Tuesday, 7 Nov 2017

Written Answers Nos. 234-257

Excise Duties

Ceisteanna (234)

Niamh Smyth

Ceist:

234. Deputy Niamh Smyth asked the Minister for Finance his plans not to increase the excise fuel duty on the freight industry; and if he will make a statement on the matter. [46577/17]

Freagraí scríofa

Minister for Finance

My decision not to increase the rate of excise duty applying to petrol and diesel in Budget 2018 ensures that the applicable rates have remained unchanged since 2012.  

To protect road transport operators from exposure to increases in the price of oil a fuel rebate scheme was introduce in July 2013. This scheme, known as the Diesel Rebate Scheme, provides a partial refund of excise duty on the basis of the retail price of fuel. Once a litre of diesel is above €1.23, qualifying road transport operators can apply for a refund of 1c per litre and this increases on a sliding scale up to 7.5c per litre if the price of fuel reaches €1.54 per litre.

Banking Sector

Ceisteanna (235)

Niamh Smyth

Ceist:

235. Deputy Niamh Smyth asked the Minister for Finance the position regarding the downgrading a service (details supplied) in County Cavan; and if he will make a statement on the matter. [46584/17]

Freagraí scríofa

Minister for Finance

My officials have investigated this matter and have found that Ulster Bank have not reduced service in their Ballyconnell branch. The opening hours have not changed. Ballyconnell customers, in addition to using the branch, can manage their personal and business accounts directly, anytime and anywhere using:

- Anytime internet banking

- Mobile phone banking

- Anytime Telephone banking

- ATMs

- Bankline

- An Post

Ulster Bank closed three branches in the Cavan/Monaghan constituency this year – Arva, Carrickmacross and Cootehill. However, they introduced six Community Banker roles, who are experienced staff that represent Ulster Bank in the community with a focus on providing support to customers. These roles focus on the geographical areas where branches have closed. Ulster Bank have also enhanced the existing transactional banking services they offer via An Post for Cootehill, Arva and Carrickmacross customers.

During September 2017, Ulster Bank launched a mobile banking ‘Bank on Wheels’ service in Cavan and Monaghan which operates 5 days a week and can accept deposits, cash withdrawals, bill payments, and all vehicles have on-board customer phone facilities for contacting central areas to enquire about products and services.

Banking Sector

Ceisteanna (236)

Niamh Smyth

Ceist:

236. Deputy Niamh Smyth asked the Minister for Finance the position regarding the downgrading of a service (details supplied) in Counties Cavan and Monaghan; the way in which service have been affected as a result; and if he will make a statement on the matter. [46585/17]

Freagraí scríofa

Minister for Finance

Notwithstanding the State’s 14% minority shareholding in Bank of Ireland, I, as Minister, have no direct function in commercial decisions taken by the bank including those which are part of the relationship between the bank and its customers. Decisions of this nature are matters for the board and management of the institution. The Minister has responsibility to ensure that the bank is run on a commercial, cost effective and independent basis to protect the value of the bank as an asset to the State. Accordingly, it would not be appropriate for me to intervene in actions taken by the BOI in matters of this nature.

A Relationship Framework has been specified which defines the nature of the relationship between the Minister and Bank of Ireland which can be found at the following link:

http://www.finance.gov.ie/what-we-do/banking-financial-services/shareholding-management-unit/bank-ireland/relationship-0

Notwithstanding this, officials in the Department of Finance have been provided with an update by Bank of Ireland relating to developments in its branch network with the bank commenting on its retention of a strong nationwide branch presence (c. 250 branches and 16 additional banking outlets), and in branches where staff move from behind the counter, the continued provision to customers of a comprehensive range of products and services, the ability to lodge and withdraw cash from easy to use self-service devices and access to online phone services. In addition, the bank has highlighted its commitment to supporting vulnerable and elderly customers in the use of digital and self-service options.

Finally, the matter raised by the Deputy was the subject of a Topical Issues debate during the summer and further details of the update supplied by Bank of Ireland was shared with the Dail at that time. The full debate can be found at the following link:

http://oireachtasdebates.oireachtas.ie/debates%20authoring/debateswebpack.nsf/takes/dail2017062900055?opendocument#FFF00500

Tracker Mortgages

Ceisteanna (237)

Tom Neville

Ceist:

237. Deputy Tom Neville asked the Minister for Finance the recourse available to mortgage customers who were not offered the better value tracker mortgages by financial institutions when they took out mortgages; if financial institutions were duty bound to offer trackers to customers; and if he will make a statement on the matter. [46608/17]

Freagraí scríofa

Minister for Finance

The scope of the Central Bank 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:

- 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.  

