Written Answers Nos. 120-130
120. Deputy Pearse Doherty asked the Minister for Finance his plans to remove the six year rule on financial complaints; if this removal will be retrospective in nature; if so, the way this will be achieved; and if he will make a statement on the matter. [7573/17]
Amharc ar fhreagraThe current legislation (section 57BX (3)(b) of the Central Bank 1942 Act) prohibits the Financial Services Ombudsman from examining any aspect of a complaint where the conduct being complained of occurred more than six years from receipt of the complaint in his Office.
The Heads of Bill to amalgamate the Financial Services Ombudsman and Pensions Ombudsman were published on the Department's website on 5 October of 2016. These heads provided for an amendment to the time limit in which complaints can be made to the Ombudsman.
As outlined at the pre-legislative scrutiny session on 27 October of 2016, I propose to extend the time limits for complaints in relation to certain long-term financial services to the same time limit that currently applies to pension products, namely
- six years from date of the conduct complained of or
- three years from the date the complainant knew/ought to have known about the conduct.
This greatly improves access to the Ombudsman for consumers of long-term financial services, who may not become aware of an issue, until well after the original six years time limit had passed.
For short-term financial services, the time limit for complaints to the Ombudsman is unchanged at six years from the date of the conduct complained of.
The question of the commencement date for new time limits is being considered carefully by the Department in consultation with the Office of the Attorney General
The Heads of the Bill, as published on the Department's website on 5 October of 2016, do not provide for any commencement date of the legislation as yet. The appropriate commencement date for particular provisions, such as the new time limit for complaints to the Ombudsman, is being considered in the course of the drafting and legislative process. This issue of the commencement date involves a range of considerations including: the interface with the statute of limitations; existing consumer protection laws; complaints mechanisms; and availability of records. In addition, the report from the pre-legislative scrutiny on the draft legislation, including the proposed extension of time limits, is currently awaited.
Officials in the Office of the Parliamentary Counsel are drafting the text of the Bill in close consultation with the officials from the Department, the Office of the Attorney General, and other stakeholders. It is hoped that the Bill will be published in the coming months.
121. Deputy Pearse Doherty asked the Minister for Finance the legal and regulatory measures that have been put into place since the banking crash to ensure that the culture of reckless behaviour that contributed to that crash has been changed; and if he will make a statement on the matter. [7578/17]
Amharc ar fhreagra122. Deputy Pearse Doherty asked the Minister for Finance his views on whether bankers are more accountable for their actions since the banking crash; if so, the basis on which he is of this view; and if he will make a statement on the matter. [7579/17]
Amharc ar fhreagraI propose to take Questions Nos. 121 and 122 together.
A comprehensive overhaul of the legal and regulatory framework in the financial sector has been pursued at both domestic and at an EU level since the financial crisis. A whole raft of new European regulations have strengthened controls over the banking system and have resulted in an overhaul of regulation, supervision and resolution regimes.
The Capital Requirements Directive and Regulation which came into force in 2014, brought about significant enhancements in the quality and quantity of capital that banks are required to hold and the setting of minimum liquidity requirements.
The Banking Recovery and Resolution Directive and the Single Resolution Mechanism have transformed the framework for dealing with failing banks and are designed to provide a financial safety net and a means for recovery and resolution with minimum disruption to the sovereign.
The Single Supervisory Mechanism (SSM) is now responsible for the prudential supervision framework for euro area banks. Building on the single rulebook, the SSM transfers key supervisory tasks for significant banks in the euro area to the European Central Bank. Daily banking supervision is now conducted according to a detailed ECB supervisory manual including frequent and intrusive onsite inspections.
This new regulatory framework is supported by the presence of new European institutions, such as the Single Resolution Board, to address weaknesses in the institutional structures and to improve cross-border cooperation, ensuring consistent enforcement of rules and systemic oversight.
