
The Government will continue to assess the effects of the Covid-19 pandemic on the economy and I will continue to work with Ministerial colleagues to ensure that appropriate supports are in place to mitigate these effects to the maximum extent feasible.
For those businesses who may need additional support during this period, I would draw attention to the comprehensive package of other business and employer supports that have been made available since the July Stimulus Plan and Budget 2021 - including the Covid Restriction Support Scheme (CRSS), the Credit Guarantee Scheme, the SBCI Working Capital Scheme, Sustaining Enterprise Fund, and the Covid-19 Business Loans Scheme.
The Government remains fully committed to supporting businesses and employers insofar as is possible at this time.
442. Deputy Holly Cairns asked the Minister for Finance the steps he is taking to ensure that concession-based moratoriums are being provided to tourism and hospitality businesses by Irish banks and lenders until the Covid-19 restrictions are lifted; and if he will make a statement on the matter. [14310/21]
View answerAs the Deputy will be aware, on 18 March 2020, the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by banks and other lenders to help their customers, including those in the tourism and hospitality sectors, who were economically impacted by the Covid-19 crisis. The measures included flexible loan repayment arrangements where needed, including loan payment breaks initially for a period up to three months and then subsequently extended for up to six months. The implementation of this voluntary moratorium by the banking industry was a flexible response to the emerging Covid-19 crisis and ensured that a large volume of affected customers could benefit quickly during a fast moving and evolving public health crisis.
Borrowers whose payment break has ended are been given an option to return to full repayments based on the same term of the loan or to extend the term of the loan or to engage further with their bank on suitable arrangements. The BPFI reported, that as of 31 December 2020, approximately 49% of SMEs returned to repaying on the existing term whilst 46% returned to repaying on extended term basis and just over 5% were receiving other supports from lenders.
As Minister for Finance I have no function in the commercial decisions made by banks. However, the Central Bank has confirmed that there is no regulatory impediment to lenders offering payment breaks to borrowers, providing they are appropriate for the individual borrower circumstance. The BPFI has also reiterated that standard payment breaks continue to be part of the wide range of tailored solutions which are being made available to customers upon assessment of their situation.
SME borrowers have regulatory protections via the Central Bank's SME lending regulations. The SME Regulations https://centralbank.ie/news/article/regulations-for-firms-lending-to-smes-from-2016 set out the required treatment of SMEs by regulated entities in relation to various aspects of business lending. This includes detailed provisions around the credit application process, requirements regarding security or collateral, credit refusals and withdrawals, handling complaints, managing arrears and having in place policies for engaging with SMEs in financial difficulty. The options could include additional flexibility, and this could be a short-term arrangement such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements. The Central Bank recently wrote to all lenders indicating that lenders are to ensure that they have sufficient expert resources to assess individual borrower circumstances, and to offer appropriate and sustainable solutions to affected borrowers in a timely manner in line with regulatory requirements. The Central Bank’s clear expectation is that lenders engage effectively and sympathetically with distressed borrowers.
In addition, Credit Review https://www.creditreview.ie was established to assist those SMEs and farm borrowers that have had credit applications of up to €3 million refused or indeed an existing credit facility withdrawn or amended by the participating bank. SMEs can apply to Credit Review after exhausting the internal appeals process in the participating institution, which are currently AIB, BOI, Ulster Bank and Permanent TSB.
I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that will still need support.
443. Deputy Niall Collins asked the Minister for Finance when the disabled drivers and disabled passengers tax concession scheme will be replaced in view of the Supreme Court judgement of 18 June 2020; and if he will make a statement on the matter. [14378/21]
View answerFollowing approval of the Finance Act 2020, which provides for the medical criteria for the Disabled Drivers Scheme, the HSE has been informed that medical assessments can recommence from 1st January 2021. This is considered to be an interim solution only. A comprehensive review of the scheme, to include a broader review of mobility supports for persons with disabilities, will be conducted this year. On foot of that review new proposals will be brought forward for consideration.
Separately, the ability to hold assessments may be impacted on by, among other things, the public health restrictions in place and the role of the HSE Medical Officers in the roll out of the COVID vaccination programme.