However, subject to compliance with all relevant legal and regulatory requirements, a lender is not obliged to offer any particular mortgage product to a prospective borrower.   

The Central Bank issued details on the tracker mortgage Examination in March 2017 and October 2017 which are available at the following link: 

https://www.centralbank.ie/consumer-hub/tracker-mortgage-examination.

Where a customer is dissatisfied with their lender’s approach in relation to a tracker mortgage issue, the customer has to right to refer a complaint directly to the lender. Lenders have set up dedicated units to deal with complaints and queries in relation to tracker related matters. Details as to how a customer can complain directly to the lender are available on the lender's website.   The lender is required to handle all complaints in accordance with the requirements of the Consumer Protection Code. If the customer is not satisfied with the outcome of how their complaint has been dealt with, the customer has the right to make a complaint to the Financial Services Ombudsman who is the statutory competent authority to deal with individual customer complaints.

Emergency Services Personnel

Ceisteanna (238)

John Brassil

Ceist:

238. Deputy John Brassil asked the Minister for Finance if his attention has been drawn to the hard work and immense effort put in by all the emergency services and crews that worked upwards of 100 hours per week to ensure that roads and electricity were restored during the weeks after the storms from 16 October to 27 October 2017; his plans to allow them to remain on the lower rate tax bracket for all overtime hours worked in these weeks as a gesture of gratitude for their hard work and dedication; and if he will make a statement on the matter. [46647/17]

Freagraí scríofa

Minister for Finance

The Government acknowledges and appreciates the work undertaken both before and after the storms by a wide range of individuals including the emergency services, road and electricity crews and community and voluntary organisations. 

However, the rates at which Income Tax is charged, and the amounts subject to each rate are set out in section 15 of the Taxes Consolidation Act 1997. The legislation does not allow for an alternative tax treatment for income earned in particular circumstances such as, for example, income earned by individuals working to restore roads and electricity after the recent storms.

All individuals are subject to income tax at the standard rate (currently 20%) up to their standard rate cut off point, and at the marginal rate (currently 40%) above that point. The current standard rate cut off points in respect of different classes of individual are set out in the table below:

Individual's Status	2017 Standard Rate Cut Off Point
Assessed as a Single Person	€33,800
Jointly Assessed - One Income	€42,800
Jointly Assessed - Two Incomes (max)	€67,600*
Assessed as a Single Person and qualifies for the Single Person Child Carer Credit	€37,800

*where each spouse earns a minimum of €24,800.

I have no plans to introduce changes which would enable the income tax code to accommodate circumstances along the lines of those mentioned by the Deputy. 

Interest Rates

Ceisteanna (239)

Michael Harty

Ceist:

239. Deputy Michael Harty asked the Minister for Finance the reason why interests rates are high here compared to other EU countries; and if he will make a statement on the matter. [46699/17]

Freagraí scríofa

Minister for Finance

There is a variety of factors which result in a disparity between mortgage interest rates in Ireland and other EU countries. Some of these include differences in national legal and housing systems, cultural preferences, the proximity of lenders to borrowers. More directly, credit and market conditions, mortgage default rates and the funding of mortgage credit will also be relevant factors.

There have, however, been some developments which seek to promote a more harmonised market for credit across the EU. In particular, the 2014 Mortgage Credit Directive, which has now been transposed into Irish law by the European Union (Consumer Mortgage Credit Agreements) Regulations 2016, seeks to develop a more harmonised, efficient and competitive internal market for the provision of residential mortgages to consumer borrowers and this should help to promote the closer integration of EU mortgage markets over time.

In terms of the national context, the issue of the level of variable mortgage rates is an important one for this Government and it is committed to reducing the cost of secured mortgage lending and promoting competition in the supply of mortgage finance. To that end, the Competition and Consumer Protection Commission (CCPC) has recently produced a report which sets out options for consideration to help improve the level of competition and general efficiency of the market. Additionally, the Central Bank has recently carried out research which showed the scope for borrowers to save money by switching mortgages. 

Following on from this, and building on the 2016 addendum to the Consumer Protection Code in relation to standard variable rate mortgage holders, last August the Central Bank  published a consultation paper proposing new measures which would enhance the framework of protections for variable rate mortgage holders and in particular to require lenders to, inter alia, better inform consumers about other available mortgage options that could save them money, to help them compare their existing mortgage to other mortgage options and to provide consumers with standardised switching information. A copy of the Consultation Paper is available on the Central Bank’s website and the consultation process was open for comment until 1 November 2017.

