Thursday, 16 Jun 2022

Written Answers Nos. 41-60

Eurozone Issues

Questions (41)

Alan Farrell

Question:

41. Deputy Alan Farrell asked the Minister for Finance his views on Eurozone interest rates and the impact on the Irish economy; and if he will make a statement on the matter. [30550/22]

Written answers

Minister for Finance

It is important to put the current monetary policy environment into context. Monetary policy supports over the course of the pandemic have been extraordinary, with the ECB maintaining record low interest rates and making extensive asset purchases. This injected additional liquidity into markets and helped to maintain favourable financing conditions during the worst of the pandemic.

These favourable conditions supported commercial bank lending to firms and households, and low interest rates also reduced the burden of debt for euro area countries. This allowed necessary government borrowing to take place, which enabled the substantial fiscal support provided to households and businesses. Essentially, monetary and fiscal policy worked hand-in-glove during the pandemic.

At the beginning of this year, the outlook for the euro area economy was positive. The fading impact of the pandemic represented a tailwind for economic activity, and the expectation was that monetary policy could be gradually normalised in line with the burgeoning economic recovery. This outlook was upended with Russia’s unlawful and immoral invasion of Ukraine, with the crisis and its associated economic, financial, and other sanctions representing a large supply-side shock to the global economy. One of the major economic consequences of the war has been the significant rise in energy and other commodity prices.

Prices across the globe have risen substantially as a result, with inflation in Ireland recorded at 8.3 per cent in April, the highest rate since the series began. Against this backdrop, the process of monetary policy normalisation in the euro area has begun, with the ECB bringing their programme of quantitative easing to an end. I also note the recent announcement by the ECB’s Governing Council that it plans to raise interest rates at its upcoming meeting in July, in accordance with its commitment to ensure inflation stabilises at its 2 per cent goal over the medium term. This will be the first rise in ECB interest rates in more than a decade, following the most recent period of very accommodative policy.

As Minister for Finance, monetary policy is not a part of my remit and it is not my place to comment or speculate on the setting of Eurozone interest rates, which as the Deputy is aware is the responsibility of the ECB. Of course, higher interest rates will have an impact on the Irish economy. Indeed estimates published by my Department suggest that a one per cent increase in policy rates would lead to lower economic growth and employment over the medium term – although it would also serve to reduce inflation. As such my Department will continue to monitor interest rate developments closely.

Tax Yield

Questions (42, 76, 85)

Michael Moynihan

Question:

42. Deputy Michael Moynihan asked the Minister for Finance the extent of corporation tax receipts in the first five months of the year; and if he will make a statement on the matter. [30072/22]

Willie O'Dea

Question:

76. Deputy Willie O'Dea asked the Minister for Finance the way that the tax receipts for the first five months of 2022 compare with the same period in 2021; and if he will make a statement on the matter. [30327/22]

Neale Richmond

Question:

85. Deputy Neale Richmond asked the Minister for Finance if he will report on the tax revenues to date in 2022; and if he will make a statement on the matter. [31019/22]

Written answers

Minister for Finance

I propose to take Questions Nos. 42, 76 and 85 together.

Tax receipts in the January-May 2022 period amounted to €30.1 billion, up by almost €6.4 billion (27 per cent), on the same period last year. This was driven by very strong growth in VAT, corporation tax and income tax.

Income tax receipts to end-May were up by €1.7 billion (17 per cent), compared to the same period last year. This is a reflection of the strong recovery in our labour market, with employment now at its highest level ever, as well as continued robust increases in wages in sectors less affected by the pandemic.

The strong rebound in VAT receipts – up by €2.0 billion, or almost 29 per cent – also points to the scale of the domestic economic recovery.

Of course, it is important to remember that these annual comparisons are flattered by a number of factors, such as the impact of stringent public health restrictions last year, the warehousing of tax receipts and the temporary reduction in the standard rate of VAT, which exaggerates the annual growth rate.

Corporation tax receipts amounted to €5.2 billion to end-May, up by €2.3 billion (77 per cent) on the same period last year. This was mainly driven by increased profitability in the multinational sector; it also reflects, in part, a timing issue, whereby receipts received in August last year have been received earlier this year, distorting the annual comparison.