444. Deputy Cormac Devlin asked the Minister for Finance if a deferral mechanism or staggered payment options can be put in place for householders who are struggling to pay their local property tax for 2021; and if he will make a statement on the matter. [14398/21]
View answerI am informed by Revenue that it has engaged extensively with residential property owners who are experiencing financial difficulties since the pandemic began to agree flexible Local Property Tax (LPT) payment arrangements that best suit their circumstances and avoid unnecessary hardship, and it has assured me that this will continue to be the case.
Any property owners experiencing financial difficulties can avail of a wide range of flexible payment options both in respect of 2021 liabilities and for any previous years where liabilities remain outstanding. The full range of payment options, which include phased arrangements, are available to property owners via the LPT portal on the Revenue website at www.revenue.ie/en/property/local-property-tax/paying-your-lpt/index.aspx.
There are also existing legislative provisions in place that allow property owners to defer payment of LPT in certain circumstances. Further information regarding the deferral of LPT is available on the Revenue website at www.revenue.ie/en/property/documents/lpt/guidelines-for-deferral-of-lpt.pdf. However, deferral is not an exemption from LPT, and the outstanding liability remains as a charge on the property until it is paid and carries an interest charge of 4% per annum.
445. Deputy Peadar Tóibín asked the Minister for Finance the details of the process through which his Department drafts and produces legislation; if his Department outsources the drafting of legislation; if so, the Bills for which the drafting was outsourced since he took office; and the costs associated with the drafting of each Bill. [14419/21]
View answer(1) Details of the process through which the Department of Finance drafts and produces legislation
The Department drafts and produces legislation in accordance with the procedures outlined in the Cabinet Handbook.[1] In particular, Chapter 4 sets out the procedures to be followed in respect of proposals for new legislation.
In broad terms, the Department develops policy proposals subject, where necessary, to prior Government approval. The proposals are then formulated as a General Scheme for the proposed Bill in numbered heads comprising instructions for drafting and explanatory notes. Subject to prior consultation with the Office of the Attorney General and any other interested Departments, the General Scheme is then presented to Government for approval to draft. If a General Scheme receives such approval, it is then referred to the Office of the Attorney General for the Bill to be drafted by the Office of Parliamentary Counsel to the Government.
The procedures set out in Chapter 4 of the Cabinet Handbook do not apply to certain types of proposed legislation, including the Finance Bill and Consolidation Bills.
In the development of new legislation, the Department does, where appropriate, collaborate with public bodies, particularly bodies under the aegis of the Department, which have expertise in the relevant legislative and policy area. For example, the Office of the Revenue Commissioners is closely involved in the development of the Finance Bill each year. The Department does not consider engagement of this type to be “outsourcing” within the meaning of this question.
(2) Does the Department of Finance outsource the drafting of legislation
The Department does not routinely outsource the drafting of legislation, though it may consider this as an option in matters of urgency, or where resource constraints so require.
(3) The Bills for which the drafting was outsourced since June 2017 and the costs associated with the drafting of each Bill
Since June 2017, the Department has engaged external drafting services on one occasion, as follows:
|
Date of project commencement |
Date of project completion |
Title of General Scheme / Title of Bill
|
Consultant |
Total cost (ex VAT) |
|
December 2014 |
December 2018 |
Central Bank (Consolidation) Bill |
Matheson |
€100,000 |
[1] Available at https://assets.gov.ie/6813/2a580791a7b24decb97a550539a0faff.pdf
446. Deputy Jackie Cahill asked the Minister for Finance the amount of VAT reclaimed by persons who are not registered for VAT from 2010 to 2020, inclusive in tabular form; and if he will make a statement on the matter. [14433/21]
View answerI am advised by Revenue that the amounts of Value-Added Tax (VAT) claimed by persons who are not registered for VAT across a range of schemes is published each year in the Cost of Tax Expenditures Table, which is available at link:
https://www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/costs-tax-expenditures.pdf. The data for 2020 will be published in the coming months.
