asked the Minister for Industry and Commerce if he will specify for those financial institutions for which he is responsible: (1) the legislation under which they are regulated or supervised by his Department; (2) the principal prudential ratios and requirements to which they must conform, for example capital, reserve and liquidity; (3) the concessionary taxation arrangements vis-á-vis other financial institutions; and (4) the frequency of reporting, auditing and inspections by his Department.
Written Answers. - Financial Institutions.
64.
I have a supervisory responsibility for authorised insurers operating in the State under the provisions of the Insurance Acts, 1909 to 1985, and the Insurance Regulations, 1976 to 1986, made under the European Communities Act, 1972.
Additionally, the Registrar of Friendly Societies, who is an independent statutory officer who reports annually to me, has supervisory responsibilities in relation to credit unions and friendly societies. Credit unions are governed by the Industrial and Provident Societies Acts, 1893, to 1978, the Credit Union Act, 1966, and Regulations made under those Acts. Friendly societies are governed by the Friendly Societies Acts, 1896 to 1977, and by Regulations made under the Acts.
Insurance
The paid up share capital requirement for insurance companies depends on the nature and scale of the business proposed. In practice a non-statutory minimum requirement of £0.5 million is imposed. Insurance reserves are required to give 100 per cent cover of all liabilities. Additionally, in the case of Irish head office companies and branch offices whose head office is outside the EEC, additional free reserves are required calculated by reference to relevant European Communities Regulations. The approximate ratios are: Non-life, 16-18 per cent of premium income; Life: 4 per cent of mathematical reserves plus 0.3 per cent of capital sum at risk.
No particular liquidity ratio is stipulated in law but rules and regulations are applied to ensure a prudent spread of assets in terms of liquidity and security.
Insurers are required to submit audited accounts and returns within six months of the end of each financial year. More frequent returns are required of newly authorised insurers. Deadlines for submission of accounts and returns may be brought forward where this is considered desirable from a supervisory points of view.
Credit Unions and Friendly Societies
No specific ratios for capital, reserves or liquidity are set down in the legislation governing credit unions or friendly societies. However, section 23 (1) of the Credit Union Act, 1966, requires each credit union to allocate not less than 10 per cent of its surplus funds in each financial year to its reserves.
The Registrar of Friendly Societies in his supervision of credit unions seeks to ensure that their business is carried on in a proper and prudent manner. Credit unions are required to make an audited return annually to the registrar. There is no set frequency of inspections of credit unions but the registrar does undertake a number of such inspections each year to the extent that the resources available to him allow.
In general, friendly societies may be classified as associations which provide for the mutual benefit of members rather than as financial institutions. There are a small number of societies which have a long-standing authorisation to accept subscriptions or deposits and make loans to members. Each friendly society is required under legislation to submit to the registrar an audited annual return of receipts and expenditure, funds and effects of the society. I intened in the near future to submit for the approval of both Houses draft regulations to extend and strengthen the supervisory arrangements in relation to such societies.
Taxation Arrangements
The taxation arrangements applying to the various financial institutions are primarily a matter for the Minister for Finance.