While the reform of our statutory code for the financial services sector has been and continues to be driven by comprehensive reforms brought forward at EU level, a number of significant domestic legislative reforms have been undertaken towards building a strengthened domestic regulatory framework for the financial services sector which complements the strategically important reforms at EU level.
The Central Bank Reform Act 2010 created a single fully-integrated Central Bank of Ireland with a unitary board, the Central Bank Commission, chaired by the Governor of the Central Bank. The unitary Central Bank structure gives the Commission members a more complete remit over prudential regulation and financial stability issues. The Central Bank has demonstrated its willingness to use its macro prudential, micro prudential and enforcement powers to strengthen capital and liquidity positions, business model resilience and governance arrangements of the banks operating in Ireland.
The Central Bank (Supervision and Enforcement) Act 2013 introduced a more assertive supervisory approach and overhauled the Central Banks powers across a wide range of areas and throughout the regulatory life cycle of firms. It strengthened the ability of the Central Bank to impose and supervise compliance with regulatory requirements and to undertake timely assertive prudential interventions. The Act also provided the Central Bank with greater access to information and analysis and underpins the credible enforcement of financial services legislation in line with international best practice.
The 2013 Act provides the Central Bank with early intervention powers including the power to issue directions to regulated entities and their related undertakings to address emerging problems, including where the entity has become or is likely to become unable to meet its obligations to its creditors or its customers, or where it is not maintaining or is unlikely to be in a position to maintain adequate capital or other financial resources.
The 2013 Act also gave the Central Bank extensive powers to make regulations including in relation to areas identified as weak points in the post crisis analysis such as risk management, consumer protection, audit processes and lending, including lending to 'restricted persons' such as those who work within the bank or family members.
Measures have also been introduced to address cultural change and behaviour in banking. In 2011, the new Fitness and Probity regime was rolled out by the Central Bank in accordance with the provisions of the Central Bank Reform Act 2010. The regime provides for new powers to be exercised by the Central Bank to ensure the fitness and probity of nominees to key positions within financial service providers and of key office-holders within those providers.
The Central Bank has put in place a pre-approval process for persons who apply for relevant positions, known as Pre-Approval Controlled Functions, in regulated firms, to ensure that they meet the required standards of fitness and probity. If concerns arise that a person or persons in Controlled Functions in a regulated firm do not meet the required standards of fitness and probity, they may be investigated by the Central Bank and could ultimately be prohibited from carrying out a Controlled Function in their firm, or any other regulated firm. These powers enable the Central Bank to ensure that the people in senior roles are capable, competent and act with integrity.
The 2013 (Supervision and Enforcement) Act also provides that if, in the opinion of the Bank, a person has engaged, is engaging or is about to engage in a contravention the Bank may apply to the Court for an order restraining the person from engaging in the conduct.
At present, a one year on report is being prepared for Minister of State Murphy on the findings and recommendations of the Joint Oireachtas Committee of Inquiry into the Banking Crisis. This report will set out the actions taken to date in relation to the Committee's Report and whether further actions are necessary for consideration by Government and/or other bodies.
123. Deputy Pearse Doherty asked the Minister for Finance his views on the possible re-emergence of a bonus-based pay culture in the banking system which could increase the probability of reckless behaviour in future; and if he will make a statement on the matter. [7580/17]
Amharc ar fhreagraThe excesses seen in the banking system prior to 2008 have resulted in significant changes to the regulatory framework facing the industry. This included a number of changes to the framework that applies to bonus payments (including salaries and discretionary pension benefits) to staff of relevant institutions. The aim of these changes is to prevent a re-emergence of the issues we have seen in the past of short-term targets being the focus of institutions due to the remuneration policies implemented for staff resulting in significant risk taking.
The Capital Requirements Directive IV (CRD IV) introduced a remuneration framework to deal with excessive risk taking.
The framework includes a number of criteria to prevent a return to the excesses of the past. These include requirements on individuals within a relevant entity whose professional activities have a material impact on their risk profile, known as 'material risk takers'.