In addition to the above, farmers who are not registered for VAT may reclaim VAT paid in relation to construction, extension, alteration, or reconstruction on certain farming activities. The VAT amounts refunded to farmers under this arrangement from 2007 to 2019 are shown in Table 15 of Revenue’s Farming Sector Profile, which is available at link: https://www.revenue.ie/en/corporate/documents/research/farming-profile-2020.pdf.
447. Deputy Bernard J. Durkan asked the Minister for Finance if his Department is considering expanding the remit of the Financial Services and Pensions Ombudsman to provide non-legal recourse to SMEs with annual turnover of greater than €20 million a year; and if he will make a statement on the matter. [14462/21]
View answerThe function of Financial Services and Pensions Ombudsman (FSPO) is to investigate complaints made against financial service providers and pension providers in an appropriate manner, proportionate to the nature of the complaint, by informal means, mediation or formal investigation including Oral Hearings if required.
To be eligible to make a complaint to the FSPO, the person making the complaint must fall within the definition of a “complainant”, which includes an actual or potential beneficiary, or a “consumer”.
The term “consumer” in relation to a financial service includes:-
(1) a natural person, not acting in the course of business,
(2) a sole trader, a partnership, trust club or charity (not being a body corporate) with an annual turnover in its previous financial year of €3 million or less, or
(3) an incorporated body that had an annual turnover in its previous financial year of €3 million or less (and is not a body corporate that is a member of a group of companies with a combined annual turnover of greater than €3 million).
This definition of “consumer” in the Act, aligns with the definition within the Consumer Protection Code 2012 (CPC) published by the Central Bank of Ireland as regulator of financial service providers.
Current Position
I am advised that data for 2018, published by the Central Statistics Office, confirms that micro enterprises accounted for 91.9% of all enterprises in Ireland, during that year. Such enterprises are already within the jurisdiction of the FSPO, as their turnover comes within the €3 million limit prescribed by the Act. As more than 90% of all enterprises are already within the remit of the FSPO, there does not appear to be any need to expand the remit of the FSPO, to include eligibility for enterprises with a turnover of up to €20 million.
Potential Legal Challenge
I am further advised that the FSPO believes that an expansion of its remit to include eligibility for enterprises with a turnover of up to €20 million could give rise to a Constitutional challenge.
Article 34.1 of the Constitution provides that the administration of justice is reserved to the Courts. Administrative bodies, such as the FSPO, are permitted by Article 37.1 of the Constitution, but only insofar as they exercise:
“Limited functions and powers of a judicial nature in matters other than criminal matters”
Expanding the jurisdiction of the FSPO to include enterprises with a turnover of up to €20 million seems likely to be open to challenge on the basis that the FSPO would no longer exercise limited functions and powers.
The comments of Hogan J. (of the High Court at the time) in Lyons and Murray v Financial Services Ombudsman [2011] IEHC 454, are particularly noteworthy. The Judge expressed considerable reservations regarding the regulations made by the Financial Services Ombudsman Council to expand the definition of “consumer” to include a person or group of persons and incorporated bodies having an annual turnover of €3 million or less. In considering an appeal against a finding of the FSO in a complaint concerning borrowings of €17M, he commented that
“The FSO cannot be regarded as some form of miniature version of the Commercial Court…it could not practically function if this was what was expected of it.”
Similarly, in Hooper Dolan Financial Services Limited v Financial Services Ombudsman and Abbeyleix Credit Union Ltd [2011] IEHC296, McMenamin J. upheld the definition of “consumer” applying to the FSO, but in so doing the Judge stated that the category of “consumers” should be:-
"Seen as distinct from large corporations, well-versed in the financial world, which would be precluded and outside any legislative principle or policy”
It is also worth noting that the overall value of redress potentially sought by a complainant with a turnover of up to €20 million, seems likely to go beyond the current maximum compensation of €500,000 which the Ombudsman may direct, in addition to rectification. An enterprise capable of generating turnover of up to €20 million seems likely to hold potentially very valuable financial products and services and arguably will not require the type of protection generally accepted as being appropriate for entities coming within the current definition of “consumer”.