Excise receipts of €2.1 billion were broadly flat on last year. This is due, in part, to the measures Government has taken to address the rising cost of living by reducing excise on petrol, diesel and marked gas oil, and likely reflects the impact of rising energy price on excise-related consumption.

In conclusion, I would caution that these figures are backward looking; many of the risks that we identified in the spring forecasts (set out in the Stability Programme Update ) now appear to be materialising. Inflation is higher, broader and more persistent than foreseen, external demand is slowing and borrowing costs are rising. All of these will have adverse implications for the public finances.

Question No. 43 answered with Question No. 39.

Question No. 44 answered orally.

Economic Policy

Questions (45)

John Lahart

Question:

45. Deputy John Lahart asked the Minister for Finance the action that he is taking to address economic uncertainty and reduced consumer and business confidence; and if he will make a statement on the matter. [30135/22]

Written answers

Minister for Finance

The war in Ukraine and the associated economic and financial sanctions represents a large supply-side shock to the global economy. While Ireland’s direct exposure to the impacts of the war is limited, second round effects have been significant, with higher energy and commodity prices acting as the main transmission channel from the war to the Irish economy. We are already seeing the impact of higher commodity prices, with inflation in Ireland reaching a multi-decade high of 8.3 per cent in May.

The pass through effect of soaring energy prices will also be reflected in rising costs for both businesses and households. These factors, alongside heightened uncertainty, will hold back consumer spending and investment this year. Indeed, modified domestic demand (MDD) – the best measure of domestic economic activity – declined by 1 per cent in the first quarter as consumers and businesses scaled back spending and investment. At the time of SPU 2022, my Department forecast MDD growth of 4¼ per cent for this year. However, as set out in the SPU, there are numerous downside risks to this projection.

The Government is acutely aware of the cost pressures currently facing households and businesses and has responded to help alleviate some of this burden. On a cumulative basis, the Government has announced €2.4 billion in cost of living measures since last October. These measures have included changes in tax and social welfare, the provision of an energy credit for households, a temporary reduction in the rate of VAT on the supply of gas and electricity and a reduction in the excise rate for petrol, diesel and marked gas oil.

Whilst the Government will continue to work to help with the cost of living challenge, we must be cognisant that resources are limited and we cannot cushion households and businesses from the entire impact of the current shock. Furthermore, in calibrating how we respond to the current challenges, it is important that we strike the right balance and ensure policy doesn’t inadvertently add further inflationary pressures into the system.

Insurance Industry

Questions (46)

Paul McAuliffe

Question:

46. Deputy Paul McAuliffe asked the Minister for Finance his views on the impact of the Government’s proposed amendments to the Occupiers’ Liability Act 1995 and the impact that it may have on business insurance premiums; and if he will make a statement on the matter. [29752/22]

Written answers

Minister for Finance

My colleague, the Minister for Justice, is leading on this work to reform the duty of care, which represents a key element of the Government’s Action Plan for Insurance Reform.

As the Deputy is aware, the Government recently approved proposals to reform the law with respect to the duty of care, by amending the Occupier’s Liability Act 1995.

I welcome these proposals, which are in line with the Government policy objective of restricting the liability of occupiers, and include amendments to take account of recent case law which sought to rebalance the duty of care by occupiers and visitors.

The overall policy objective of the proposed amendments is to balance occupiers’ duty of care responsibilities with personal responsibilities, includes voluntary assumption of risk, including those of customers and members of the public.

There is a shared determination across Government to remove the impediment that high insurance costs present to our economy and communities.

As previously stated, it is my firm expectation that all savings from the Government’s reform agenda should be passed on to customers, and reflected in the premium paid.

Therefore, I believe it is important that any legislation introduced in this area is robust and will receive widespread support, so that it can achieve the intended policy impact.

The combined effect of these reforms is intended to lead to further reductions in insurance premiums, building on the success of the Personal Injuries Guidelines introduced last year.

I understand that the proposed legislation, which will be included in the Courts and Civil Law (Miscellaneous Provisions) Bill 2022 is currently being drafted. I support these proposed reforms, which the Minister for Justice is driving and which deliver on a key commitment of our Programme for Government , and I look forward to seeing the published amendments in due course.

