Written Replies Nos. 173 to 185
173. Deputy Thomas P. Broughan asked the Minister for Finance if he will provide a full report on the actions and investigations being taken on foot of the reports of the Moriarty tribunal; the status of these investigations; and if he will make a statement on the matter. [10267/17]
Amharc ar fhreagraIn response to the Deputy's question the Moriarty Tribunal made a number of recommendations which affected a number of Government Departments. As Minister for Finance I can only respond in relation to the recommendations made in relation to my own Department.
The tribunal pointed out problems to be addressed in our system of financial regulation. Poor supervision, an overly-deferential attitude by regulators, poor assessment of risks and a lack of follow-through on enforcement, all played a part in the financial crisis. I and my European counterparts have been working steadfastly since the financial crisis to bring about strengthened oversight and resolution regimes. The entire financial services landscape has changed utterly, characterised by the presence of new European institutions; strengthened regulations; a more intrusive supervisory approach; and a new focus on macroprudential requirements.
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' regulation and directive, 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 (BRRD) 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 overarching objective of the BRRD is to shift the cost of bank failure from taxpayers to shareholders and creditors of the institutions themselves.
The Single Supervisory Mechanism (SSM) is now responsible for the prudential supervision framework for euro area banks. The central piece of the SSM supervisory process is the Supervisory Review and Evaluation Process (SREP) under which ECB led joint supervisory teams inspect business models, internal governance, profitability and banking risks.
All of these new regulations and institutional arrangements have been designed to address the challenges of banking oversight and resolution at a European level and provide for a proactive approach towards systemic and emergent risks at a European level.
Besides the introduction of new European and national regulations, the Central Bank too has increased its resources and has become more pro-active in addressing systemic risk.
In response to the Tribunal recommendations I considered the provision of tax relief for donations to political parties and decided against introducing such relief. The Electoral (Amendment) (Political Funding) Act 2012 provided for changes to the Electoral Act, 1997 and imposed new limits for donations. Donations to individuals exceeding €600 must be declared and donations exceeding €1,000 in any one year may not be accepted. Political party donations greater than €1,500 must be declared and donations greater than €2,500 in any one year may not be accepted. These limits, in themselves, should act to deter any attempts by wealthy individuals to influence political activity.
Recommendation: Representations to Revenue by Office holders -
In relation to this proposal, I remain of the view that this recommendation could best be considered in the context of the Government's overall approach to political and parliamentary reform. Representations are a valid part of the political process. The Government may wish to consider whether this recommendation should be confined to Revenue, or to Office holders, or whether the Commissioners decision to publish data on the volume of representations made by each Deputy is an adequate response.
The Office of the Revenue Commissioners has advised in relation to the following recommendations of the Moriarty Tribunal that:
Recommendation: Independence of the Revenue Commissioners-
Section 101 of the Minister and Secretaries (Amendment) Act 2011 placed on a statutory basis the independence of the Revenue Commissioners in the exercise by the Commissioners of their statutory functions under the various taxation and customs enactments. This has given effect to the recommendation of the Report of the Tribunal into Payments to Politicians and Related Matters (that is, the report of Mr. Justice Moriarty), that the principle or convention of the independence of the Revenue Commissioners be placed on the more robust status of a legislative provision.
Recommendation: Transmission to other agencies of information obtained by Revenue under bilateral agreements- This recommendation has been considered. These agreements are international treaties which are very precisely drawn as to the purpose for which information may be used and would not permit such transmission. However if opportunities arise in the future, the Commissioners will consider the matter further. The Deputy will appreciate that Revenue is not in a position to comment on matters relating to individuals for reasons of taxpayer confidentiality.
175. Deputy Pearse Doherty asked the Minister for Finance when the Central Bank will next publish statistics on mortgage arrears; and if he will make a statement on the matter. [9549/17]
Amharc ar fhreagraI refer the Deputy to the Central Bank's website at www.centralbank.ie/polstats/stats/Documents/Publication%20Calendar%202017.pdf, which indicates that the next bulletin on Residential Mortgage Arrears and Repossessions Statistics will be released in mid-March. That bulletin will cover the period to end-December 2016. The quarterly data is available at www.centralbank.ie/polstats/stats/mortgagearrears/Pages/releases.aspx.
