Thursday, 19 Jan 2017

Written Answers Nos. 74 - 88

Brexit Issues

Ceisteanna (74)

Niall Collins

Ceist:

74. Deputy Niall Collins asked the Tánaiste and Minister for Justice and Equality the bilateral meetings she had with her European counterparts, outside of Council of the EU meetings, since the UK referendum to leave the EU took place in which the issue of Brexit and the unique challenges faced by the island of Ireland was discussed; the name of each European government ministerial counterpart, the meeting location and the date of each meeting, in tabular form; and if she will make a statement on the matter. [2522/17]

Freagraí scríofa

Tánaiste and Minister for Justice and Equality

As the Deputy will be aware, an extensive programme of engagement with other EU Governments and the EU institutions, including the Commission’s Brexit Negotiations Task Force, is under way across Government.

Since 24 June 2016, I have attended two formal meetings and one informal meeting of the Justice and Home Affairs Council of Ministers, during the course of which I took the opportunity to also engage informally with my EU counterparts on issues of mutual interest, including the outcome of the UK referendum and the issues it gives rise to. Clearly one of the very purposes of the JHA meetings is to allow for ongoing engagement between Ministers across the EU.

I have also held the following bilateral meetings with Ministerial colleagues, and met with Michel Barnier, the Commission's Chief Negotiator in relation to UK exit on 12 October 2016.

Name of European Counterpart	Meeting Location	Date of Meeting
Rt. Hon David Davis,M.P., Secretary of State for Exiting EU	Dublin	8 September 2016
Rt. Hon James Brokenshire, M.P. Secretary of State for Northern Ireland	London	1 November 2016
Minister Carmelo Arbela, Maltese Minister for Home Affairs and Security	Dublin	18 January 2017

Help-To-Buy Scheme

Ceisteanna (75)

Bernard Durkan

Ceist:

75. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which existing incentives for first-time house buyers are assisting those who are eligible; and if he will make a statement on the matter. [2323/17]

Freagraí scríofa

Minister for Finance

I assume the Deputy is enquiring about the parameters of the Help to Buy incentive which was initially announced on 19 July 2016 as part of the "Rebuilding Ireland: Action Plan for Housing and Homelessness." The design of the scheme was outlined in Budget 2017, and the full details were set out in Finance Act 2016.

The initiative aims to assist a first-time purchaser fund the deposit required to purchase or self-build a new house or apartment to live in as their home. The scheme is open to both those who are purchasing new builds from a developer, and those who self-build. By restricting it to new builds and new self-build homes only, it is anticipated that the resulting increase in demand for affordable new build homes should encourage the construction of an additional supply of such properties.

Broadly, the relief takes the form of a rebate of income tax, including DIRT, paid over the previous four tax years. The maximum possible rebate is 5% of the purchase price or valuation for a self-build up to a maximum of €400,000. Although relevant properties valued at up to €500,000 can qualify, the maximum relief is capped at €20,000 per property, subject to the applicant having paid sufficient income tax and DIRT over the previous 4 years.  Where more than one individual is involved in purchasing or building a new home, all of the individuals must be first-time buyers.

There are additional conditions of the scheme that must be met, including that the property must have been purchased or built as the first-time buyer's principal private residence, and that the mortgage taken out to purchase or build the home must be a minimum of 70% of the purchase price or 70% of the value of the property in the case of a self-build.

Applications for the Help to Buy incentive can be made to the Revenue Commissioners. Further details on it and how to apply are available from the Revenue Commissioners website at the following links:

http://www.revenue.ie/en/tax/it/reliefs/htb/index.html

http://www.revenue.ie/en/tax/it/reliefs/htb/htb-applicant-guide.html

Help-To-Buy Scheme

Ceisteanna (76)

Stephen Donnelly

Ceist:

76. Deputy Stephen S. Donnelly asked the Minister for Finance if his Department has reviewed the impact of the introduction of the first-time buyer's grant; if so, the findings on the impact on sales; and if he will make a statement on the matter. [2402/17]

Freagraí scríofa

Minister for Finance

I assume the Deputy is referring to the 'Help to Buy' incentive which was initially announced on 19 July 2016 as part of 'Rebuilding Ireland: Action Plan for Housing and Homelessness' and provided for in the recent Budget and Finance Act. The Action Plan contains a significant volume of responses to the current housing crisis, of which the Help to Buy incentive is one.  This comprehensive Action Plan takes a holistic approach in addressing the many interacting structural constraints affecting the housing market in areas such as planning and land use, as well as regulation and skills deficits in the construction sector. While the primary focus of the Action Plan is to tackle structural constraints, fiscal supports can play a supporting and time-bound role in addressing the current problems in the housing sector. It is in this context that the Help-to-Buy scheme should be considered.

