Written Answers Nos. 121-140
123. Deputy Brendan Griffin asked the Minister for Finance if he is concerned with the increases in mortgage interest rates being demanded of customers by financial lenders; to provide an update on his recent engagements with such lenders and the Central Bank; and if he will make a statement on the matter. [51580/23]
View answerThe Government fully recognises the difficulties that increasing interest rates, and the rise in the cost of living more generally, is causing for some mortgage borrowers.
In view of this, on 31 August 2023 I met with the mortgage industry including the Banking and Payments Federation Ireland, CEOs and senior representatives of all the main mortgage lenders and servicers. The Central Bank of Ireland, Citizens Information Board (and its Money Advice and Budgeting Service) and the Insolvency Service of Ireland also attended the meeting.
I made it clear that banks and all other mortgage entities should be fully aware of the significant challenges that some of their customers are facing and, therefore, lenders and servicers should respond by assisting their customers who are experiencing difficulty. In relation to customers’ ability to switch to another provider to avail of a more advantageous mortgage interest rate, I also indicated that greater clarity should be provided to customers on the possibility of switching provider. The option of switching provider should be fully supported by all mortgage entities, including the existing mortgage creditor.
Furthermore, I supported the steps taken by the Central Bank to ensure that firms proactively deal with emerging difficulties for their customers since the increase in interest rates. The Central Bank requires firms to enhance the range of supports available to borrowers in or facing arrears and to have sufficient operational capacity to manage applications by borrowers to switch their mortgage or mortgage provider.
Arising from that meeting, on 6 September the Banking and Payments Federation of Ireland announced a number of further initiatives by the mortgage industry. This included:-
• a second phase of a ‘Dealing with Debt’ campaign to highlight new and existing supports for concerned mortgage customers;
• mortgage servicing firms and MABS to collaborate on an expansion of streamlined customer engagement framework; and
• the provision of initial eligibility criteria by the main lenders to provide clear guidelines for home mortgage customers of credit servicing firms who are seeking to switch their mortgage.
This means that, for the first time there is now an agreed industry wide set of initial eligibility criteria to facilitate people switching their mortgage from a non-bank to a bank. All of the banks and some other lenders have signed on to that set of criteria which is a significant change and brings welcome clarity to mortgage holders.
These new measures are additional to those provided for in the existing regulatory framework. However, the criteria to switch would be subject to an individual credit assessment by lenders and there are other criteria that will need to be considered.
Regulated firms are also keeping the range of supports they already had available for their customers in or facing mortgage arrears under review and additional alternative repayment arrangements (ARAs), including a fixed interest rate option, are now coming on stream from non-banks. In particular, Pepper has introduced a new discounted 2-year fixed rate ARA option for borrowers in arrears, which increases the range of options for Pepper customers entering into an ARA.
Therefore, while acknowledging that the consumer protection framework to assist mortgage borrowers in genuine difficulty remains strong, it remains a priority for me that consumers are supported and I will continue to monitor the implementation of these commitments provided by industry following our recent meeting.
In addition, as the Deputy is aware, Budget 2024 provided for a one-year mortgage interest tax relief scheme for homeowners with an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 on 31 December 2022. Qualifying homeowners will be eligible for mortgage interest tax relief in respect of the increased interest paid on that loan between the calendar year 2022 compared to the calendar year 2023 at the standard rate of income tax, capped at €1,250 per property.
124. Deputy Pearse Doherty asked the Minister for Finance his views on recent statistics published by An Garda Síochána regarding the 77% increase in cases of investment fraud this year; the measures his Department is considering to respond to the rise in financial fraud and authorised push payment scams; and if he will make a statement on the matter. [51433/23]
View answerInvestment fraud is where criminals pose as investment managers to deceive someone into investing money in schemes and projects that do not exist. This type of fraud usually involves a level of social engineering, where victims are manipulated into making real-time payments to fraudsters, and in some cases can be carried out through authorised push payments. These type of frauds are called cyber-enabled frauds.
As the Deputy will be aware, by law the investigation of this type of crime is an operational matter for An Garda Síochána. As Minister for Finance, I have no role in these matters. However, I can assure the Deputy that work is being carried out on this issue.