Compliance Obligations
Any change in the turnover limit for the definition of “consumer” would of course require a similar amendment to the definition of “consumer” within the CPC, in order to maintain that alignment. Any such extension of the definition of “consumer” within the CPC and the FSPO Act 2017, could give rise to significant extra compliance obligations for most types of regulated entities, having regard to the scope of application of the CPC which applies to most types of regulated entities with some exceptions. Such compliance work would of course give rise to significant costs and could transpire to be a significant disincentive to any financial service providers considering Ireland as a potential base for operations, thereby potentially diminishing Ireland’s competitiveness. It also appears likely that regulated entities may in certain instances either withdraw or increase the prices of certain products or services to newly defined “consumers”, in light of such potential new compliance obligations.
The Ombudsman has informed me that for the reasons outlined above it does not appear either necessary or appropriate to expand the remit of the FSPO to include eligibility for enterprises with a turnover of up to €20 million.
448. Deputy Bernard J. Durkan asked the Minister for Finance his plans to update the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 to regulate cases in which vulture funds transfer legal ownership of loans to third parties but retain beneficial ownership; and if he will make a statement on the matter. [14463/21]
View answerSince the introduction of the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015, credit servicing firms have been subject to the provisions of Irish financial services law that apply to regulated financial services providers, including but not limited to:
- The Consumer Protection Code,
- the Code of Conduct for Mortgage Arrears,
- the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015,
- the Fitness and Probity Regime,
- the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) Minimum Competency Regulations 2017, and
- the Minimum Competency Code 2017
The Consumer Protection (Regulation of Credit Servicing Firms) Act 2018 (the 2018 Act) expanded the scope of ‘credit servicing’ to also bring the loan owners themselves directly under Central Bank regulation and supervision, and also within the scope of the relevant consumer protection framework. The 2018 Act came into effect on 21 January 2019 and expanded the definition of ‘credit servicing’ in the 2015 Act to also include the following activities:
- holding the legal title to credit granted under the credit agreement;
- determination of the overall strategy for the management and administration of a portfolio of credit agreements; and
- maintenance of control over key decisions relating to such portfolio.
The Central Bank published Authorisation Requirements and Standards (the Standards) in December 2015. These Standards require that Credit Servicing Firms must be able to demonstrate that they are in a position to conduct their affairs in a manner that ensures the best interests of their customers are protected. The Standards were imposed on Credit Servicing Firms as a condition of authorisation and must be complied with on an on-going basis.
In advance of the 2018 legislation coming into effect on 21 January 2019, the Central Bank published and updated the Standards to reflect the fact that loan owners now fall to be directly regulated. The Standards provide that a Credit Servicing Firms must structure, organise and resource its business to ensure that it is in a position to demonstrate that it can comply with applicable regulatory requirements. This includes ensuring that adequate and effective control of the firm rests in the State, that all firm records are available to the Central Bank, and that the firm is not outsourcing activities to any extent that would impact on its ability to meet all applicable regulatory requirements.
The Standards also contain additional requirements for Credit Servicing Firms which hold the legal title to credit granted under a credit agreement and which engage in associated ownership activities. These requirements include that each Credit Servicing Firms must have effective processes for the development, implementation and oversight of the firm’s overall strategy for the management and administration of its portfolios of credit agreements and the maintenance of control over key decisions relating to those portfolios.
The Central Bank’s supervision strategy for the credit-servicing sector has a number of elements, including:
- Detailed data gathering and analysis, including mortgage arrears and repossession data, such as the pattern of arrears in the Irish mortgage market by entity type; mortgage arrears profile; restructuring activity in the Irish market; data on ARAs and complaints etc. Additionally, obtaining direct evidence from consumers to provide first-hand information about their experiences in dealing with the credit-servicing sector.
- Intensified risk and evidenced-based supervision, which includes both on-site and offsite inspections. The Central Bank will continue to assertively supervise credit servicing firms’ compliance with the CCMA, to ensure that a fair and transparent process is in place for all borrowers, including those whose loans have been sold.
- Use of its full suite of supervisory powers as appropriate.
The Central Bank’s approach to supervision of the credit-servicing sector is underpinned by an expectation of high standards and a professional and consumer-focused approach to compliance.