I wish to assure the Deputy that my Department continues to monitor developments in the property market, including property prices, on an ongoing basis. The Deputy will also be aware that I have committed to commissioning an independent economic impact assessment of the Help to Buy incentive.  It will focus specifically on the workings of the incentive and its impact on the housing market generally, including any potential impact on property prices. This findings of this assessment will be available later in the year, following the completion of the required public procurement processes, awarding of the contract and completion of the relevant analysis.

I would point out that the relevant online application facilities were launched by the Revenue Commissioners on the 3rd of January 2017 and as such, the incentive has only been operational for just over two weeks. In this regard, it would be very early to consider the measurement of the impact (if any) of the incentive.

Help-To-Buy Scheme Administration

Ceisteanna (77)

Jack Chambers

Ceist:

77. Deputy Jack Chambers asked the Minister for Finance if his attention has been drawn to an issue that is affecting some first-time buyers who have already placed deposits in full on new build homes which are not yet completed but still qualify for the help-to-buy scheme retrospectively, whereby the developer delays passing on the relevant information to the Revenue Commissioners to have part of the deposit released back to the first-time buyer; if his attention has been further drawn to the distress such delays are causing such first-time buyers who require the portion of the deposit to be returned to cover the cost of other aspects of the house buying process; the measures he proposes to introduce to ensure developers undertake the necessary actions to ensure first-time buyers receive their refund in a timely and prompt manner; and if he will make a statement on the matter. [2404/17]

Freagraí scríofa

Minister for Finance

Retrospective claimants for the Help to Buy incentive are taxpayers who have either contracted to purchase, or have drawn down the first tranche of their qualifying loan to self-build their home, in the period between 19 July 2016 and 31 December 2016, inclusive.

I am advised by Revenue that the online claim process for retrospective claimants differs from that for current claimants. It does not require the developer or contractor to pass on information to Revenue, and instead retrospective claimants are required to submit supporting documentation including a signed copy of the contract, evidence of their mortgage or mortgage drawdown, and details of the property, directly to Revenue.  

All claimants for the Help to Buy incentive are advised to provide the necessary information to Revenue via MyEnquiries, which is an online service that allows customers to securely send correspondence to Revenue.  MyEnquiries can be accessed from the Revenue website either through myAccount or through ROS (Revenue's Online Service), depending on whether the claimant is a PAYE taxpayer or a self-employed taxpayer.

I am advised by Revenue that once the information is received from retrospective claimants, all appropriate refunds are being processed without delay. In addition, the legislation allows for Revenue to pay the Help to Buy refund directly to the claimant's bank account.

Bank IT Systems

Ceisteanna (78)

Pearse Doherty

Ceist:

78. Deputy Pearse Doherty asked the Minister for Finance the number of times in the past year and each of the past five years banks operating here have failed to process the payment of workers on schedule due to an operational issue at the bank; the names of the banks involved; the number of occasions each bank failed to make the payments; the estimated number of workers affected in each case; and if he will make a statement on the matter. [2242/17]

Freagraí scríofa

Minister for Finance

I have consulted with the Central Bank on this matter and I understand that it does not hold the data sought.

Customers have a legitimate expectation of high quality, uninterrupted services, whether provided through traditional or online channels. It is my role as Minister for Finance to put in place an appropriate legislative framework for the regulation of the financial services sector.

The Central Bank is responsible for prudential supervision and financial regulation including consumer protection. In this context, the Deputy may be aware that the Central Bank fined Ulster Bank Ireland Limited €3,500,000 and reprimanded it in relation to IT and governance failings by the firm that resulted in approximately 600,000 customers being deprived of essential and basic banking services over a 28 day period during June and July 2012. 