Question No. 47 answered with Question No. 28.

Banking Sector

Questions (48)

Brendan Smith

Question:

48. Deputy Brendan Smith asked the Minister for Finance if he has had recent discussions with the Central Bank in relation to the difficulties facing customers transferring accounts from banks (details supplied) to other retail banks; and if he will make a statement on the matter. [31295/22]

Written answers

Minister for Finance

I am in regular contact with the Central Bank of Ireland on a range of matters and my officials also meet regularly with the Central Bank to discuss relevant matters regarding the withdrawal of Ulster Bank and KBC from the Irish market.

I would note that the decision of Ulster Bank and KBC to leave the Irish market is regrettable and my focus is on ensuring an orderly withdrawal and minimising the disruption to impacted consumers.

The Central Bank has been clear that it expects all retail banks, both those exiting the market and those remaining, to have plans in place to manage the impact of the broader changes and consolidation in the retail banking sector in Ireland. It is the responsibility of the individual banks to ensure that they are putting their customer first, ensuring fair treatment of customers and that customers understand what the changes mean for them.

The Central Bank met with the CEOs of the five main retail banks in Ireland on 17 May 2022 to discuss the large scale migration of customer bank accounts, and the actions necessary to ensure that this activity happens in line with customer needs and expectations. Following the meeting, there was agreement that a strong customer focused approach needs to be delivered. In order to achieve this objective, more work is required in the following areas:

- Better planning – the need for the sector to collaborate on a collective approach with agreed timelines and joined up planning across all institutions.

- Customer focused arrangements –taking into account the specific circumstances a customer may face and strongly supporting them in making the move.

- Proactive communication –so that customers can understand the banks processes, including how and when key customer facing decisions will be made.

- System wide engagement – the need for an inclusive forum where the banks engage as a group with the other actors and stakeholders in a way that is purposeful and enables problems to be anticipated and solved.

The Central Bank will meet again with the CEOs on 28 June 2022 for a further update on progress of the migration of customer accounts.

Banking Sector

Questions (49)

Brendan Smith

Question:

49. Deputy Brendan Smith asked the Minister for Finance his views on the need to extend the timeline for banks (details supplied) exiting this State; and if he will make a statement on the matter. [31296/22]

Written answers

Minister for Finance

While it is regrettable that Ulster Bank and KBC have decided to exit the market, as Minister for Finance, I do not have a role in the day to day operations of any bank operating within the State. Decisions in this regard are commercial matters and are the sole responsibility of the board and management of the banks, which must be run on an independent and commercial basis.

My priority now is that the withdrawals take place in an orderly manner and the importance of this is emphasised in all engagements with Ulster Bank and KBC. Both banks are meeting with officials and providing relevant information regarding account closures to the Department of Finance on a monthly basis. This will help to identify any emerging trends and potential issues for consumers.

Both banks have indicated that they will provide customers with six months' notice to close their accounts and that will be issuing letters to customers in tranches over the coming year.

Section 3.11 of the Central Bank's Consumer Protection Code requires that where a regulated entity intends to cease operating, merge with another, or to transfer all or part of its regulated activities to another regulated entity it must:

a) notify the Central Bank immediately;

b) provide at least two months notice to affected consumers to enable them to make alternative arrangements;

c) ensure all outstanding business is properly completed prior to the transfer, merger or cessation of operations or, alternatively in the case of a transfer or merger, inform the consumer of how continuity of service will be provided following the transfer or merger; and

d) in the case of a merger or transfer of regulated activities, inform the consumer that their details are being transferred to the other regulated entity, if that is the case.

As part of its supervisory programme on retail bank consolidation, the Central Bank met with the CEOs of the five main retail banks in Ireland on 17 May 2022 to discuss the large scale migration of customer bank accounts, and the actions necessary to ensure that this activity happens in line with customer needs and expectations. The Central Bank will meet again with the CEOs on 28 June 2022 for a further update on progress of the migration of customer accounts.

My officials and I will continue to monitor the migration of current accounts from the exiting banks and engage with relevant stakeholders, both public and private, as I have been doing over recent months. With the objective of ensuring that impacted customers face the least amount of disruption in migrating their accounts over the coming months.