In overall terms, the Government is of the opinion that the development of a healthy banking system, which is one which delivers increased competition, which is in a position to provide finance to credit worthy customers and which is also resilient to economic and financial market shocks, 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. 

Community Employment Schemes Supervisors

Ceisteanna (240)

James Browne

Ceist:

240. Deputy James Browne asked the Minister for Finance the reason why community employment scheme workers are not liable for tax but those working for Tús are; and if he will make a statement on the matter. [46715/17]

Freagraí scríofa

Minister for Finance

I am advised by Revenue that income arising from participation in a Community Employment Scheme is liable to income tax and that such income is, in fact, taxed under the PAYE system.

If the Deputy is aware of a situation whereby participants in a Community Employment Scheme are not paying income tax, he should provide relevant details to Revenue who will examine the matter.

VAT Exemptions

Ceisteanna (241)

James Browne

Ceist:

241. Deputy James Browne asked the Minister for Finance if progress has been made in discussions at a European level to designate defibrillators at zero rate of VAT; and if he will make a statement on the matter. [46746/17]

Freagraí scríofa

Minister for Finance

The Programme for Partnership Government recognises the difficulties faced by community groups in relation to VAT rates on certain products such as defibrillators. This is an EU competency and the Government has committed to  work with our EU counterparts in seeking to reform this area.

Defibrillators, other than implantable defibrillators, are liable to VAT at the standard rate, which in Ireland is 23%. Parts or accessories are also liable to VAT at the standard rate. There is no provision under existing VAT law that would make it possible to apply a reduced rate or zero rate to the supply of such products. Under the EU VAT Directive, Member States may retain the zero rate on goods and services which were in place on 1 January 1991, but cannot extend the zero rate to new goods and services. As such a zero rate cannot be applied to defibrillators. Any changes to VAT rates outside of what is currently permitted by the EU VAT Directive must be negotiated at EU technical working groups and ultimately agreed by the EU Council of Finance Ministers.

As part of the Action Plan on the future of VAT published on 7 April 2016 which sets out the Commission’s pathway for modernising the VAT system, the EU Commission is due to publish a proposal on the reform of VAT rates later this month. Earlier in the year, preliminary details of the proposed changes were discussed as part of the EU Commission’s Group on the Future of VAT - a forum for consulting VAT experts from Member States on pre-legislative initiatives. Officials from the Department of Finance contributed to these discussions.  With regard to what activity should be subject to a reduced rate of VAT going forward, Ireland specifically recommended to the Commission to include defibrillators and other emergency-medical and rescue equipment. After the Commission proposal is published, technical and political discussions will commence at EU Council among all Member States and Ireland will take the opportunity to continue to recommend that Member States should be able to apply specialised VAT rating to defibrillators and other emergency-medical and rescue equipment.

In advance of any change that might be made at EU level to the VAT rating of defibrillators and other products that pose difficulty for community groups, I am happy to draw your attention to the Budget 2018 announcement of a VAT compensation refund scheme, which will compensate charities for the VAT they occur on their inputs, in recognition of the work undertaken by the charities sector. 

The scheme will take effect from 1 January 2018 but will be paid one year in arrears. That is, charities may make a claim in 2019 for VAT costs arising in 2018. Charities will be entitled to a proportion of VAT based on the level of non-public funding they receive. A capped fund of €5 million will be available to the scheme in 2019.

The Government is very committed to supporting community groups and we will continue to press for a reduction in the VAT rate on defibrillators at EU level.

Question No. 242 answered with Question No. 233.

Tax Compliance

Ceisteanna (243)

Marc MacSharry

Ceist:

243. Deputy Marc MacSharry asked the Minister for Finance the tax implications for Irish citizens living here that held property abroad (details supplied); if an amnesty is still available to such persons to retrospectively comply with their obligations without penalties and interest; if so, the details of such amnesty; if not, his plans to re-establish such an amnesty to permit the substantial number of persons that wish to meet retrospective tax liabilities which arise from rental income from property in other countries; and if he will make a statement on the matter. [46818/17]

Freagraí scríofa

Minister for Finance

I am advised by Revenue that the provisions relating to penalties for failing to make a correct tax return where one is required are set out in section 1077E of the Taxes Consolidation Act (TCA) 1997. This section provides that the applicable penalties may be mitigated in specific circumstances where the taxpayer makes a “qualifying disclosure”, that is a full disclosure of all information relating to a liability made before an inquiry into the liability is commenced by Revenue. This was not an amnesty, the full tax liability, statutory interest and penalties were payable.