Beneficial owners were excluded from the scope of the 2018 Act as their inclusion could have had an impact on entities like passive securitisation vehicles. Irish and European banks use securitisation as a matter of course to raise funds for on-lending to the real economy, mortgage borrowers and SMEs who need access to credit. This is an important and ongoing aspect of the international financial system and passive securitisation vehicles do not have any implications for consumer protection.
If securitisation vehicles needed to be authorised and regulated, a number of unintended consequences may arise. For example, such vehicles could find it impossible to comply with the regulatory requirements of the Central Bank and therefore could be forced out of the market completely. Alternatively, they would have to take on staff and premises and adopt structures in order to meet these requirements and the costs of this would be factored in the price that buyers would be willing to pay for securitisations thereby increasing costs which are likely to be passed to consumer.
449. Deputy Bernard J. Durkan asked the Minister for Finance if he will consider enhancing consumer protection with regard to the expected increased sale of loans to non-traditional entities including vulture funds owing to the economic impact of Covid-19; and if he will make a statement on the matter. [14464/21]
View answerThe Deputy will be aware that the overall regulatory framework provides a significant number of protections and supports for borrowers in or facing mortgage arrears, in recognition of the distress and, in the case of mortgages secured on a borrower’s primary residence, the vulnerability of borrowers at risk of losing their home. Most loan agreements include a clause that allows the original lender to sell the loan on to another firm. When a loan is sold, the relevant Irish and EU consumer protections continue to apply.
All regulated firms, including banks, retail credit and credit servicing firms (CSFs), are obliged to comply with the Consumer Protection Code 2012 (the Code) and the Code of Conduct on Mortgage Arrears 2013 (the CCMA) in addition to a range of other provisions of Irish financial services law which are outlined more fully below. Collectively, these provide a strong consumer protection framework, providing rules with which regulated firms operating in Ireland must comply by law. The Central Bank has reviewed, advocated for and strengthened, where necessary, these rules in order to ensure that the regulatory framework remains fit for purpose and continues to ensure the protection of all consumers in their dealings with regulated firms.
The Consumer Protection (Regulation of Credit Servicing Firms) 2015 amended the scope of the Central Bank Act 1997 and brought ‘credit servicing’ under Central Bank regulation and supervision. This resulted in a significant strengthening of consumer protection for borrowers whereby all consumer protection obligations would travel with loans, if they were sold by a bank to a new non-bank owner. Under the 2015 legislation, the new loan owners themselves did not directly fall to be regulated; rather it was the company appointed to ‘service’ those loans by the loan owner.
The Consumer Protection (Regulation of Credit Servicing Firms) 2018, which came into effect on 21 January 2019, further expanded the scope of the 1997 Act and has now also brought the loan owners (holders of legal title to the credit) directly under Central Bank regulation and supervision, and within the scope of the relevant consumer protection framework.
Since 2015, CSFs have been subject to the provisions of Irish financial services law that apply to regulated financial service providers, including, but not limited to:
- The Consumer Protection Code
- the CCMA
- the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Medium-Sized Enterprises) Regulations 2015,
- the Fitness and Probity Regime,
- the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) Minimum Competency Regulations 2017, and
- the Minimum Competency Code 2017
Authorisation standards for credit servicing firms
The Central Bank also published Authorisation Requirements and Standards (the Standards) in December 2015. These Standards require that CSFs must be able to demonstrate that they are in a position to conduct their affairs in a manner that ensures the best interests of their customers are protected. The Standards were imposed on CSFs as a condition of authorisation and must be complied with on an on-going basis.
In advance of the 2018 legislation coming into effect on 21 January 2019, the Central Bank updated and published the Standards to reflect the fact that loan owners now fall to be directly regulated. The Standards provide that a CSF must structure, organise and resource its business to ensure that it is in a position to demonstrate that it can comply with applicable regulatory requirements. This includes ensuring that adequate and effective control of the firm rests in the State, that all firm records are available to the Central Bank, and that the firm is not outsourcing activities to any extent that would impact on its ability to meet all applicable regulatory requirements.