Question No. 50 answered with Question No. 24.

Vacant Properties

Questions (51, 63, 69, 80, 83)

Steven Matthews

Question:

51. Deputy Steven Matthews asked the Minister for Finance his views on the introduction of a vacant property tax; if further research on this matter will be carried out by his Department following the completed assessment of the local property tax returns; and if he will make a statement on the matter. [31300/22]

David Stanton

Question:

63. Deputy David Stanton asked the Minister for Finance his views on the possible introduction of a vacant property tax; and if he will make a statement on the matter. [31075/22]

Thomas Gould

Question:

69. Deputy Thomas Gould asked the Minister for Finance if he will provide an update on the collection of vacancy data by the Revenue Commissioners. [29649/22]

David Stanton

Question:

80. Deputy David Stanton asked the Minister for Finance if he has received reports on the possible introduction of a vacant property tax; the scale and impact of same; and if he will make a statement on the matter. [31076/22]

Pádraig O'Sullivan

Question:

83. Deputy Pádraig O'Sullivan asked the Minister for Finance the status of plans to introduce a vacant property tax as per the commitment in the Housing for All strategy; and if he will make a statement on the matter. [31281/22]

Written answers

Minister for Finance

I propose to take Questions Nos. 51, 63, 69, 80 and 83 together.

The Government’s strategy ‘Housing For All’ includes an action for my Department to collect data on vacancy with a view to introducing a Vacant Property Tax. The timeframe for delivery on this commitment is the second quarter of 2022. The Finance (Local Property Tax) (Amendment) Act 2021 enabled Revenue to collect certain information in relation to the occupancy status of residential properties including, where unoccupied, the duration and reason for this, in the Local Property Tax (LPT) return forms submitted by residential property owners in respect of the new LPT valuation period 2022-2025. This information, together with information from other available sources, will be used to assess the merits and impact of introducing a Vacant Property Tax.

In considering the case for such a tax, it is important to have a sound understanding of the quantity, locations and characteristics of long-term vacant properties. It is also essential to identify the reasons for vacancy, and whether this is long or short-term in nature. There may be genuine and acceptable reasons for vacancy such as refurbishment work, the temporary absence of the owner for medical reasons or pending the grant of probate for a deceased person’s estate.

The LPT returns included questions such as whether a property is vacant, the reasons for the vacancy and if the period of vacancy exceeds 12 months. It should be noted that LPT applies only to habitable residential properties, and derelict or uninhabitable properties are not captured under the LPT system.

Revenue have completed a preliminary analysis of the LPT returns received to date which has been shared with my Department. The results of the preliminary analysis suggest that levels of vacancy are low across all counties. The Minister for Finance will be considering this issue in consultation with colleagues before reverting to Government with proposals on the appropriate response. I understand Revenue intends to publish a profile of the occupancy data from the LPT returns shortly.

Addressing vacancy and dereliction, and maximising the use of the existing housing stock, is a priority objective of the Government, as evidenced in the Housing for All strategy where one of the four pathways in the plan is specifically dedicated to this area.

Tourism Industry

Questions (52)

Pearse Doherty

Question:

52. Deputy Pearse Doherty asked the Minister for Finance the engagements that he has had with the hotel industry regarding accommodation prices being charged in Dublin city; the commitments, if any, that he has received or sought that the extension of the reduced VAT rate to the hotel industry will be passed on to consumers; the estimated cost of the VAT rate extension as it applies to hotel and accommodation services; and if he will make a statement on the matter. [31253/22]

Written answers

Minister for Finance

I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In general, the Directive provides that all goods and services are liable to VAT at the standard rate unless they fall within Annex III of the Directive, in respect of which Member States may apply either one or two reduced rates of VAT. Ireland currently operates two reduced rates of VAT, 13.5% and 9%, as permitted by the Directive. Hotel and holiday accommodation is listed in Annex III of the Directive and, therefore, can be subject to VAT at a reduced rate.

In Budget 2021, as part of the Government’s response to the economic situation arising from the Covid emergency, some goods and services that previously had been subject to VAT at the 13.5% rate were temporarily moved to the 9% rate, including hotel and holiday accommodation. In Budget 2022, I announced an extension of the arrangement until end August 2022. In May, the Government agreed a further extension until 28 February 2023.