However, section 56 of Finance Act 2016 introduced a new provision which excluded any tax defaults relating to offshore matters from the qualifying disclosure regime with effect from 1 May this year. As a result any tax defaults which have not yet been declared cannot avail of the mitigation in penalties. 

These changes were introduced as part of Ireland’s fight against offshore tax evasion, and following increased levels of international tax transparency and data exchange. Under international exchange of information agreements Revenue are now receiving information relating to Irish taxpayers from over 100 countries, and are working with other jurisdictions to maximise the use of this information. As a result of these developments Revenue have increased capabilities to identify offshore tax defaulters, and to carry out audits and investigations into outstanding liabilities.

Following the enactment of Finance Act 2016 those with outstanding offshore tax liabilities were given a window of opportunity to avail of reduced penalties under the qualifying disclosure regime before the 1 May deadline. As this deadline has now passed, persons with outstanding offshore tax defaults will not be able to avail of the reductions of penalties provided under the qualifying disclosure regime.  However, where a taxpayer has an offshore liability it is still in their interest to come forward to Revenue to regularise their affairs in order to avoid the risk of an investigation leading to a criminal prosecution, and to avail of the reduced penalties that are offered to taxpayers that fully cooperate with Revenue as set out the Code of Practice for Revenue Audit and other Compliance Interventions.

I am further advised that tax defaults, whether they relate to offshore or domestic liabilities, are subject to statutory interest under section 1080 TCA 1997.

Mortgage Schemes

Ceisteanna (244)

Michael McGrath

Ceist:

244. Deputy Michael McGrath asked the Minister for Finance the reason why persons who previously bought a home in another jurisdiction but not in Ireland are not regarded as first time buyers here for the purposes of the help to buy scheme or under the Central Bank mortgage deposit rules; and his views on whether this is acting as a deterrent for some persons who may now wish to return here. [46841/17]

Freagraí scríofa

Minister for Finance

Section 477C of the Taxes Consolidation Act 1997 provides for the Help to Buy (HTB) initiative. A  first-time purchaser is defined as "an individual who ... has not, either individually or jointly with any other person, previously purchased or previously built, directly or indirectly, on his or her own behalf a dwelling". 

One of the main policy aims of the Help to Buy initiative is to help encourage the building of additional new properties. 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 of an additional supply of such properties. The other main aim of the scheme is to make mortgages more accessible to first-time buyers, many of whom have difficulty securing the required deposit under the Central Bank macro-prudential rules. I believe that it would be inequitable to individuals that are resident in Ireland to allow those who had already purchased a property elsewhere to avail of the incentive putting them at a significant advantage to both genuine first-time buyers and indeed all other buyers. 

Regarding the Central Bank of Ireland mortgage lending rules, it should be noted that the Bank is independent in the formulation of macro prudential policies. 

I am advised by the Central Bank that for the purposes of the Central Bank mortgage rules, a first-time buyer is defined as a borrower to whom no housing loan has ever before been advanced. Where the borrower under a housing loan is more than one person and one or more of those persons has previously been advanced a housing loan, none of those persons is a first-time buyer for the purpose of the Bank’s mortgage lending rules despite their previously owning a property.

Tax Reliefs Eligibility

Ceisteanna (245)

Mattie McGrath

Ceist:

245. Deputy Mattie McGrath asked the Minister for Finance if he will amend the medical criteria as laid out in regulation 3 statutory instrument No. 353 of the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994 to include those with neurological or degenerative disorders; and if he will make a statement on the matter. [46846/17]

Freagraí scríofa

Minister for Finance

The Disabled Drivers and Disabled Passengers Scheme provides relief from VAT and Vehicle Registration Tax, an exemption from motor tax and a grant in respect of fuel expenditure, on the purchase of an adapted car for transport of a permanently and severely disabled person within the terms of the Disabled Drivers and Disabled Passengers (Tax Concessions) Regulations 1994.