Following on from the review of the second Payment Services Directive (PSD2), on June 28 the European Commission published a proposal for an updated Payment Services Directive (PSD3), accompanied by a proposal for a Payment Services Regulation. These proposals contain anti-fraud measures regarding both fraud prevention and redress including:
• An extension of IBAN/name matching verification services to all credit transfers. These have been proposed by the Commission for instant payments in Euro;
• A legal basis for Payment Service Providers (PSPs) to share fraud-related information between themselves in full respect of GDPR via dedicated IT platforms;
• The strengthening of transaction monitoring;
• An obligation by PSPs to carry out education actions to increase awareness of payments fraud among their customers and staff; and an extension of refund rights of consumers in certain situations.
The Department of Finance is also currently engaged in the action of a number of recommendations arising out of the retail banking review, including engaging with the financial literacy stream of the Adult Literacy for Life Strategy so that Ireland is compliant with the OECD High Level Principles on Financial Consumer Protection and the Recommendation on financial literacy.
The Retail Banking Review contained a recommendation for the Department to lead on the development of a National Payments Strategy (NPS) in 2024, developing a new strategy that will take account of the changing landscape and determine how best to adapt to it. The NPS will also take account of the EU legislative landscape, particularly the proposals on instant payments and payment services.
A key element of the work will be to examine and analyse the critical issue of payment fraud. While much of this is governed by EU legislation, it is important that the NPS examines and analyses payment fraud to see if it can identify further measures that could be taken to address fraud at a domestic level.
A large proportion of payment fraud is facilitated through false communications and the Commission for Communications Regulation, a body under the aegis of the Department of Environment, Climate and Communications, is actively working with the telecoms industry through the Nuisance Communications Industry Taskforce (NCIT). ComReg published Consultation 23/521 in June 2023 setting out proposals for combatting scam calls and texts and in addition, the NCIT have published a number of information documents to help businesses combat scam communications, these are available on their website. An obligation for electronic communications services providers to cooperate with PSPs is also proposed in the PSR, with a view to preventing fraud.
I am informed by the Central Bank of Ireland that a dedicated unit has been established, the Unauthorised Providers Unit (‘UPU’), which investigates alleged instances of unauthorised activity carried out by individuals or entities that are not authorised or regulated by the Central Bank.
All instances of alleged unauthorised activity are investigated by the Central Bank and all statutory reporting obligations are complied with over the course of the investigations. The UPU liaises closely with An Garda Síochána, in respect of unauthorised activity to effectively address these wrongdoings through crime prevention and consumer protection initiatives. The Central Bank also recently launched a campaign to help consumers avoid scam operations, including a combination of a digital campaign, a regional radio ad campaign and targeted media interventions.
Finally, consumers are advised to seek professional advice when investing, whether in cryptocurrency or any kind of investment product, and to check the Central Bank website and ensure the company is regulated. An Garda Síochána is advising the public to pay particular close attention when considering any potential investments.
125. Deputy Ged Nash asked the Minister for Finance the reason no monies can be drawn down from the Infrastructure, Climate and Nature Fund until 2026; and if he will make a statement on the matter. [51426/23]
View answerOn 10 October 2023, I announced the Government's intention to establish the Future Ireland Fund and the Infrastructure, Climate and Nature Fund. The Heads of the Bill were published on 12 October and the Bill is currently in the process of being drafted.
The drawdown for the use of the "Climate and Nature" element of the Infrastructure, Climate and Nature Fund has been set to begin from 2026.
The legislation is not likely to be passed until 2024 and there is a need to allow time for the building of sufficient resources in the Fund. It is intended that €2 billion will be paid into the fund each year from 2024 until 2030.
Thus based on that approach €4bn would be lodged to the Fund by the beginning of 2026. This would allow projects up to a value of €900m to be funded in 2026 which is a significant increase in resources.
This fund is intended to support capital projects when specific objectives have not been met for climate such as reductions in greenhouse gas emissions or in the areas of nature and water quality such as deterioration in areas of special conservation or reductions in biodiversity.