As the Deputy will be aware, there is no legal obligation for companies to pass on price reductions arising from a decrease in VAT. I have not engaged with the hotel industry in relation to this issue but would encourage hotels in Dublin and across Ireland to reduce their prices by the equivalent of the VAT reduction.

I am informed by Revenue that the estimated cost of continuing to apply the 9% VAT rate to hotels and holiday accommodation (instead of the 13.5% rate which normally applies), from 1 September 2022 until 28 February 2023, is in the region of €70 million. This estimate is based on the most recently available third-party consumption data and assumes no behavioural changes in response to price.

The estimated full-year cost of this measure is presented in the Revenue Ready Reckoner at the following link:

www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf

Tax Code

Questions (53)

Neasa Hourigan

Question:

53. Deputy Neasa Hourigan asked the Minister for Finance if he plans to reduce the VAT rate on new sanitary products such as menstrual cups and period proof underwear given the publication of European Union Council Directive 2022/542 on 5 April 2022 allowing greater flexibility on VAT rates; and if he will make a statement on the matter. [31297/22]

Written answers

Minister for Finance

Officials in my Department are currently reviewing the options now available to Ireland in setting VAT rates. This will include consideration of the new options available to Member States as a result of the recently updated EU VAT rules when setting VAT rates as well as the new limitations introduced on how reduced rates may be applied.

Decisions about tax changes are generally taken in the context of the Budget and, as part of our normal annual Budget preparations. In this context, various options for tax policy changes will be considered by the Tax Strategy Group prior to Budget 2023.

Ukraine War

Questions (54)

Cormac Devlin

Question:

54. Deputy Cormac Devlin asked the Minister for Finance his current assessment of the consequences that the Russian invasion of Ukraine is having and will have on the Irish economy; and if he will make a statement on the matter. [30069/22]

Written answers

Minister for Finance

First and foremost the war in Ukraine is a major humanitarian crisis, with devastating consequences for the people affected. Along with the unjust loss of life, millions of people have been forced to flee their homes. As well as the humanitarian crisis, the war and associated economic, financial, and other sanctions represent a large supply-side shock to the global economy, with European countries at the front line.

Reflecting the negative spill-over effects from the war, the OECD has recently revised down its forecast for global GDP growth by 1½ percentage points this year and ½ percentage point next year, relative to their December projections.

Whilst Ireland’s trade links with Russia are small, we are nevertheless, highly exposed to indirect effects arising from the conflict.

The primary channel through which the war is having a negative impact on the Irish economy is through higher energy and commodity prices. Consumer price inflation rose to 8.3 per cent in May, the highest rate in decades. Pass-through price effects are expected to result in price levels rising in other sectors, such as food, transport and consumer goods. Indeed, in recent month core inflation has also been increasing sharply, suggesting that inflationary pressures are becoming increasingly broad-based.

Higher inflation is squeezing the purchasing power of households. Along with the heightened level of uncertainty created by the geopolitical instability, this will dampen growth in the domestic economy. Households are expected to respond to higher prices by reducing their real spending, while firms are expected to hold back on investment.

In addition, while Ireland’s direct links with Russia are limited, many of our key trading partners have stronger trade links with Russia. The war is weighing on demand in some of Ireland’s export markets, with knock-on implications for Irish exports.

The Government is acutely aware of the cost pressures currently facing households and businesses. Whilst the government will continue working to minimise the fall-out on those who are least-equipped to respond, resources are limited and we cannot cushion households and businesses from the entire impact of the current shock.

Housing Schemes

Questions (55)

Éamon Ó Cuív

Question:

55. Deputy Éamon Ó Cuív asked the Minister for Finance if he intends extending the help-to-buy scheme; if so, when he intends announcing same in order to let intending houses purchasers aware; and if he will make a statement on the matter. [30330/22]

Written answers

Minister for Finance

The Help to Buy incentive is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund on Income Tax and Deposit Interest Retention Tax paid in the State over the previous four years, subject to limits outlined in the legislation. Section 477C Taxes Consolidation Act 1997 outlines the definitions and conditions that apply to the scheme.