176. Deputy Clare Daly asked the Minister for Finance if it is the case that where a registered charity purchases a home, that charity will not refund the local property tax, LPT, paid by the previous owner, despite the fact that the norm is that a house purchaser refunds the seller the amount of LPT paid from the date of the sale to the end of the following year, if the seller has paid the LPT in November of the previous year; and if he will make a statement on the matter. [9590/17]
Amharc ar fhreagraSection 13 of the Finance (Local Property Tax) Act 2012 (as amended) provides that the owner of a relevant residential property on the 'liability date' is liable to pay the LPT charge for that year. The 'liability date' is always 1 November in the preceding year, for example 1 November 2016 is the 'liability date' for 2017. The only exception in this regard was the 2013 'half year' where the 'liability date' was 1 May 2013.
In circumstances where a relevant residential property is sold after the 'liability date', the vendor remains liable to pay the tax for the following year. This remains the case even if the sale is completed before the start of the calendar year. The intended usage of the property by the new owners has no bearing on its LPT status until the next 'liability date', for example 1 November 2017 in respect of the 2018 tax year.
Revenue has confirmed that the property in question was sold after 1 November 2016 and as a consequence the vendor is correctly liable to pay LPT for 2017. The purchaser is not liable until 2018. Any agreements between the vendor and the purchaser to either 'share' the 2017 liability or to refund the tax (to the vendor) are outside the legislation as set down and have no statutory basis.
177. Deputy Eugene Murphy asked the Minister for Finance the steps being taken to ensure that all banks pass on the reductions in variable mortgage rates to their mortgage customers; and if he will make a statement on the matter. [9638/17]
Amharc ar fhreagraThe issue of standard variable mortgage rates is a significant one for this Government and it has made it clear that it is not acceptable for lenders to charge excessive rates on such mortgages. The Programme for a Partnership Government, therefore, sets out a number of important and practical measures which can be taken to improve the position of variable rate mortgage holders.
Firstly, it wishes to promote competition in the supply of mortgage finance. To that end, the Competition and Consumer Protection Commission (CCPC) will 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. Pursuant to section 10(3) of the Competition and Consumer Protection Act 2014, the CCPC will undertake an exercise which will involve:-
(i) setting out how competition in the mortgage market operates in terms of interest rates and mortgage approval with a focus on outcomes in comparator jurisdictions;
(ii) setting out what consumers want and expect in a properly functioning mortgage market;
(iii) identifying gaps where competition or consumer protection is inadequate, including a survey of potential new entrants (both traditional and non-traditional) on barriers to entry into the Irish mortgage market;
(iv) outlining of options, including their likely benefits and costs, to reduce the cost of secured mortgage lending and to improve competition and consumer protection in terms of market structure, legislation and regulation.
In liaison with the Central Bank, the CCPC has now commenced this work and this week announced a public consultation to gather all views about the future of the Irish mortgage market. The closing date for submissions is 20 March 2017. The CCPC will produce a final report outlining their proposals by the end of May 2017. For more information on this please see the following link: www.ccpc.ie/news/2017-02-20-future-irelands-mortgage-market-ccpc-opens-public-consultation.
Secondly, the Government considers that measures to encourage and promote a greater level of switching in the mortgage market would also help boost the level of competition in the market for existing mortgages. In particular, the Programme for Government considers that the development of a code of conduct for switching mortgage provider would be a useful and practical initiative which would have the potential to deliver savings to many existing mortgage holders. To that end, the Central Bank has commenced a programme of research on this topic and the Bank has indicated that the output of this work will be used to inform its consideration of the need for any future work in the area of mortgage switching and specifically around the need for a mortgage switching code.
A healthy commercial banking system that is in a position to provide finance to customers and is resilient to economic and financial market shocks, needs to be able to generate sustainable profits over the long term for example, sufficient profit levels to absorb credit losses over the credit cycle while still generating capital. In Ireland, the mis-pricing of risks in historical lending continues to be a significant contributor to weak profitability, as evidenced by the continued high level of non-performing loans, prevalence of very low yielding tracker mortgages, and low net interest margins.