The scheme and qualifying criteria were designed specifically for those with severe physical disabilities and are, therefore, necessarily precise. To qualify for the scheme an applicant must be in possession of a primary medical certificate, which can be obtained if an applicant meets one of the following conditions:

- be wholly or almost wholly without the use of both legs;

- be wholly without the use of one leg and almost wholly without the use of the other leg such that the applicant is severely restricted as to movement of the lower limbs;

- be without both hands or without both arms;

- be without one or both legs;

- be wholly or almost wholly without the use of both hands or arms and wholly or almost wholly without the use of one leg;

- have the medical condition of dwarfism and have serious difficulties of movement of the lower limbs.

After six months an unsuccessful applicant can re-apply if there is a deterioration in their condition.

From time to time representations are received on behalf of individuals who feel they would benefit from the scheme but do not qualify under the criteria. While I have sympathy for these cases, given the scale and scope of the scheme, I have no plans to review the medical criteria eligibility at this time.

VAT Rate Reductions

Ceisteanna (246)

Pearse Doherty

Ceist:

246. Deputy Pearse Doherty asked the Minister for Finance how and when he will implement the budget decision to put in place a VAT refund scheme for charities; and if he will make a statement on the matter. [46870/17]

Freagraí scríofa

Minister for Finance

The Deputy will be aware that I announced in the Budget the introduction of a VAT compensation scheme for charities, which will compensate them for the VAT they incur on their services. The scheme will be introduced in respect of VAT incurred in 2018 but will be paid in arrears in 2019. Details of the proposed scheme are available on my Department’s website.

Legislation for this scheme is not included in the current Finance Bill as it will be made by Ministerial Order on the basis of Section 103 of the Value-Added Tax Consolidation Act 2010 (Ministerial Refund Orders). One of the reasons that the scheme will not pay out until 2019 is that it will take time for the Revenue Commissioners to establish the necessary IT and administrative systems. 

The VAT Refund Order establishing this scheme will be implemented over the course of 2018, taking into account all implications of the proposed change, including Revenue's practical implementation requirements. If it is deemed at any point that a change to primary legislation is required, this can be undertaken in Finance Bill 2018, but this will not delay the introduction of the scheme.

Insurance Compensation Fund

Ceisteanna (247)

Michael McGrath

Ceist:

247. Deputy Michael McGrath asked the Minister for Finance the status of resolving the outstanding claims associated with a company (details supplied); the position on the liquidation of the company; the estimated shortfall in November 2017; the payouts made by the Insurance Compensation Fund to date; the authorisation date of the next ICF payments; and if he will make a statement on the matter. [46884/17]

Freagraí scríofa

Minister for Finance

Setanta Insurance was placed into liquidation by the Malta Financial Services Authority on 30 April 2014. As it was a Maltese incorporated company, the liquidation is being carried out under Maltese law.

As the Deputy is aware, the Supreme Court delivered its judgment on 25 May 2017 and overturned the previous decisions of the High Court and the Court of Appeal that the Motor Insurers’ Bureau of Ireland (MIBI) was liable in respect of third party motor insurance claims made against the policyholders of Setanta Insurance. The consequence of this is that the Insurance Compensation Fund (ICF) has been deemed responsible for the payment of such third party claims.

As the judgment has been delivered, the process of making payments in accordance with the provisions of the Insurance Act, 1964, as amended, has commenced. Under the current legislation payments can only be made out of the ICF, with the approval of the High Court and only if it appears to the High Court that it is unlikely that the claim can be met otherwise than from the ICF. If satisfied, the High Court can order payments out of the ICF up to 65% (or €825,000, whichever is the lesser) due to relevant claimants. 

To date, there have been two applications to the High Court for the payment of compensation from the ICF in relation to Setanta Insurance. An Order was granted in the High Court in October 2016 in relation to first party claims at a cost to the ICF of €608,085.14. Subsequent to the Supreme Court judgment, an Order was granted in the High Court in July 2017 in relation to third party claims at a cost to the ICF of €6,479,336.85. Therefore, the total amount paid out of the ICF to date in relation to Setanta Insurance is €7,087,421.99.

The Liquidator has informed my Department that, as of 30 September 2017 - the latest information available -, there are 1,576 active claims, of which 573 claimants have been paid compensation from the ICF subject to the 65%/€825,000 limits. The process of settling claims is still ongoing and are subject in some cases to complex negotiations between all relevant parties. The Liquidator is currently working on settled claims and preparing them for inclusion in the next application to the High Court, expected to be made in February 2018.

Over and above the 65% ICF payment, it is expected that a proportion of the balance of money due to third party claimants will be met from the proceeds of the distribution of Setanta’s assets on completion of the liquidation process. An actuarial report, commissioned by the Liquidator, estimates the claims reserves at 30 June 2017 at between €105.9 million and €112.9 million. This is an increase from the first report in 2014, which estimated the claims reserves at between €87.7 million and €95.2 million.