These material risk takers include senior management, risk takers, staff engaged in control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers.
The remuneration paid to these material risk takers must consist of the following structure: a substantial portion, and in any event at least 50%, of any variable remuneration should consist of equity-linked or other non-cash instruments; a substantial portion of the variable remuneration component, and in any event at least 40% to 60% (the latter in the case of a variable remuneration component of "a particularly high amount") should be deferred over a period of not less than three to five years; the variable component of the total remuneration shall not exceed 100% of the fixed component of the total remuneration of material risk takers; shareholders, owners or members of the institution, acting by a qualified majority can approve a higher maximum level of the variable component provided that this level does not exceed 200% of the fixed component of the total remuneration; and the relevant competent authority in Ireland, the Central Bank of Ireland are to be informed of recommendations to shareholders and of the result of any shareholder vote, which shall not conflict with institutions' obligations to maintain a sound capital base.
In addition the regulatory regime requires greater transparency on bonuses paid by banks with disclosure requirements relating to the number of individuals earning over €1 million per annum.
The introduction of the framework in 2014 and enforced by the relevant competent authorities across Europe is designed to ensure the excessive risk taking culture and short term focus on targets seen prior to 2008 is not repeated. This is being achieved by the framework outlined above on the structure of bonus payments by the relevant institutions and the increased disclosure requirements as introduced under CRD IV.
124. Deputy Pearse Doherty asked the Minister for Finance the number of applications that have been revived for banking licences in each of the past five years; the number of licences granted; and if he will make a statement on the matter. [7583/17]
Amharc ar fhreagraI am informed by the Central Bank that the number of applications for a banking licence received in the past five years is as follows:
2016 - None
2015 - None
2014 - None
2013 - One - Dell Bank International Limited - licence granted
2012 - None
In December 2015, Credit Suisse AG, a credit institution authorised in Switzerland was granted authorisation under section 9A of the Central Bank Act, 1971 (the "Act") to operate in the State through its Dublin branch for the purpose of carrying on banking business in the State. This was the first authorisation granted by the Central Bank under section 9A of the Act.
It should be noted that the Central Bank operates an internal two-step process to bank licensing. Step 1 is whereby the potential applicant submits a proposal for authorisation. This is then reviewed by the Central Bank and if it is considered that the proposal meets the criteria for the granting of a banking licence then, under Step 2, an application is submitted. If the proposal does not meet the criteria then it is returned to the potential applicant. The data contained above refers only to applications received at Step 2.
125. Deputy Pearse Doherty asked the Minister for Finance the steps being taken to attract a greater range of banks to ensure consumers have a choice of banks; and if he will make a statement on the matter. [7584/17]
Amharc ar fhreagraThe Government is committed to continuing to work to improve the attractiveness of the Irish market to new entrants. I have said before that open market competition represents the best method of driving better rates, offers and choice in financial services for customers. This can be fuelled both by competition between existing lenders and that introduced by new entrants. In this regard, as part of a range of competition measures agreed with the European Commission under their respective EU-Restructuring plans AIB and Permanent TSB are required to provide funding to a public awareness campaign (such campaign to be facilitated by Ireland through an appropriate state body) to raise awareness and promote customer switching. As such my Department is currently managing a contract for the provision of the first phase of a public awareness campaign which is due to go live on a variety of media channels in Q1 2017. This is being funded in its entirety by the two banks.
In addition, we must be careful that we do not deter new entrants from coming in, meaning that, ultimately, consumers have less choice and will end up paying a higher price or, worse, having no access to credit at any price.
Furthermore, it is worth pointing out that initiatives to improve competition in the market have already been introduced, such as the Strategic Banking Corporation of Ireland. The SBCI continues to make low cost, flexible finance available to SMEs across all sectors of the economy and all regions of the Country. To the end of September 2016, over 10,600 SMEs, operating across all business and economic sectors of the Irish economy, have benefited from €458 million of SBCI loans.