In addition, the Financial Services Ombudsman is an independent office established to deal with consumer complaints about their dealings with financial institutions. Therefore, I believe that we have a robust regulatory framework in Ireland to deal with operational issues that may affect customers of banks operating here. 

Banking Operations

Ceisteanna (79)

Catherine Murphy

Ceist:

79. Deputy Catherine Murphy asked the Minister for Finance if he and-or his officials consulted with any parties connected with a legal action against a bank (details supplied) by persons connected with a group of hedge funds; and if he will make a statement on the matter. [2257/17]

Freagraí scríofa

Minister for Finance

I am aware that my officials in the Department of Finance were in contact with the Deputy's office and received confirmation of the hedge fund to which the question refers.

I can confirm that I had no such consultation, as described in the Deputy's question, in relation to this fund, nor am I aware of any officials in my Department having done so. Furthermore, I am not aware of any legal action taken by the fund concerned against the bank concerned.

Banking Operations

Ceisteanna (80)

Catherine Murphy

Ceist:

80. Deputy Catherine Murphy asked the Minister for Finance if he and-or his officials consulted with any parties connected with a legal action against a bank (details supplied) by persons connected with a group of hedge funds; and if he will make a statement on the matter. [2258/17]

Freagraí scríofa

Minister for Finance

I am aware that my officials were in contact with the Deputy's office to confirm the identity of two parties to which the question refers.

As far as I am aware, neither I nor my officials have consulted with the two parties or their representatives, as identified by the Deputy's office, in relation to legal action taken by these parties against the bank referred to in the question.

Given that the legal action against the bank referred to in the question would have impacted on the Department of Finance, I can confirm that the Department of Finance did take advice from its legal advisors in relation to this matter.

Credit Availability

Ceisteanna (81)

Bernard Durkan

Ceist:

81. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that the main banks are making adequate resources available to facilitate the urgently required house building programme; and if he will make a statement on the matter. [2328/17]

Freagraí scríofa

Minister for Finance

As the Deputy is aware, Government policy is focused on ensuring that all viable small and medium sized businesses have access to an appropriate supply of credit from a diverse range of bank and non-bank sources.  The Deputy will also be aware that, in my role as Minister for Finance, I have no direct function in the relationship between the banks and their customers.  Also, I have no statutory function in relation to the banking decisions made by individual lending institutions at any particular time and these are taken by the board and management of the relevant institution. This includes decisions in relation to products as determined by the banks.

All viable businesses operating in Ireland should have the opportunity to access sufficient finance to meet their enterprise needs in a manner that supports growth and employment in the economy.  As the Deputy will be aware, Chapter 7 (Finance for Growth) of the Action Plan for Jobs 2016 (APJ) set out a range of commitments to ensure viable SMEs can access appropriate finance at a reasonable cost from both bank and non-bank sources. Finance for Growth will again feature in the Action Plan for Jobs 2017 and a number of actions have been proposed by my Department for inclusion in relation to this.

In line with Action 144 of the APJ 2016, officials from my Department collated and examined data from AIB and Bank of Ireland on a monthly basis, including data pertaining to the various sectors. Furthermore, my officials meet the banks on a quarterly basis to ensure an informed understanding of the wider SME bank lending environment which assists the development and implementation of policies aimed at ensuring SME access to finance and increased competition in the SME lending sector.

I note that the data recently published by the Central Bank of Ireland for Credit Advanced to Irish Resident Small and Medium Sized Enterprises shows that new lending to Property Investment/Development enterprises for Q1 to Q3 2016 totalled €961 million a growth of €582 million (c. 154%) when compared to the same period in 2015. This data can be found in Table A.14.1 Credit Advanced to Irish Resident Small and Medium Sized Enterprises published on the Central Bank's website.

The Deputy may also wish to note that in the social housing market, in line with the commitment contained in "Rebuilding Ireland", the NTMA and key Government Departments are examining the feasibility of establishing a funding vehicle in conjunction with the private sector, which could facilitate investment in social housing.