A consequence of this is that based on this actuarial report, the liquidator now estimates that he will not be in a position to meet more than 22% of the claims out of the assets of the liquidation, rather than the not more than 30% of claims figure previously indicated.

In addition, the Deputy should note as previously indicated that there is a legal concern that any Government intervention could undermine the priority status of claimants in the liquidation. The Department of Finance has therefore sought legal advice on the impact on the State's ability to recover from the liquidated company if it were to compensate third party claimants. 

Once this legal issue is clarified, the Government will be in a better position to consider its overall position on the liquidation process.

NAMA Property Sales

Ceisteanna (248)

Michael McGrath

Ceist:

248. Deputy Michael McGrath asked the Minister for Finance if NAMA owns properties in an area (details supplied); if so, the details; if the agency has plans to dispose of these properties in the foreseeable future; and if he will make a statement on the matter. [46893/17]

Freagraí scríofa

Minister for Finance

I am advised that NAMA does not own properties. Rather its role is as a secured lender and the properties remain under the control of the debtor, or where enforcement has taken place, the appointed receiver/administrator. 

I am advised that the properties concerned are under the control of a receiver who has responsibility for their management and maintenance. In this regard, I am advised by NAMA that the receiver undertook completion works of new and unfinished units, using funding from NAMA, to ensure they could be occupied by residential tenants.

The Deputy will be aware that the receiver has a fiduciary duty to maximise the return for assets under their control. Furthermore, under Section 10 of the NAMA Act, NAMA is obliged to obtain, from its secured assets, the best achievable financial return for the State. I am advised that any future strategy in relation to the assets will therefore be decided with due regard to the statutory obligations of NAMA and the fiduciary obligations of the receiver.

The Deputy will also be aware that I, as Minister for Finance, have no role in respect of NAMA's commercial operations or decisions, and it would not therefore be appropriate for me to comment on individual assets or on the asset strategies that may be adopted.

Help-To-Buy Scheme Eligibility

Ceisteanna (249)

Michael McGrath

Ceist:

249. Deputy Michael McGrath asked the Minister for Finance the eligibility criteria for self-builds under the help-to-buy scheme; the reason why the market value of the home is used rather than the cost of building that home; and if he will make a statement on the matter. [46915/17]

Freagraí scríofa

Minister for Finance

I am advised by Revenue that, in the case of a self-build, the main criteria which apply under the Help to Buy scheme are:

- the claimant must be a first-time buyer,

- the residence must be built directly or indirectly by the first-time buyer,

- a loan must be taken out with a qualifying lender in respect of provision of the self-build, where the loan-to-value ratio is a minimum of 70%,

- the valuation approved by the qualifying lender must not exceed €500,000 unless the first tranche of the loan was drawn down between 19 July 2016 and 31 December 2016, in which case it must not exceed €600,000, and

- the residence must be occupied as the only residence of the first-time buyer for a minimum of 5 years.

For the purposes of valuing a self-build property under Help to Buy, I understand that Revenue follow the criteria used by the Central Bank under its macro-prudential mortgage rules. By way of clarification, these relate to the aggregate of the market value of the land and the estimated costs of construction rather than the market value of the home.

Question No. 250 answered with Question No. 189.

Proposed Legislation

Ceisteanna (251)

Donnchadh Ó Laoghaire

Ceist:

251. Deputy Donnchadh Ó Laoghaire asked the Minister for Finance the status of the Fossil Fuel Divestment Bill 2017; and if he will make a statement on the matter. [46955/17]

Freagraí scríofa

Minister for Finance

As the Deputy will be aware, the Fossil Fuel Divestment Bill 2016 is a Private Member's Bill which was introduced by Deputy Thomas Pringle in November 2016. It is not a Government Bill. However I can indicate to the Deputy where the Bill currently stands.

Following its passage through Second Stage on 19 January 2017, the Bill was referred to the Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach for pre-legislative scrutiny. Minister of State D’Arcy and the Ireland Strategic Investment Fund (ISIF) made separate appearances before that Committee on 27 June last.

As indicated by Deputy Pringle during Minister D’Arcy’s appearance before the Committee, he will work with the Government, during Committee Stage, to arrive at amendments which seek to address Government concerns regarding the unintended consequences which the Bill might have.