The Standards also contain additional requirements for CSFs which hold the legal title to credit granted under a credit agreement and which engage in associated ownership activities. These requirements include that each CSF must have effective processes for the development, implementation and oversight of the firm’s overall strategy for the management and administration of its portfolios of credit agreements and the maintenance of control over key decisions relating to those portfolios.
The Central Bank’s approach to supervision of the credit-servicing sector is underpinned by an expectation of high standards and a professional and consumer-focused approach to compliance.
It is the clear expectation of both the Government and the Central Bank that lenders engage effectively and sympathetically with distressed borrowers to deliver appropriate and sustainable solutions and treat borrowers at all times, including in response to COVID-19, in line with Central Bank’s robust consumer protection framework. I will continue to work with the Central Bank, and indeed also maintain contact with the main lenders, to ensure that appropriate arrangements and supports will be available for borrowers and other financial customers who continue to be impacted by COVID-19.
450. Deputy Catherine Connolly asked the Minister for Finance the analysis his Department has carried out into the use by employers of third-party providers who operate a voucher system in the delivery of the bike-to-work scheme; his views on the use of third-party providers in this regard by employers given that they take roughly 10% of every sale at no cost to the employer but resulting in the bike shop losing out on this money; and if he will make a statement on the matter. [14470/21]
View answer451. Deputy Catherine Connolly asked the Minister for Finance if his attention has been drawn to the fact that the protracted payment process of the voucher system with regard to employers’ use of third-party providers who operate a voucher system in the delivery of the bike-to-work scheme has resulted in many bicycle shops being unable to facilitate these third-party providers and the employees of the companies they represent; and if he will make a statement on the matter. [14471/21]
View answerI propose to take Questions Nos. 450 and 451 together.
I am advised by Revenue that section 118(5G) of the Taxes Consolidation Act 1997 (TCA 1997) provides for the Cycle to Work scheme. This scheme provides an exemption from benefit-in-kind (BIK) where an employer purchases a bicycle and associated safety equipment for an employee.
Under section 118B TCA 1997 an employer and employee may also enter into a salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary, in exchange for a bicycle and related safety equipment.
Where a bicycle or safety equipment is purchased under the Cycle to Work scheme or through a salary sacrifice arrangement certain conditions must be met, for example:
- The exemption applies to the first €1,250 of expenditure incurred by the employer in obtaining a bicycle and related safety equipment, or the first €1,500 for pedelecs or ebikes and related safety equipment. Employers may incur costs in excess of these limits, but any such excess will not qualify for the exemption and will be liable to tax. A salary sacrifice arrangement is subject to the same monetary limits.
- The bicycle and related safety equipment must be new and must be purchased by the employer.
- The bicycle and related safety equipment must be used by the employee or director mainly for the whole or part of their journey to or from work.
- An employee or director can only avail of the Cycle to Work scheme once in any 4-year period. A salary sacrifice arrangement is subject to the same time limits and any salary sacrifice arrangement entered into must be completed within a 12-month period.
There are no legislative provisions specifying where a bicycle or safety equipment may be purchased. Employers may therefore choose to allow employees to select a bicycle and safety equipment from the retailer of their choice, or may alternatively offer more limited options, for example, allowing employees to choose their bicycle and safety equipment from a specific range or a single retailer only.
I am advised by Revenue that it understands that the voucher system that the Deputy refers to relates to arrangements whereby employers may decide to engage the services of a third party to facilitate the operation of the cycle to work scheme. As such arrangements are at the discretion of the employer they are a matter for the employers concerned.
The scheme is designed to be administratively simple in order to encourage employers to participate. Any restriction on the employers' discretion could involve additional administrative procedures for either or both Revenue and employers. As this runs counter to the administrative simplicity of the existing provisions, it would not be appropriate to alter the existing scheme.
Further guidance regarding the Cycle to Work scheme and salary sacrifice arrangements can be found on Revenue’s website.
Furthermore, I understand that as part of the 2021 Spending Review, the Department of Transport is currently examining the Cycle-to-Work Scheme. The primary focus of the analysis will be the rationale and efficiency of the scheme. The delivery and operation of the scheme will be considered in this context, however, the role of third-party providers will not be the focus of this work.