The Government remains committed to the SME sector, including those involved in Property Investment/Development, and sees it as the key engine of ongoing economic growth. I can assure the Deputy that my Department, working with other relevant Departments, Bodies and Agencies, such as the Credit Review Office, will continue to advance policies to ensure the availability of both bank and non-bank credit so as to ensure that viable Irish SMEs have sufficient access to finance.

Credit Union Data

Ceisteanna (82)

Michael McGrath

Ceist:

82. Deputy Michael McGrath asked the Minister for Finance the amount and purpose of public funding that has been required to date by the credit union sector; the amount collected from credit unions by way of the levy; and if he will make a statement on the matter. [2353/17]

Freagraí scríofa

Minister for Finance

There are currently three funds in place which can be utilised under certain conditions to fund credit unions, two of which have been supported by public funding. 

1. The Credit Institutions Resolution Fund (CIRF)

The CIRF was established under Section 10(1) of the Central Bank and Credit Institutions (Resolution) Act 2011 (2011 Act). The Government contributed €250m to the Fund in December 2011 to provide a source of funding for the resolution of financial instability in, or an imminent serious threat to the financial stability of an authorised credit institution, and in particular-

- To reimburse the Minister for any provision of a financial incentive pursuant to section 46;

- To provide funds for any payment required pursuant to section 37(1), 42(5), 48 or 98;

- With written consent of the Minister, to provide capital for a bridge-bank; and

- To meet the Bank's expenses in discharging its functions under this Act.

The CIRF Levy commenced in October 2012 and levies collected from credit unions to date amount to €28.9m. Approximately €30m has been used to support resolution actions in the credit union sector.

2. The Stabilisation Fund

In accordance with Part 4 of the Credit Union and Co-operation with Overseas Regulators Act 2012 credit unions contribute annually to a statutory Stabilisation Fund.  The Stabilisation Fund, contained within the Credit Union Fund, is available to all credit unions with a reserve ratio equal to or greater than 7.5% of the credit union's total assets and less than 10% and where the Central Bank assesses the credit union as viable. Stabilisation support will be provided to address short-term problems at credit unions that are viable but undercapitalised. Payment of an annual Stabilisation Levy commenced in 2015 (for a period commencing on 1 October 2014) and to date levies collected amount to €6.4m. There have been no drawdowns, to date, from the Stabilisation Fund.  A review of the Stabilisation Levy will be carried out in 2017.

3. The Credit Union Fund

The Credit Union Fund was established under section 57 of the Credit Union and Co-operation with Overseas Regulators Act 2012 for a number of purposes including the provision of stabilisation support, but primarily to provide a source of funding for the restructuring of credit unions under the Credit Union Restructuring Board (ReBo) and to meet the expenses of ReBo in discharging its functions.  The Government provided €250 million to the Credit Union Fund specifically for restructuring under ReBo. The Restructuring Levy (ReBo Levy) commenced in 2014 and to date levies collected amount to approximately €5.27m. Approximately €13.75m has been drawn from the Credit Union Fund for restructuring purposes.  ReBo is expected to conclude its work in 2017.

Credit Union Regulation

Ceisteanna (83)

Michael McGrath

Ceist:

83. Deputy Michael McGrath asked the Minister for Finance the initiatives that have been undertaken by the Central Bank of Ireland in recent times that will ensure development and growth of the credit union sector in view of the Registrar of Credit Unions remit to maintain the financial stability and well-being of credit unions; and if he will make a statement on the matter. [2354/17]

Freagraí scríofa

Minister for Finance

The Registrar of Credit Unions at the Central Bank recognises the strategic challenges facing the sector, the need to revitalise business models and to find ways of doing business to better serve members, delivering on their expectations.

The Registrar of Credit Unions is currently engaging with both credit unions and the Representative Bodies on their business model development proposals. A dedicated unit within the Registry of Credit Unions, headed by a Deputy Registrar, has been established specifically to focus on the area of business model development and as part of the stakeholder engagement process, the Central Bank established Sector Stakeholder Dialogues. These dialogues commenced in November 2015 with a view to gaining a better understanding of how credit unions want to develop their business model and to identify any changes that may be required to the regulatory framework to facilitate prudent development. Since the establishment of the Sector Stakeholder Dialogues seven meetings have taken place. To date the focus has been on a number of areas including:

- Longer term lending;

- Additional services framework; and

- Publication of sectoral data.