ISIF has been proactive in this space and following a review has recently written to me proposing an update to it investment strategy in terms of the exclusion of certain categories of investment.

Regarding the Private Member’s Bill I await the Committee's signalling as to when to move to Committee stage proper.

Bank Restructuring

Ceisteanna (252)

Catherine Murphy

Ceist:

252. Deputy Catherine Murphy asked the Minister for Finance what funds have been approved for the restructuring of a bank (details supplied) after the extraordinary general meeting on 3 November 2017; and if he will make a statement on the matter. [46988/17]

Freagraí scríofa

Minister for Finance

There are no State funds provided or required in relation to the creation of a Holding Company by AIB, as facilitated by an EGM (Extraordinary General Meeting) on Friday 3rd November.

AIB is required to establish a Holding Company structure under the BRRD (Bank Recovery and Resolution Directive) which established an EU framework for dealing with pre-resolution and resolution mechanisms, tools and rules applicable to banks. The BRRD is designed to provide the relevant authorities with a credible set of tools to intervene sufficiently early and quickly in an unsound or failing bank or its group to ensure the continuity of its critical financial and economic functions, and minimise the impact on the economy and financial system.

The implementation of this holding company structure enables AIB to meet its regulatory requirements. It also provides additional confidence that they have sufficient amounts of capital, and liabilities that are capable of absorbing losses, without recourse to public funds, in a manner that minimises the impact on financial stability.

Question No. 253 answered with Question No. 224.

Tracker Mortgages

Ceisteanna (254)

Michael McGrath

Ceist:

254. Deputy Michael McGrath asked the Minister for Finance if persons whose credit record has been affected by being wrongly denied a tracker mortgage rate or as a result of being on a less favourable tracker rate have been notified of this fact; the steps that are being taken to address this problem; and if he will make a statement on the matter. [46999/17]

Freagraí scríofa

Minister for Finance

The Deputy may wish to note that the Central Bank's document "Principles for Redress" in relation to the tracker mortgage examination provides, inter alia, that the credit rating of impacted customers is to be corrected as soon as possible by the lender and that copies of an updated credit rating are to be provided free of charge to impacted customers.

The Central Bank "Principles for Redress" document is available at the attached link: https://www.centralbank.ie/consumer-hub/tracker-mortgage-examination.

Tracker Mortgage Examination Data

Ceisteanna (255, 268)

Michael McGrath

Ceist:

255. Deputy Michael McGrath asked the Minister for Finance the details of the independent appeals panel established to examine tracker mortgage issues; the membership of the appeals panel; the number of cases dealt with by the panel to date in 2017 for each of the fifteen lenders included in the Central Bank's examination of tracker mortgage related issues; and if he will make a statement on the matter. [47000/17]

Michael McGrath

Ceist:

268. Deputy Michael McGrath asked the Minister for Finance if each of the 15 lenders included in the Central Bank's examination of tracker mortgage-related issues will provide details of the amount of money provided to affected borrowers for independent professional advice; if the amount or allowance provided for such advice is relative to the amount of redress involved in each case; if it is a fixed amount irrespective of the amount of redress; and if he will make a statement on the matter. [47055/17]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 255 and 268 together.

As the Deputy is aware, the Central Bank of Ireland has set out the Framework for Conducting the Tracker Mortgage Examination and the Principles for Redress. The Central Bank has indicated that appeals form an important part of the overall Examination process by ensuring independent and transparent processes to address complaints from customers about the level of redress and/or compensation offered to them. The Central Bank requires lenders to have such appeals processes in place in advance of making redress and compensation payments to impacted customers. The Central Bank has advised that three lenders have now established appeals processes for customers who have received redress and compensation offers as part of the Examination process. The Central Bank continues to engage with the remaining lenders regarding the setting up of their appeals processes. Redress and compensation are to be paid to impacted customers up front at the point of offer and cannot be reduced by virtue of a customer lodging an appeal. This ensures that a customer’s need to receive payment upfront is not a determining factor in deciding whether or not to appeal an offer from a lender. To assist customers in the consideration of the redress and compensation offers made to them, including whether to make an appeal in respect of the adequacy of the offers, an additional payment is provided to impacted customers at the point of offer to enable them to take professional advice.