This is a demand led scheme and time is required to for relevant Departments to prepare appropriate projects that can be supported by this Fund. It should be noted that this Fund will be complementary to other work by Government in dealing with climate and nature issues, including via funding provided via the NDP and other means.
126. Deputy Matt Carthy asked the Minister for Finance if he will facilitate the progress of the Illegal Israeli Settlements Divestment Bill 2023 to Committee Stage as a matter of priority. [51424/23]
View answerIn order to allow appropriate time to consider the implications of Sinn Féin’s Private Members Illegal Israeli Settlements Divestment Bill 2023, I obtained Government and subsequent Dáil approval to a ‘timed amendment’ of nine months. The timed amendment, effectively accepted the principle of the Bill but differed in terms of how it can be made operational. It also allows for the Bill to be considered further and other alternative non-legislative based approaches to be considered which could achieve the same outcome.
Part of the Government decision on the timed amendment authorised me to write to the Chair of the Oireachtas Committee on Foreign Affairs and Defence. On this basis I wrote to them on 30 June with a view to obtaining a report from the Committee on the most appropriate way to progress the broad intention of this legislation. I also wrote to the NTMA to seek views on how to bring forward appropriate proposals.
As this is a Private Members Bill (PMB) the next steps in the legislative process are not within my control and are a matter for the Oireachtas. I can say that 2nd stage of the Bill will be deemed to have ended in mid-February 2024.
I understand that the next stage is then the Pre-Committee Stage Scrutiny (PCSS). This is the standard procedure for PMBs but in exceptional cases, the Bill’s sponsor or a Committee may seek the approval of the Business Committee for a waiver of the scrutiny requirement in respect of a Bill.
If PCSS happens normally or because a request for waiver has been unsuccessful, the Committee then produces a ‘scrutiny report’. The Dáil Select Committee must then consider, taking account of the scrutiny report, whether the Bill should, or should not, continue to Committee Stage. I will await the outcome of those processes and in the meantime my officials and I will continue to consider the issues raised by your party’s Bill.
127. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which Ireland’s economy continues on a stable footing notwithstanding any potential threat; and if he will make a statement on the matter. [51468/23]
View answer185. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that this country’s economy remains on a solid footing, notwithstanding the various challenges; and if he will make a statement on the matter. [51759/23]
View answerI propose to take Questions Nos. 127 and 185 together.
Despite large and unprecedented economic shocks in recent years, the domestic economy has proven to be remarkably resilient. This resilience is most clearly illustrated by the strength of the labour market, where the unemployment rate averaged 4.5 per cent in the third quarter of this year.
Indeed, government supports to date have clearly played a key role in maintaining growth in the domestic economy. By responding swiftly and decisively to the cost of living challenges, government has helped to mitigate the impact of inflationary pressures on both businesses and households. Looking ahead headline inflation is expected to continue to moderate in the months ahead as the war-induced energy price shock is reversed and lower wholesale prices are passed onto retail prices. As demand cools and supply catches up, core inflation is also set to moderate, although at a slower pace than headline inflation.
Although our economic position remains strong at present, government is fully aware that significant challenges remain on the horizon, not least in terms the weak state of the global economy, the ultimate impact of monetary tightening and capacity constraints in our housing and labour markets.
The measures taken as part of Budget 2024 will continue to support improvements in domestic living standards while, at the same time, laying the foundations for sustainable economic, fiscal, environmental and social growth into the future.
My Department forecasts growth in the domestic economy both this year and next year of 2.2 per cent. However, risks to the near-term outlook remain two-sided in nature, although tilted to the downside. It is possible that the ongoing wars in Ukraine, the middle-east and other geopolitical tensions could escalate or broaden to other countries, increasing uncertainty and further weakening economic activity amongst our main partners.
128. Deputy Denis Naughten asked the Minister for Finance the steps he and his European Union colleagues are taking to ensure better regulation of commodity future markets; and if he will make a statement on the matter. [51475/23]
View answerThe regulation of commodity derivative markets, including commodity futures markets, predominantly falls under the EU Markets in Financial Instruments Directive (MiFID II). MiFID II was transposed into Irish law via Statutory Instrument 375 of 2017.