The Central Bank has recently approved a suite of additional services known as a Member Personal Current Account Service (MPCAS) for 6 applicant credit unions under the Additional Services Framework set out in sections 48-52 of the Credit Union Act, 1997. This represents an example of an additional service that has been approved by the Central Bank and it is open to credit unions to apply for similar approval for this service (this does not preclude a credit union from making an application for approval of any other additional service in accordance with sections 48-52 of the 1997 Act). This MPCAS provides for credit unions to offer debit cards, overdrafts and a full range of payment services within an appropriate risk framework. The Central Bank has published details of MPCAS and the approval process, along with details of the application requirements and related guidance on its website.

The Registry of Credit Unions is also engaged on a number of other proposals, both from individual entities and at a sectoral level, including Mortgage Lending and Social Housing proposals from the representative bodies.  Funding greater longer term lending with short term funding (deposits) is a potential issue for credit unions with associated liquidity and asset liability management considerations.

In addition, the Credit Union Advisory Committee (CUAC) made a number of recommendations in its recent substantial report presented to me on 29 June 2016.  An Implementation Group, comprising representatives from a number of credit union stakeholder groups, a CUAC member, a Central Bank Official and headed up by a Department of Finance Official, will meet in the coming weeks to begin overseeing and monitoring implementation of those recommendations.  It is expected that implementation of CUAC's recommendations will also assist credit unions in the area of business model development.

Credit Union Data

Ceisteanna (84, 87)

Michael McGrath

Ceist:

84. Deputy Michael McGrath asked the Minister for Finance the number of credit unions currently operating under lending restrictions; the number of credit unions with restrictions on lending to persons and aggregate monthly lending in bands of €10,000, in tabular form; and if he will make a statement on the matter. [2355/17]

Michael McGrath

Ceist:

87. Deputy Michael McGrath asked the Minister for Finance the current restrictions that apply to long-term lending such as mortgages by credit unions; and if there are any plans to ease these restrictions. [2358/17]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 84 and 87 together.

I have been informed that in February 2015 the Central Bank commenced a lending restriction review initiative, whereby credit unions subject to a lending restriction that are satisfied they have made the necessary improvements and have embedded these improvements in robust risk sensitive lending practices, could apply for a review of their lending restriction. The closing date for receipt of applications to review lending restrictions under this initiative was 30 September 2015.  The individual credit union lending restrictions in place are reviewed on a regular basis to determine whether they are still set at appropriate levels.

I have been informed by the Central Bank that circa 24% of credit unions (73 in total) are currently operating under lending restrictions compared with 52% at the start of the review process.  These include 8 credit unions with a monthly maximum lending restriction and 65 with a maximum individual loan size restriction.  In the majority of the relevant cases, the maximum individual loan size is in excess of €10,000 as detailed in the following table.

Lending Restriction on Individual Loans	Number of Credit Unions
10,000	6
>10,000 and 20,000	34
>20,000 and 30,000	19
>30,000 and 40,000	3
>40,000 and 50,000	2
>50,000 and 60,000	-
>60,000 and 70,000	-
>70,000 and 80,000	-
>80,000 and 90,000	-
>90,000 and 100,000	1
Total	65

The Credit Union Act, 1997 (the 1997 Act) and the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 (2016 Regulations) (which set out services exempt from additional services requirements) set out the services that a credit union may provide to its members.

Credit unions are not prohibited from providing mortgages to members. However, mortgages are subject to the maturity limits contained in the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 (the Regulations) which set out the percentage of a credit union's loan book that can be outstanding for periods exceeding both 5 years and 10 years, as well as limits on the maximum outstanding liability to an individual member. Under the Regulations, issued at the beginning of January 2016, credit unions continue to be allowed to lend up to 30% of their loan book over five years and up to 10% of their loan book over 10 years, subject to a maximum maturity of 25 years. In addition, credit unions are able to apply to the Central Bank for an extension to their longer term lending limits (up to 40% of their loan book over 5 years and up to 15% of their loan book over 10 years).  Approval is subject to conditions set by the Central Bank.