In my Budget 2022 address I announced that a formal review of the scheme will take place this year. The contract for this review has been awarded to Mazars following a competitive tender process.

The terms of reference for the review are as follows:

"To examine all aspects of the Help-to-Buy scheme (section 477C of the Taxes Consolidation Act 1997) including its design, its operation, the extent to which it has met its key policy aims of assisting first-time buyers of new homes to fund their deposit and encouraging the building of additional new properties.

In doing so, the review should explore the cost effectiveness of the scheme to-date, including the issue of deadweight. It should also examine the impact of the scheme on house prices since inception.

The findings should present an assessment on a national basis while highlighting any regional aspects.

Having regard to the Government’s Housing for All strategy, and in particular to other initiatives included in Housing for All that have the same broad policy objectives as currently apply for the scheme, to examine whether there is a continued role for Help-to-Buy and, if so, to present options on how such role might best be fulfilled in the most efficient and cost-effective manner in the medium to long term, including on the question of any transitioning.

As part of the overall context, the review should draw on experience internationally and offer views in this regard as appropriate.

The study should be completed by c.o.b. Friday, 24 June 2022."

The future of the Help to Buy scheme beyond its current sunset date of 31 December 2022 is a matter that will fall to be considered by Government in the light of the findings of the above review and in the context of the Budget 2023 process. As such, it would not be appropriate for me to comment further at this point.

Question No. 56 answered with Question No. 32.

Climate Action Plan

Questions (57)

Marc Ó Cathasaigh

Question:

57. Deputy Marc Ó Cathasaigh asked the Minister for Finance if he will provide an update in relation to action 73a(i) of the Climate Action Plan (details supplied); and if he will make a statement on the matter. [31328/22]

Written answers

Minister for Finance

I am informed that NewERA continues to work with the commercial State companies, the Ireland Strategic Investment Fund (ISIF), the Strategic Banking Corporation of Ireland (SBCI) and other public bodies to mobilise private investment towards assisting in meeting our climate objectives.

To give some examples, Bord na Móna has named eight Irish companies chosen for its climate action and sustainability accelerator programme, Accelerate Green. Early stage investments are also receiving support from HBAN (Halo Business Angel Network), a joint initiative of Enterprise Ireland, InterTradeIreland and Invest Northern Ireland, which launched a new Impact Syndicate to invest in ESG start-ups on the island of Ireland over the next three years, in February this year. HBAN’s Impact Syndicate will collectively invest €10m in start-ups focusing on sectors such as climate, energy, the blue economy and cleantech.

To meet Climate Action Plan energy efficiency targets, the Department of the Environment, Climate and Communications (DECC), with assistance from NewERA, is working with SBCI to develop a loan guarantee scheme of at least €500m to provide a competitive funding offer to help increase the volume and depth of retrofit activity – the Residential Retrofit Loan Guarantee Scheme.

Separately, the SBCI published an Open Call earlier this year to identify lenders to participate in the €150m SME Energy Efficiency Loan Scheme.

The St James’s Hospital €15m retrofit, financed by the Ireland Energy Efficiency Fund, in which the Minister for the Environment, Climate and Communications is an investor, was completed in March. This will reportedly result in energy and operational savings of at least €26m over the next 20 years and a reduction of almost 6,000 tonnes of CO2 every year.

I would also note that the ISIF committed €20m to a major new fund that will improve the energy efficiency of buildings and homes in February this year. Other cornerstone investors in the Solas Sustainable Energy Fund (SSEF) include the European Investment Bank (EIB), MEAG, the asset manager of the Munich Re group and IDEAL insurance. ISIF is also an investor in the €90m Irish Innovation Seed Fund Programme, a new fund for Irish start-ups targeted at a number of areas including climate change.

Question No. 58 answered with Question No. 24.

Insurance Industry

Questions (59)

Seán Haughey

Question:

59. Deputy Seán Haughey asked the Minister for Finance if he will provide an update on the work that he has undertaken to bring down the cost of insurance for motorists, homeowners and businesses; and if he will make a statement on the matter. [29753/22]

Written answers

Minister for Finance

At the outset, it is important to note that neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products, as this is a commercial matter which individual companies assess on a case-by-case basis. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive).