The Programme for a Partnership Government also sets out a number of important and practical measures which can be taken to improve the position of variable rate mortgage holders. The Competition and Consumer Protection Commission has been asked to work with the Central Bank to set out options for Government in terms of market structure, legislation and regulation to lower the cost of secured mortgage lending and to improve the degree of competition and consumer protection. This work has commenced and draft options are expected to be available for discussion within the coming months. In addition, the Central Bank has commenced a programme of research into switching in the mortgage market which will, inter alia, inform its consideration of the need for a mortgage switching code.
On the subject of competition in this sector, the Deputy will be aware that I welcomed the announcement on 9 February that KBC Group had carried out a strategic review of the bank's operations in Ireland and confirmed its long standing commitment of almost 40 years to the Irish market. I understand that Ireland will be designated as one of the group's core markets, alongside Belgium, Czech Republic, Bulgaria, Slovakia and Hungary. The Bank said that it will pursue a "fully-fledged sustainable growth strategy based on implementation of a 'Digital First' customer-centric strategy." It is worth highlighting that KBC Bank Ireland has 15 branches and provides important competition in the Irish domestic banking market. KBC said that it believes that "Ireland is a sound and attractive market which presents opportunities and in which we wish to play a more active role". I welcome this independent acknowledgement of the progress made under this Government. The bank also referred to "significant improvements in cost competitiveness in recent years, a stronger trend in domestic spending augmented by favourable demographics, a supportive fiscal stance and a favourable borrowing environment" in explaining its reasons for remaining in Ireland.
This is another strong sign of the recovery in Ireland and shows confidence by KBC Ireland in the Irish economy. The fact that KBC is committed to remaining in Ireland ensures continuing competition in the Irish banking market which is good for consumers. Such commitment is also a mark of the recovering market and of its continuing growth potential into the future.
126. Deputy Pearse Doherty asked the Minister for Finance if the staff of banks who are of the view that they were wrongfully moved off or denied a tracker rate mortgage are to be included in the tracker review being carried out by the banks; and if he will make a statement on the matter. [7586/17]
Amharc ar fhreagraThe Central Bank has confirmed that the scope of the Tracker Mortgage Examination covers all lenders which sold tracker mortgage accounts, including both for the family home and investment properties, up to the end of 2015. This includes mortgages: that originated on tracker interest rates; that had tracker interest rates applied at any stage during the term of the underlying mortgage agreements; and/or where the underlying mortgage agreements provided for contractual rights to or options for tracker interest rates at any stage during the term of the agreements.
All tracker mortgage accounts, including staff loans, that fall within this scope are covered by the Examination.
An update on the Examination is available on the Central Banks website at http://www.centralbank.ie/press-area/press-releases/Pages/UpdateTrackerMortgages.aspx.
127. Deputy Bernard J. Durkan asked the Minister for Finance if P60s in each of the years 1984 to 1987 or a similar statement will issue in the case of a person (details supplied) who requires such documents for pension purposes; and if he will make a statement on the matter. [7650/17]
Amharc ar fhreagraI am advised by Revenue that arrangements have been made to provide the person concerned with the details sought.
128. Deputy Willie Penrose asked the Minister for Finance the reason his Department did not pursue positive steps to ensure that the clause of the VAT system engaged by penalty processors was immediately halted, in the context of the recent release of documents to a media organisation (details supplied) which confirmed that the Revenue Commissioners briefed his Department regarding their concerns in January 2016; if his attention has been drawn to the fact that a prominent poultry farmer who refused to participate in the scheme has been effectively closed down with the total loss of business; when the anti-avoidance measures to deal with this issue in budget 2016 will be implemented; and if he will make a statement on the matter. [7735/17]
Amharc ar fhreagraI am advised by Revenue that taxpayers are entitled to structure their businesses and undertake their business activities in the most tax efficient manner permitted by the law. However, where such structures and activities result in an outcome not intended by the legislation, Revenue will raise the issue with this Department and propose a legislative change to neutralise or limit such an outcome if one is possible.