As a first step to making the existing longer term lending limits more usable the Central Bank agreed to undertake work on potential changes to the conditions attaching to approvals for existing longer term lending limits as part of the sector stakeholder dialogue process. Some initial proposals on how the conditions could be amended were put forward by the Central Bank for discussion within the sector stakeholder dialogue and the Central Bank now intends to publish revised conditions.

The September 2016 Prudential Return indicates that for the sector overall total gross loans over 10 years amount to 2.46% of total loans in the credit union sector compared to the limit of 10%. 73% of credit unions currently engaged in lending over 10 years have less than 3% of their total gross loans outstanding for over 10 years, and just 11% have more than 5% of their total gross loans outstanding for over 10 years.

Lending restrictions in credit unions are a matter for the Registrar of Credit Unions at the Central Bank, who, as the independent regulator for credit unions, acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.

Credit Union Data

Ceisteanna (85, 86, 88)

Michael McGrath

Ceist:

85. Deputy Michael McGrath asked the Minister for Finance the number of credit unions that have been approved for additional services, declined for additional services and the number of applications in the past five years ongoing; and the length of time it takes on average from preliminary application stage to full approval. [2356/17]

Michael McGrath

Ceist:

86. Deputy Michael McGrath asked the Minister for Finance the additional services that are most frequently requested by credit unions; the number of inquiries that relate to an application for provision of debit card services; and the number of applications for debit cards that have been approved in the past five years. [2357/17]

Michael McGrath

Ceist:

88. Deputy Michael McGrath asked the Minister for Finance the number of credit unions that have a current account and debit card service available for their customers. [2359/17]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 85, 86 and 88 together.

The Credit Union Act 1997 (the 1997 Act) and the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 (which set out services exempt from additional services regulations) set out the services that a credit union may provide to its members. These include loans; savings; account access by phone; account access by internet; third party payments (including EFT); ATM services; bureau de change; certain insurance services on an agency basis; group health insurance; bill payment; money transfers; standing orders; direct debits; financial counselling; PRSAs on an introduction basis and insurance on an introduction basis.

Where a credit union wishes to provide services to its members, other than those services that are provided for under the 1997 Act, an application may be made to the Central Bank for approval to provide such additional services in accordance with the provisions set out in sections 48-51 of the 1997 Act.

As set out in communications to the sector the Central Bank is, in principle, supportive of credit unions developing additional services and will consider proposals from credit unions on new additional services they wish to provide to members where the credit union can demonstrate that:

-  the proposed additional service is supported by a robust business case;

-  the proposed additional service is not contrary to financial services legislation;

  -  the board of directors has a sound appreciation of the nature of the additional service proposed and is fully informed of the strategic, governance, risk management, operational, financial and legal implications involved; and

  - systems and controls are in place to ensure any risks involved in the provision of the additional service are managed and mitigated.

I have been informed by the Central Bank that in the last five years, 11 applications for additional services have been approved, no application has been declined and there are currently no such applications in progress.  The majority of these applications have related to the provision of a Member Personal Current Account Service. I have been further informed by the Central Bank that the timescale from preliminary application stage to full approval depends on the quality of information provided. Where the application form has been fully completed and contains or includes all of the information requested, the Central Bank endeavours to turn around the application as quickly as possible. 

In respect of debit cards, the Central Bank has been clear in its engagement with credit unions and other stakeholders who are seeking to offer this service, that it must be supported by the appropriate payment account service. The Central Bank has recently approved a suite of additional services known as a Member Personal Current Account Service (MPCAS) for 6 applicant credit unions under the Additional Services Framework set out in sections 48-52 of the 1997 Act. The approved MPCAS service provides for credit unions to offer debit cards, overdrafts and a full range of payment services within an appropriate risk framework. This represents an example of an additional service that has been approved by the Central Bank and it is open to credit unions to apply for similar approval for this service (this does not preclude a credit union from making an application for approval of any other additional service in accordance with sections 48-52 of the 1997 Act). The Central Bank has published details of MPCAS on its website along with the approval process, details of the application requirements and related guidance. 

Question No. 87 answered with Question No. 84.

Question No. 88 answered with Question No. 85.