It also needs to be noted that the residential mortgage market is evolving and that it now comprises, inter alia, fixed interest rate mortgages, loan to value managed variable rate mortgages, trackers and restructured mortgages of various types. Therefore, the residential mortgage market cannot be assessed by only looking at standard variable rate mortgages, and any assessment, would need to consider the large number of different factors that influence interest rate pricing. The provision of clear information to consumers on mortgage products is, therefore, very important. The Central Bank requires that all mortgages are advertised and sold in accordance with the requirements of financial services legislation (including Central Bank Codes), and that consumers who choose a given mortgage product (or to switch to a new product) are treated in accordance with these requirements in the context of the product they have chosen. Also, the Central Bank has recently made changes to better inform and protect variable rate mortgage holders in relation to changes in the mortgage rate. The enhanced measures, which are provided for in an Addendum to the Consumer Protection Code 2012 and are effective from 1 February, will require lenders to explain to borrowers how their variable interest rates have been set, including in the event of an increase. The measures will also improve the level of information to be provided to borrowers about other mortgage products their lender provides that could provide savings for the borrower and signpost borrowers to the CCPC's mortgage switching tool. Central Bank research has also showed that there is scope for borrowers to save money by switching mortgages.
In overall terms, the Government is of the opinion that increased competition rather than administrative controls is the best way to ensure that retail lending rates are driven down in a sustainable way for the market as a whole but without giving rise to potentially undesirable consequences for the provision of new mortgage lending. This is a policy area that the Government will keep under active review in its ongoing engagement with mortgage lenders and in implementing the Programme for Government commitments to help deliver on a long term basis better outcomes for all mortgage borrowers.
178. Deputy Catherine Murphy asked the Minister for Finance the legal fees incurred on freedom of information, FOI, requests received by his Department; the staff hours involved in the processing of FOI requests for the past three years; and if he will make a statement on the matter. [9678/17]
Amharc ar fhreagraIn response to the Deputy's question, my Department has not incurred any legal fees on FOI requests. The Department's internal Legal Unit provides ad-hoc legal support to Deciding Officers and Internal Reviewers in relation to FOI where appropriate.
With regard to the staff hours involved in the processing of FOI requests for the past three years, my Department does not collect centralised information in this regard. However, since the introduction of the FOI Act 2014, the Department has experienced an increase in the number of FOIs received; Deciding Officers in the Department processed 220 FoI Requests in 2013, 165 in 2014, 413 in 2015 and 405 FOI requests in 2016 (an increase of 84% on the 2013 figure), which has naturally resulted in an increase in the number of staff hours required to fulfil the Department's responsibilities in relation to the effective delivery of our obligations under FOI Act in the past three years.
179. Deputy Pearse Doherty asked the Minister for Finance the engagement he has had with the European Commission, the ECB or the European Banking Authority regarding a possible move of the authority to Ireland; and if he will make a statement on the matter. [9692/17]
Amharc ar fhreagraWhile I personally have not specifically raised this issue in talks, I would point out that Minister of State Murphy along with my officials are using every opportunity, to promote Ireland as a location of choice for the European Banking Authority. The Department of Finance role in promoting Ireland as a location of choice for the EBA is outlined in the current IFS 2020 strategy. As part of this strategy, the Minister of State Murphy met with the Executive Director of the European Banking Authority earlier this month.
My officials have also been engaging with relevant stakeholders in order to further progress the goal of relocating the European Banking Authority to Ireland, post the completion of the negotiations between the EU and the United Kingdom. This has included meetings with the European Commission in order to highlight the benefits of relocating the Authority to Ireland. The meetings have also sought to determine the needs of the European Banking Authority and its staff, after they are re-located from London.
Finally, I would like to point out that the ultimate decision on relocation of the European Banking Authority will be made by both the European Council and Parliament and will be linked to the triggering of Article 50 by the UK and subsequent negotiations between it and the European Union.
