Terence Flanagan
Ceist:15. Deputy Terence Flanagan asked the Minister for Finance his views on a matter (details supplied) regarding financial brokers; and if he will make a statement on the matter. [39329/14]
Amharc ar fhreagraWednesday, 15 October 2014
Ceisteanna (15)
Freagraí scríofa
For the purposes of this reply I understand "financial broker" to mean a retail intermediary who receives and transmits orders in certain financial products and/or provides advice in relation to those products and is authorised by Central Bank as one of the following:
- an insurance/reinsurance intermediary under the European Communities Insurance Mediation Regulations 2005,
- an investment intermediary under the Investment Intermediaries Act 1995, or
- a mortgage intermediary under the Consumer Credit Act 1995.
The Central Bank is responsible for supervising some 3,200 Retail Intermediaries, which vary in size and activity. Retail Intermediaries employ over 30,000 employees, with firms reporting over 5 million policies/financial products held by their clients. Much of the regulation of retail intermediaries is focussed on consumer protection and in that respect the Central Bank's impact rating of retail intermediaries reflects that these firms are not authorised to hold client money and the failure of any one firm would not cause economic or systemic problems. However, it is also recognised that these firms have the capacity to cause consumer detriment, for example, through mis-selling, overcharging or poor systems and controls.
I am advised by the Central Bank that its Strategic Plan 2013 - 2015 sets out the Bank's strategy of assertive risk-based supervision underpinned by a credible threat of enforcement. Enforcement is an important tool to effect deterrence, achieve compliance and promote positive behaviour. The Central Bank takes enforcement action against regulated entities under its Probability Risk and Impact SysteM (PRISM) supervisory model. PRISM represents a challenging but proportionate risk-based system of supervision for all regulated entities operating in Ireland, based on the impact they have on the economy or on consumers if things go wrong, and the probability that problems will arise.
In relation to the second part of the question, under sections 32D and 32E of the Central bank Act 1942 I have a role in approving the Central Bank regulations providing for fees and levies for the regulation of financial services providers, but the levels of those fees and levies is in the first instance a matter for the Central Bank. I am further advised by the Central Bank that all financial service providers are liable to pay the proportion of the annual industry funding levy attributable to the period in respect of which they were authorised by the Central Bank. Levies payable by intermediaries are determined by the firm's impact score under PRISM. Intermediaries shall be liable to pay the levy contribution (varying between €515 and €26,500 in 2014) corresponding to the firm's impact score as set out in Table 6 in the Guide to the 2014 Industry Funding Regulations.
Levies to the Investor Compensation Company Limited and the Financial Services Ombudsman may also be payable.