In the context of Finance Bill 2016, Revenue drew to the attention of my Department that the interaction of the flat rate scheme for farmers and the normal VAT system was being exploited in a particular agricultural sector to achieve overcompensation for flat rate farmers on their VAT input costs. As a result, as the Deputy is aware, I introduced a provision in Finance Act 2016 that enables me to exclude by Ministerial Order any specified agricultural sector where the business structures or models employed result in a systematic excess of flat-rate addition payments over input costs borne by flat-rate farmers within that sector.
129. Deputy Brendan Smith asked the Minister for Finance if there are specific tax incentive schemes available to provide assistance in the refurbishment and upgrading of buildings in town centres or villages for residential or commercial purposes; and if he will make a statement on the matter. [7745/17]
Amharc ar fhreagraThe recently launched "Realising our Rural Potential: Action Plan for Rural Development" by the Minister for Arts, Heritage, Regional, Rural and Gaeltacht Affairs contains a detailed list of actions and priorities with a view to revitalising rural Ireland generally. This effort is being led by the Minister for Arts, Heritage, Regional, Rural and Gaeltacht Affairs in conjunction with Ministers and officials from other Departments, as well as the Local Authorities and a range of other stakeholders.
A variety of actions included in this plan aim to assist in improving rural towns and making rural Ireland a better place to live. These include the Town and Village Renewal Scheme, under which funding of up to €12 million per annum is available to revitalise rural towns and villages, while there is also a commitment to develop and pilot an initiative to encourage increased residential occupancy in town and village centres.
There are currently no specific tax incentive schemes for the refurbishment and upgrading of buildings in town centres or villages. EU State Aid rules make it difficult to introduce tax reliefs that target specific geographic areas while excluding others. In this regard, the Deputy may be aware of the difficulties that my Department encountered in obtaining state aid approval from the European Commission for the Living City initiative.
Notwithstanding the above, the Home Renovation Incentive (HRI) provides for an income tax credit for homeowners or landlords of residential property, who carry out repair, renovation or improvement works on their property. It provides for tax relief by way of an income tax credit at 13.5% of qualifying expenditure. Qualifying work must cost a minimum of €5,000 (including VAT). The maximum qualifying cost for the purpose of the incentive is (€30,000 including VAT), which equates to a maximum tax credit of €4,050. The tax credit is payable over the two years following the year in which the work is paid for. The Deputy may be aware that I extended the scheme for a further two years in the recent Budget.
130. Deputy Denise Mitchell asked the Minister for Education and Skills if his Department has been reviewing the need for new premises for a group (details supplied); and if he will make a statement on the matter. [7560/17]
Amharc ar fhreagraCity of Dublin Education and Training Board (CDETB) has been working with the Trinity Adult Resource Group for Education and Training (TARGET) on the provision of Further Education and Training programmes in Donaghmede for over 20 years.
Over the years, TARGET have provided a range of education courses to cater for the life-long learning needs of adults in the community as well as a community employment scheme. In addition, TARGET have also provided a range of community services, including a childcare service offering a playgroup and a pre-school facility. They also offer a counselling service.
As a result of an increase in enrolments, St Kevin’s National School, Donaghmede, where TARGET was based, has informed TARGET that the school is not in a position to renew the lease into the future due to a 57% increase in enrolments between 2011 and 2015 and the trend continuing. The school submitted an application to my Department in 2015 to provide for the refurbishment of existing spaces to create two classroom-sized spaces to create a mainstream classroom and a resource room for special education. This application was examined and approved and funding was provided.
TARGET has continued to provide a more limited service from St Kevin's but I understand that the lease will not be renewed beyond summer 2107.
CDETB have been working with TARGET to secure alternative premises. A proposed site was identified locally however it was later deemed unsuitable for the needs of TARGET. CDETB will continue to liaise with TARGET to try to source alternative and appropriate accommodation for the service.