180. Deputy Pearse Doherty asked the Minister for Finance if he has identified possible locations for housing the European Banking Authority if it moves here; and if he will make a statement on the matter. [9693/17]
Amharc ar fhreagraIn the event the EBA is re-located to Dublin, the decision relating to accommodation is a matter for the Authority. The EBA have made clear they require a location with good transport links to other European capitals and commercial office space equivalent to the 45,000 sq ft they currently occupy in London. As a location, Dublin would be able to provide both of these. The fact that Dublin has a pipeline of over 12 million sq. ft of commercial office space up to 2021 has been highlighted by Minister Murphy and my officials in their discussions with the EBA and other relevant stakeholders.
181. Deputy Niamh Smyth asked the Minister for Finance the status of mediation between persons (details supplied) and the special liquidators of a bank; if this mediation is ongoing; if his attention has been drawn to the next step in this matter; the mandate which has been conveyed to those negotiating on the State's behalf; the amount of legal and recovery costs already incurred by the special liquidator on this matter; and if he will make a statement on the matter. [9742/17]
Amharc ar fhreagraI am advised by the Special Liquidators that there is no ongoing mediation with the party referred to in the question or any of their representatives at this time.
Generally speaking, my officials and I would be kept informed by the Special Liquidators at a high level of any such discussions between them and the party referred to in the question but the detail of such discussions between both parties would be a matter for the Special Liquidators in the context of their overriding legal obligations and neither I nor my officials would have any input into such discussions.
In relation to the costs incurred by the Special Liquidators on this matter, I am advised by them that they are not in a position to provide the requested information due to commercial confidentiality and ongoing litigation involving the party referred to in the question.
It is important to note that the Special Liquidators are not only working on behalf of the State but on behalf of all creditors of the liquidation and they have a legal obligation to maximise the recovery on the liquidation of IBRC and deliver the best possible outcome to all creditors.
182. Deputy Brendan Griffin asked the Minister for Finance the reason professional drivers are incurring higher insurance premiums on their private vehicles due to their occupation; if his action plan will address this anomaly; and if he will make a statement on the matter. [9755/17]
Amharc ar fhreagraIt is important to note that neither I nor the Central Bank of Ireland can direct insurers to provide cover to a particular category of drivers at a particular price as this is a matter of a commercial nature, and would be contrary to EU rules.
In providing motor insurance, insurers adopt a risk based approach to determining premiums. In simple terms, they look at an application and make a determination of what the likelihood of a claim is and price accordingly. Their previous claims history will heavily influence their decisions in this area.
Amongst the risk factors insurers look at are how the car is used and the occupation of the driver, as well as, for example, the age of the driver, the age of the car, the location of risk, driving history, vehicle details (e.g. engine size), medical conditions.
I understand following consultation with your office that the term "professional drivers" in this context refers to individuals who accumulate above-average mileage figures in their private vehicles due to the nature of their job. Therefore on the basis of how insurers' assess their risks such a driver is going to represent in general a higher level of risk compared with a person who drives a short distance to work every day.
The Deputy should note that while I cannot directly intervene in pricing of insurance products, I do accept that it is possible for the State to play a role in helping to stabilise the market and deal with factors contributing to the cost of insurance. Consequently, I established the Cost of Insurance Working Group and appointed Minister of State Eoghan Murphy as Chair. The Report on the Cost of Motor Insurance was finalised in December 2016, approved by Cabinet on January 10 2017, and subsequently published. It contains 33 recommendations and 71 actions which are detailed in an action plan contained in the Report with agreed timelines for implementation and work on carrying these out is already well underway.
While there is no single simple solution to effect a reduction in the cost of insurance, when taken cumulatively, the implementation of these 71 actions can deliver fairer premiums for consumers, including drivers who accumulate above-average mileage figures due to the nature of their job. However, the Deputy should be aware that even in a lower price environment, there will in general be a differential in the price of insurance for professional drivers compared with those doing less mileage due to the higher risk they pose because of the greater amount of time they spend on the road.
183. Deputy Sean Sherlock asked the Minister for Finance if the help to buy scheme for first time buyers extends to first time buyers who purchase old houses and build extensions to live in them, especially in a situation where the existing building requires significant structural and other work, is extended by 700 sq ft and currently is uninhabitable. [9794/17]
Amharc ar fhreagraThe Deputy will be aware that the Help to Buy incentive is not a broad based relief available for the purchase of any home by any buyer. It is instead a targeted response that is aimed at first-time buyers, buying (or building) new residences. This targeting is designed to help encourage the building of new homes, thereby increasing supply, by turning notional demand into real demand. By restricting this initiative solely to new dwellings and new self builds, it is anticipated that the resulting increase in demand for affordable new build homes should encourage the construction industry to provide for an additional supply of such properties.