Given the key role the appeals process will have in delivering fair outcomes for impacted customers, the Central Bank has also developed and issued guidance to lenders outlining its expectations in respect of the establishment and operation of their appeals processes. This guidance includes the expectation, mentioned above, that redress and compensation paid to customers at the point of offer cannot be reduced by virtue of those customers lodging an appeal. This ensures that a customer’s need to receive payment up front is not a determining factor in deciding whether or not to appeal an offer. Further information can be found within the Central Bank’s Guidelines for the Establishment and Operation of an Appeals Process to Deal with Appeals Arising from the Tracker Mortgage Examination, available on the Central Bank’s website.

However, the Central Bank has also advised that, generally speaking, it can only disclose supervisory and regulatory information in a summary or aggregate form so that individual firms cannot be identified. The Central Bank has further indicated that, due to the fact that only a minority of lenders are at appeals stage at this point, the disclosure of data in relation to appeals at this point could be attributed to individual firms.    

Tracker Mortgage Examination

Ceisteanna (256)

Michael McGrath

Ceist:

256. Deputy Michael McGrath asked the Minister for Finance the range of compensation as a percentage of redress available to persons affected for each of the 15 lenders included in the Central Bank's examination of tracker mortgage-related issues; the minimum and maximum percentage compensation for same; and if he will make a statement on the matter. [47001/17]

Freagraí scríofa

Minister for Finance

The Central Bank has advised that in accordance with the Tracker Examination Framework, the Central Bank expects that for all impacted customers, lenders’ redress and compensation offers will restore them to the position they would have been in had the detriment not occurred and that they are appropriately compensated for the detriment suffered.

The Central Bank expects the majority of the 13,000 impacted customers identified to date under the Examination will receive redress and compensation by year-end. The Bank has also advised that its decisions regarding the groups of customers identified as part of the Examination and disputed by some lenders to date will be issued to lenders by mid-December. As of end-September, €120m has been paid in redress and compensation to approximately 3,300 impacted borrowers. This is in addition to redress and compensation provided by permanent tsb plc (€36.8 million) and Springboard Mortgages Limited (€6.2 million) to customers pursuant to their Mortgage Redress Programme (MRP), which was required by the Central Bank and predated the industry wide Examination. Accordingly from July 2015 to end September 2017, the aggregate figure for redress and compensation to customers arising from the MRP and the Examination is €163 million.

In line with the Central Bank’s mandate to ensure that the best interests of consumers are protected, the Bank's immediate focus is to ensure that lenders prioritise the identification of impacted customers, stop the harm and then provide appropriate redress and compensation in line with the Principles for Redress. The purpose of redress is to return customers to the position they would have been in had the issue not occurred. Compensation should be reasonable and reflect the level of detriment suffered by customers.

The Central Bank Framework requires that lenders categorise impacted customers by reference to the type and level of detriment suffered. The types of detriment identified range from overcharging due to the application of incorrect interest rates up to loss of ownership of mortgaged properties.

The calculation of redress and compensation proposals for customers can be complex. The Central Bank has challenged all lenders with particular regard to their redress and compensation proposals for loss of ownership customers and as a result lenders have substantially improved their proposals.

Each lender's compensation package is tailored to the specific circumstances of its customer. Given the complexity of the issues identified by the Examination, the scale of detriment suffered is unique to each individual customer and the level of the redress and compensation payment will, therefore, be dependent on the circumstances of the individual case.

It should be noted that all redress and compensation payments are made to customers on an upfront basis.  Customers can accept the redress and compensation offered and still make an appeal to the appeals panels required to be established by lenders. Customers’ rights to make appeals to the FSO and through the courts are also preserved.

Tracker Mortgages Data

Ceisteanna (257)

Michael McGrath

Ceist:

257. Deputy Michael McGrath asked the Minister for Finance the number of persons estimated to have lost their property, private dwelling homes and buy-to-let as a result of being wrongly denied a tracker mortgage rate or as a result of being on a less favourable tracker rate; the steps that have been taken to assist these persons for each of the fifteen lenders included in the Central Bank's examination of tracker mortgage related issues; and if he will make a statement on the matter. [47002/17]

Freagraí scríofa

Minister for Finance

The recent October 2017 Central Bank update on the tracker mortgage examination (https://www.centralbank.ie/docs/default-source/consumer-hub-library/tracker-issues/update-on-tracker-examination.pdf?sfvrsn=5) indicates that to date lenders have reported that as a result of their failings, loss of ownership has occurred in respect of 23 private dwelling homes and 79 buy-to-let properties. However, the Bank's update also states that, as lenders’ analyses continue, this figure will rise. The Central Bank's "Principles for Redress" makes clear to lenders that the level of compensation provided for the harm inflicted on impacted borrowers must reflect the level of detriment involved.