Notwithstanding this, the Programme for Government recognises that insurance costs are a significant issue for businesses, motorists, and households, as well as a range of sporting, community, and voluntary groups. We therefore established the Sub-Group for Insurance Reform to prioritise further action in this area, with a focus on reducing insurance costs, and increasing the availability of cover. Furthermore, the Insurance (Miscellaneous Provisions) Bill 2022, which is a pro-consumer piece of legislation that will enhance transparency in several areas, should be finalised in the Oireachtas in the coming weeks.

This reform work is being driven through the Action Plan for Insurance Reform, which sets out 66 actions across several policy areas, including the Department of Finance. According to the second Action Plan Implementation Report published in March this year, this reform agenda is progressing well, with some 80% of actions being delivered, and the remaining ongoing to completion.

Some of the key achievements to date aimed at reducing costs include:

- the implementation of the Personal Injuries Guidelines, which have significantly lowered award levels for many common injuries;

- the Central Bank’s forthcoming ban on price walking for home and motor insurance, which will end the “loyalty penalty” imposed on some long-term customers;

- the establishment of the Office to Promote Competition in the Insurance Market , which aims to lower costs by promoting greater competition in the Irish market;

- the development of legislative proposals to reform the Personal Injuries Assessment Board (PIAB), with a view to increasing the number of claims settled by the Board without recourse to litigation; and

- measures to reduce fraud, including the enactment of the Criminal Justice (Perjury and Related Offences) Act 2021, which places perjury on a statutory footing for the first time.

My Department has regular engagements with industry and stakeholders in relation to implementing this suite of reform measures.

I believe that the annual decline of 10.9% in motor insurance prices, as evidenced by recent Central Statistics Office data, indicates that the Action Plan initiatives are having a positive policy outcomes for consumers.

The Central Banks’ National Claims Information Database (NCID) last motor report indicates that the average earned premium per policy peaked at €708 in Q4 2017, and declined by 16% to €595 in Q4 2020.

With respect to insurance for businesses, the first NCID Report on Employers’ Liability, Public Liability and Commercial Property indicates that many businesses are accessing affordable insurance. According to the Report, in 2019, the average premium for package policies was €2,269, and 93% of all policies had a premium of less than €5,000.

Over time, the NCID should allow us to assess the cumulative impact of the reform package across motor, employers’ liability, and public liability insurance, and I look forward to the publication of this year’s reports in due course.

Banking Sector

Questions (60)

Louise O'Reilly

Question:

60. Deputy Louise O'Reilly asked the Minister for Finance the protections that are in place for consumers availing of buy-now, pay-later lending services; the oversight and monitoring of these providers that is carried out by the Central Bank; and if he will make a statement on the matter. [31256/22]

Written answers

Minister for Finance

As the Deputy will be aware, the Consumer Protection (Regulation of Retail Credit and Credit Servicing Firms) Act 2022 has now come into operation. This Act provides that any person which directly or indirectly provides credit to consumers, including credit which is termed as 'buy now pay later' (BNPL) type credit, or hire purchase or consumer hire agreements to consumers will now fall within the regulatory remit of the Central Bank of Ireland.

As a consequence of this legislation, the Central Bank can apply the relevant provisions of its codes and regulations to all the regulated providers of credit, hire purchase and PCP agreements to consumers. In particular, the Central Bank will be able to apply Chapter 5 of its Consumer Protection Code on 'Knowing the Consumer and Suitability', and which requires that a regulated entity assess the suitability and affordability of credit before the provision of financial accommodation. This is in line with a recommendation that was made in the Tutty Report on the PCP market.

Firms which are providing these financial services will now be required to seek Central Bank authorisation as a retail credit firm or as a credit servicing firm as appropriate. Firms that have been providing these services up to now can, subject to making an application to the Central Bank for authorisation within a period of three months from the commencement of the Act, avail of transitional authorisation arrangements.

However, the Central Bank has indicated that it expects firms and their staff to meet the necessary minimum competency standards required of staff, with a particular emphasis on staff dealing with consumers in relation to retail financial products, at the earliest possible opportunity.

Overall this Act will ensure that consumers have the same level of protection no matter where they source their financial services.