In line with these policy objectives, the Help to Buy scheme is not available for extensions to old houses in the manner in which the Deputy describes.
The legislation under Section 477C(1) of the Taxes Consolidation Act 1997, defines a qualifying residence as:
- a new building which was not, at any time, used, or suitable for use, as a dwelling, or
- a building which was not, at any time, in whole or in part, used, or suitable for use, as a dwelling and which has been converted for use as a dwelling.
On the basis of the information provided in the Question, it is the view of the Revenue Commissioners that the extended property does not qualify for the incentive as the legislation requires that the building was not, in whole or in part, used, or suitable for use, as a dwelling.
184. Deputy Jackie Cahill asked the Minister for Finance the regulations under which a bank regulated for lending by the Central Bank can refuse to provide a mortgage to a person for the sole reason that the person's parent has a right of residence at the home upon which the mortgage is sought; and if he will make a statement on the matter. [9820/17]
Amharc ar fhreagraThere are certain consumer protection requirements on regulated entities when considering an application for residential mortgage credit. For instance, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 require creditors to assess the creditworthiness of the consumer before concluding a credit agreement (Regulations 19 and 21). In addition, the Central Bank's Consumer Protection Code 2012 requires regulated entities to carry out affordability and suitability assessment, prior to offering, recommending, arranging or providing a credit product to a personal consumer.
Within the parameters of this consumer protection regulatory framework, however, it remains a commercial decision for a regulated entity to grant or refuse an individual application for mortgage credit in the context of adopting an appropriately prudent overall approach to credit provision.
However, if a consumer (including a potential consumer) is concerned or unhappy with how they have been dealt with by a firm regulated by the Central Bank, there are clear processes in place in the Consumer Protection Code 2012 for handling complaints and complaints resolution. In addition, where a consumer is not happy with the response received from the regulated firm he/she can, provided the conduct complained of occurred within the last six years, escalate his/her complaint to the Financial Services Ombudsman (FSO). The FSO has the statutory powers to investigate complaints against financial services providers.
185. Deputy Richard Boyd Barrett asked the Minister for Finance if he will address a matter regarding local property tax in respect of a person (details supplied); and if he will make a statement on the matter. [9823/17]
Amharc ar fhreagraSection 13 of the Finance (Local Property Tax) Act 2012 (as amended) provides that the owner of a relevant residential property on the 'liability date' is liable to pay the Local Property Tax (LPT) charge for that year. The 'liability date' is always 1 November in the preceding year, for example 1 November 2016 is the 'liability date' for 2017. The only exception in this regard was the 2013 'half year' where the 'liability date' was 1 May 2013.
In circumstances where a relevant residential property is sold after the 'liability date', the vendor remains liable to pay the tax for the following year. This remains the case even if the sale is completed before the start of the calendar year. During the conveyancing process associated with a property sale it is normally the case that LPT obligations are finalised between the vendor and the purchaser before the transaction is completed.
The person in question was correctly liable to pay the 2017 LPT charge on the Ballybrack property because she was the 'liable person' on 1 November 2016. However, there was no statutory obligation on her to pay the 2017 LPT charge on the Shankill property because the vendor of that property was still the 'liable person' on 1 November 2016.
Revenue is not aware of why the person opted to pay the 2017 charge on the Shankill property or why the statutory requirements in respect of the charge were not administered in accordance with the LPT legislation. It may be that an agreement was reached between both parties during the conveyancing process that the person (as purchaser) would meet the 2017 payment on behalf of the vendor.
However, any such arrangement was a matter between both parties and Revenue was not in any way involved. The question of whether the 2017 liability on the Shankill property should have been paid by the purchaser (the person in question) or the vendor is a matter between both parties to resolve and on that basis it is not possible for Revenue to offset the 2017 payment to a future LPT liability in the manner suggested by the Deputy.