MiFID II established a position limit and position management regime for all commodity derivative contracts traded on trading venues and economically equivalent over-the-counter contracts. Position limits set a ceiling for the number of shares or derivative contracts that a trader, or any affiliated group of traders and investors may own, so as to prevent market abuse and support orderly pricing and settlement conditions. MiFID II also establishes position reporting obligations to enable monitoring of compliance with the position limit regime and mandates the publication of weekly reports by the European Securities and Markets Authority (ESMA) detailing aggregate positions held by different categories of market participants.
Amendments were made to the MiFID position limit regime under the EU Capital Markets Recovery Package that was published in the Official Journal of the EU in February 2021. Within this package were adaptations to the position limit regime for commodity derivatives to help develop euro denominated commodity markets. Commodity derivatives deemed to be critical or significant as well as agricultural derivatives remain subject to the position limit regime.
The MiFID regulations concerning commodity derivatives are supported by a suite of other financial services regulation. The European Markets Infrastructure Regulation (EMIR), which was developed following the 2008/2009 financial crisis to promote financial stability and to make markets more transparent, introduces central clearing, risk mitigation and reporting requirements for over-the-counter commodity and other derivatives in order to make these markets safer and more transparent. The EU Market Abuse Regulation (MAR) also increases the regulation of commodity derivative markets by, among other things, extending the regime’s scope to cover certain related Over- the- Counter (OTC) traded instruments which can have an effect on the covered underlying market including inside information for spot commodity contracts within the definition of 'inside information' and extending the market manipulation offence to include, in some circumstances, spot commodities. The EU Benchmarks Regulation, which entered into application in 2018, further increases the regulation of commodity derivatives by providing a framework for the regulation of commodity benchmarks and their administrators.
Last year’s energy crisis in Europe, resulting from Russia’s invasion of Ukraine, had a significant impact on commodity future markets. In response, EU legislators adopted Council Regulation (EU) 2022/2578 which, among other things, established a temporary market correction mechanism (MCM). The mechanism is designed to prevent excessive pricing in the gas market by providing for price caps on certain natural gas derivatives during periods of market volatility.
The totality of financial services regulation of commodity derivative markets, including commodity futures markets, represents a comprehensive set of regulations designed to ensure the proper functioning and integrity of these markets as well as addressing specific concerns regarding the potential impacts of commodity derivative markets on underlying commodity markets. The EU Commission, the various EU supervisory and regulatory institutions along with the EU member States regularly consider the appropriateness of the overall framework for the regulation of commodity derivative markets.
129. Deputy Peadar Tóibín asked the Minister for Finance the number of tribunals, public investigations and commissions of investigations in process; the length of time each has been underway; when each will conclude; the cost to date of each; and the estimated cost of each at completion. [44814/23]
View answerI wish to inform the Deputy that there are currently no commissions of investigation under my Department. My Department is a stakeholder in one commission of investigation, however, this is set up under the Department of the Taoiseach.
130. Deputy Cathal Crowe asked the Minister for Finance if he will report on the implementation of the recommendations of the banking review. [51368/23]
View answerThe Government approved the publication of the Retail Banking Review and the implementation of its recommendations on 29 November 2022. Each recommendation identifies the body or bodies responsible for delivery of that recommendation and, where appropriate, contain timelines for delivery of the recommendations. It is for the relevant bodies to consider and implement the recommendations addressed to them. The implementation of the recommendations that are directed at the Department of Finance have been embedded in the business plans of the relevant Divisions.
A key issue identified by the Review was access to cash, both the ability to withdraw and deposit cash, and a number of recommendations address this. There is a dedicated team in place working on this issue that is currently preparing heads of bill to be ready by the end of the year. These heads of bill will include initially preserving reasonable access to cash based on existing levels of access, while proving that the future evolution of the infrastructure will be fair, transparent and equitable.