452. Deputy Róisín Shortall asked the Minister for Finance further to Parliamentary Question No. 389 of 3 November 2020, the position regarding the fuel grant element of the scheme for scheme recipients if a disabled driver purchases an electric car; and if he will make a statement on the matter. [14517/21]
View answerAs outlined in my answer to the Deputy’s Parliamentary Question No. 389 of 3 November 2020, the Drivers and Passengers with Disabilities Scheme provides for the remission or repayment of Vehicle Registration Tax (VRT) up to maximum limits. Section 135C(3)(b) of the Finance Act 1992 further provides that a Category A series production electric vehicle can avail of relief of up to €5,000 on the VRT due.
Under the Drivers and Passengers with Disabilities Scheme there is no differentiation between electric and other vehicles in terms of VRT/VAT relief. The amount of VRT due or paid on a vehicle is remitted or repaid up to the maximum relief applicable (€10,000 for VRT/VAT relief in most cases). As there is a separate VRT relief for electric vehicles provided for by Section 135C(3)(b) of the Finance Act 1992, the amount of VRT due or paid on an electric vehicle may be lower than the maximum relief permitted. In such a case the VRT relief will equate to the actual VRT due or paid. The VAT element of the refund is given regardless of whether it is an electric vehicle.
Members of the Scheme may claim payment of a fuel grant based on a per litre rate of €0.602 for petrol, €0.495 for diesel and €0.106 for liquefied petroleum gas (LPG). An annual maximum of 2,730 litres applies in respect of a driver or passenger, and 4,100 litres in respect of an organisation. The fuel grant covers petrol, diesel and LPG, it does not cover electricity used to recharge electric vehicles. However, it should be noted that electricity supplied for household use is not subject to Electricity Tax.
454. Deputy Pádraig O'Sullivan asked the Minister for Finance if consideration will be given to increasing the current rates under the e-working tax relief in view of the current shortfall for employees in the difference between the maximum rate of employer-allowed working from home allowance before tax is applicable and the e-working tax relief; and if he will make a statement on the matter. [14525/21]
View answerWhere e-workers incur certain extra expenditure in the performance of their duties of employment remotely or from home, such as additional heating and electricity costs, there is a Revenue administrative practice in place that allows an employer to make payments up to €3.20 per day to such employees, subject to certain conditions, without deducting PAYE, PRSI, or USC. Revenue have confirmed that PAYE workers using their primary residence as a workplace during Covid-19 restrictions qualify as e-workers for the purposes of this practice.
This administrative practice has been in place for some time and the choice of whether to make the payment of €3.20 is at the discretion of the employer. The value of relief allowed under the Irish system is already considered sufficient to cover any legitimate additional costs incurred by workers. The level of support allowed also compares favourably internationally: at €3.20 per day up to €16 per week or €832 per annum may be paid tax free. By contrast, the weekly rate in the UK is just £6 per week or a maximum of £312 per annum.
Revenue also advise that the provision of equipment, such as computers, printers, scanners and office furniture by the employer to enable the employee work from home will not attract a Benefit-In-Kind charge, where the equipment is provided primarily for business use. The provision of a telephone line, broadband and such facilities for business use will also not give rise to a Benefit-in-Kind charge, where private use of the connection is incidental.
Where an employer does not pay €3.20 per day to an e-worker, employees retain their statutory right to claim a deduction under section 114 of the Taxes Consolidation Act (TCA) 1997 in respect of actual vouched expenses incurred wholly, exclusively and necessarily in the performance of the duties of their employment. PAYE employees are entitled to claim costs such as additional light and heat in respect of the number of days spent working from home, apportioned on the basis of business and private use.
As I announced on Budget day, in addition to these existing measures, Revenue have agreed to allow broadband to qualify for this relief. This apportionment is based on the number of days the person spent working from home in year with 30% of the apportioned value accepted by Revenue as related to work in the home.
PAYE workers can claim e-working expenses by completing an Income Tax return at year end. Revenue advise that the simplest way for taxpayers to claim their e-working expenses and any other tax credit entitlements is by logging into the myAccount facility on the Revenue website.
Revenue have published detailed guidance on e-working arrangements in their Tax and Duty manual TDM 05-02-13 e-Working and Tax which may be viewed at the following link: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-02-13.pdf.
Finally, the national remote working strategy: Making Remote Work, commits the Tax Strategy Group to reviewing the current tax arrangements for remote working in respect of both employees and employers. The Tax Strategy Group will take account of the economic, financial and organisational implications arising from the experience of remote working during the pandemic, and assess the merits of further enhancements for consideration in the context of Budget 2022.
455. Deputy Ged Nash asked the Minister for Finance his views on the proposal by a union (details supplied) on the need to establish a structured forum on banking to consider the future of the banking landscape in Ireland; if his Department will engage with the union to consider the proposals further; and if he will make a statement on the matter. [14538/21]
View answerWhen I met with the FSU, last December, I outlined that I did not think my Department should participate in the Forum as I was concerned that it would not represent a model of good governance to have competent authorities, such as the Department of Finance and the Central Bank of Ireland, participating in the formulation of proposals and recommendations that will then be submitted to Government for objective consideration by the same competent authorities. However, I assured the FSU that I and my Department would examine any proposals or any outputs from the FSU or a banking forum organised by it, should one be established.
In addition the Programme for Government highlights the importance of social dialogue and the importance of open engagement with all sectors of society. Accordingly, I and my Department are happy to engage with the FSU and other stakeholders. In that context, I engaged with the FSU late last year on the strategic review of Ulster Bank. I also met with the FSU following the announcement by NatWest that it intends withdrawing from the banking sector in the State and has begun the process of winding down its ROI Ulster Bank business and I have committed to further engagement with the FSU in relation to this issue.
456. Deputy Ged Nash asked the Minister for Finance if a copy will be provided of the briefing notes prepared for Central Bank officials in preparation for their recent Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach session; and if he will make a statement on the matter. [14539/21]
View answerAs the Deputy will be aware material prepared for Central Bank officials in preparation for their appearance at Oireachtas Committees or any other events are an internal matter for the Bank.
The Central Bank is independent in the performance of its functions and this independence is enshrined in the Treaties of the European Union and in the Statute of the European System of Central Banks.
The Deputy may wish to consider submitting a request for the information to the Bank under the Freedom of Information Act 2014.
457. Deputy Thomas Pringle asked the Minister for Finance the actions he has taken regarding the decision by a bank (details supplied) to sell loans to a fund despite the fact that agreements had been entered into under the mortgage-to-rent scheme with a social housing body; and if he will make a statement on the matter. [14540/21]
View answerAs the Deputy is aware, as Minister for Finance I have no role in the day to day operations of any bank operating within the State including banks in which the State has a shareholding. I'm precluded from intervening on behalf of any individual customer in any particular bank. Decisions in relation to commercial matters are the sole responsibility of the board and management of the banks, which must be run on an independent and commercial basis. The independence of banks in which the state has a shareholding is protected by Relationship Frameworks which are legally binding documents that cannot be changed unilaterally. These frameworks, which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market
Non-performing exposures (NPE's) remain at an elevated level across the European banking system and addressing this issue is one of the key priorities for the European banking supervisor. In Ireland significant progress has been made across the banking sector in reducing the level of NPEs since the financial crisis mainly through loan by loan restructuring in addition to a number of loan disposals.
Despite this progress, the level of NPEs in the Irish system remains well above the European average and some time ago the supervisory authority tasked the management and board of each institution with developing and implementing a strategy to address this challenge. The banks have no choice but to respond.
You will recall that in 2018 my Department brought forward legislation to ensure that the contractual rights and obligations of a customer are not altered by the sale of a loan and customers will continue to benefit from, and fall under the scope of applicable regulations, whether with their bank or a 3rd party servicing entity. In this regard, the Consumer Protection (Regulation of Credit Servicing Firms) Act ensures that relevant borrowers whose loans are sold are afforded the regulatory protections they had prior to the sale. All of the customer's rights under their existing terms and conditions will remain in place post transfer.