The Retail Banking Review contained a recommendation for the Department to lead on the development of a National Payments Strategy (NPS) in 2024 that will take account of the changing landscape and determine how best to adapt to it. The NPS will also take account of the EU legislative landscape, particularly the proposals on instant payments and payment services.
A key element of the work will be to examine and analyse the critical issue of payment fraud. While much of this is governed by EU legislation, it is important that the NPS examines and analyses payment fraud to see if it can identify further measures that could be taken to address fraud at a domestic level.
Implementation of several of the recommendations requires close collaboration between my Department and the Central Bank and the Central Bank has informed me that it is working on the implementation of recommendations addressed to it.
The Bank is currently undertaking a major review of the Consumer Protection Code and the outcome of this significant piece of work is going to address several of the recommendations of the Review. The Bank’s next step under the Review will be to publish a consultation paper on the proposed changes to the Code. This paper will also consult on the Central Bank’s proposed approach to the implementation of the recommendations under the Retail Banking Review that fall within the scope of the Code.
Other recommendations require implementation by other State agencies, such as the Competition and Consumer Protection Commission (CCPC), Government departments and other relevant stakeholders.
It is also crucial that the retail-banking sector ensures the interest of consumers are a priority in their organisations and seek to work together, where possible, to deliver the best outcomes for the economy and citizens. The retail-banking sector has been contacted regarding their role in carrying out those recommendations which fall to them.
135. Deputy Cathal Crowe asked the Minister for Finance when the National Payments Strategy will be published; and if he will make a statement on the matter. [51367/23]
View answerI published the terms of reference, www.gov.ie/en/publication/4af00-national-payments-strategy-2024-terms-of-reference/ for the National Payment Strategy (NPS) on 27 June 2023. Since then a team in my Department has commenced this work. The Strategy will take account of the changing payment landscape and will consider ongoing legislative developments at EU level, including proposals on instant payments, payment services, legal tender and the Digital Euro. It will be underpinned by an extensive public consultation process including engagements with key stakeholders.
The NPS will examine and analyse fraud, which is a critical issue and something that was not considered at the time of the 2013 National Payments Plan. While EU legislation governs much of the payments area it is important that the NPS examines and analyses payment fraud to see if it can identify further domestic measures that could be taken to prevent fraud.
On access to cash, the NPS work will consider the likely evolution of cash usage and how the criteria for reasonable access to cash to be provided for in the Access to Cash legislation should evolve as cash usage changes in the future. The NPS work will look at the acceptance of cash and consider if legislation should be introduced to require certain sectors or sub-sectors to accept or facilitate the acceptance of cash. It will also consider whether it should be the policy of the Government to require public service to accept or facilitate the acceptance of cash.
On acceptance of cash, you will remember that I wrote to my Government colleagues on 20 September 2023 to request that public bodies within their aegis maintain acceptance of cash as a payment method, where it currently exits, until the NPS reports.
The NPS team is currently drafting the consultation paper following extensive research and consultation with key stakeholders (the Central Bank of Ireland, the European Commission, and other government departments etc.).
The consultation paper will be published in shortly on an interactive portal, it will be open for eight weeks and close in Q1 2024. My Department will continue to engage with a wide range of stakeholders on the consultation response and on the development of the Strategy.
The estimated publication for the Strategy itself is 2024.
136. Deputy Christopher O'Sullivan asked the Minister for Finance for an update on the planned new Infrastructure, Climate and Nature Fund. [51537/23]
View answer150. Deputy Christopher O'Sullivan asked the Minister for Finance for an update on the planned new Future Ireland Fund. [51536/23]
View answerI propose to take Questions Nos. 136 and 150 together.
On 10 October 2023, I announced the Government’s intention to establish the Future Ireland Fund and the Infrastructure, Climate and Nature Fund. The Heads of the Bill were published on 12 October and the Bill is currently being drafted.
Under the draft Heads €2 billion will be invested in the Infrastructure, Climate and Nature Fund each year from 2024 to 2030, building a total contribution to the fund of €14 billion by 2030.
The majority of the fund is aimed at providing counter cyclical support for capital projects in the event of an economic downturn. Capital projects which support a positive outcome for climate and nature would also be eligible for funding should such circumstances arise.
€3.15bn of the resources of the Infrastructure, Climate & Nature Fund are intended to support capital projects when specific objectives have not been met for climate such as reductions in greenhouse gas emissions or in the areas of nature and water quality such as deterioration in areas of special conservation or reductions in biodiversity.
This will be a demand led process where projects will be proposed by relevant departments and listed for approval of Government by the Minister for Public Expenditure, National Development Plan Delivery and Reform.
138. Deputy Pearse Doherty asked the Minister for Finance to update Dáil Éireann on his engagement with the retail banking sector, Department of Housing and representative groups of homeowners affected by defective concrete blocks with respect to bridging finance and the significant funding shortfall homeowners face to remediate their homes. [51432/23]
View answerI fully understand the difficult situation faced by homeowners whose houses are affected by defective concrete blocks.
The Government response to this issue is led by my colleague the Minister for Housing, Local Government and Heritage, who has put in place a scheme of financial support to help affected homeowners. As remedial works progress, homeowners will be eligible to apply for grant payments in stages, on submission of interim valuation certificates by a competent building professional.
However, I am aware that some homeowners have identified potential challenges with commencing remediation work in circumstances where advance payment is required by building professionals prior to receipt of the first grant payment and despite confirmation of homeowners’ eligibility for the Enhanced Defective Concrete Blocks Grant Scheme.
Along with my Government colleagues, I will continue to work to ensure that the Scheme operates as effectively and consistently for all affected homeowners. I have therefore asked my officials to engage with stakeholders and officials in the Department of Housing to identify options for addressing the issue raised, with the overall aim of supporting homeowners.
140. Deputy Richard Bruton asked the Minister for Finance if he will indicate the plans for Ireland to adopt the European taxonomy in investment. [51512/23]
View answerThe EU taxonomy for sustainable activities being developed at present is a harmonised classification system for environmentally sustainable economic activities. The Taxonomy has a significant role in supporting the mobilisation of capital towards sustainable investments through providing common definitions to companies, investors and policymakers on what constitutes an environmentally sustainable economic activity. Large companies and financial services providers report on their portfolios’ alignment with the Taxonomy.
This Taxonomy is based on six EU environmental objectives. For an economic activity to be considered Taxonomy-aligned, it must make a substantial contribution to at least one of these objectives, and do no significant harm to the others, in addition to complying with regulatory technical standards and minimum safeguards. The objectives are:
• Climate change mitigation
• Climate change adaptation
• Sustainable use and protection of water and marine resources
• Transition to a circular economy, waste prevention and recycling
• Pollution prevention and control
• Protection and restoration of biodiversity and ecosystems
The reporting mandated by European laws such as the Sustainable Finance Disclosures Regulation and the Corporate Sustainability Reporting Directive include descriptions of plans and actions to ensure that a company’s business models and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5°C in line with the Paris Agreement, including absolute greenhouse gas emission reduction targets for 2030 and 2050.
In addition, the European Green Bond regulation sets out the requirements that a bond must meet in order to be considered green, namely Taxonomy alignment with transparency and supervision provisions. The Corporate Sustainability Due Diligence Directive had its general approach agreed in December 2022. The proposal aims to establish a system within company law and corporate governance to address adverse human rights and environmental impacts arising from companies' own operations, their subsidiaries' operations and their supply and value chain activities.
Other legislation with climate elements that companies and financial institutions may need to take into consideration include; the Environmental Social and Governance (ESG) Risk Disclosure Standards, the Benchmark Regulation, as well as elements within the Capital Requirements Directive (CRD IV), the Capital Requirements Regulation (CRR), and Solvency II.
All of these inter-linked sustainability legislation provisions have been developed and agreed in recent years. The overall framework is comprehensive and requires significant efforts by companies, including those in the banking and financial services sector, as well as by EU Governments - which must report against the "do no significant harm" elements of the taxonomy for the recovery and resilience plans amongst others.
Its effect on investment is primarily by encouraging investors and consumers to make more sustainable decisions through science-based definitions of sustainability and with transparent reporting and disclosures of sustainability impacts and risks.
