Written Answers Nos. 206-227
206. Deputy Micheál Martin asked the Minister for Finance the status of the implementation of the programme for partnership Government as it applies to his Department; and if he will make a statement on the matter. [24575/18]
Amharc ar fhreagraThe Programme for a Partnership Government contains 63 commitments within the remit of the Department of Finance and substantial progress has been made in implementing these commitments: 12 commitments have been implemented, 50 are on-going or underway, while 1 has not been advanced at this stage. The Department of the Taoiseach will shortly publish the latest Annual Report and this will provide more detail for the Deputy.
The full list of the Programme for a Partnership Government commitments that come under the remit of my Department is set out in the Statement of Strategy 2017-2020 which is available on my Department’s website.
207. Deputy Peter Burke asked the Minister for Finance his plans to revise the rules allowing retired persons withdrawing their remaining retirement fund but who are unable to do so due to the requirement to have additional income of €12,700; and if he will make a statement on the matter. [24602/18]
Amharc ar fhreagra208. Deputy Peter Burke asked the Minister for Finance if a retired person can be exempt on medical grounds from the rules precluding them from withdrawing in full their retirement fund due to the requirement placed on them to have €12,700 additional income; and if he will make a statement on the matter. [24603/18]
Amharc ar fhreagraI propose to take Questions Nos. 207 and 208 together.
I am advised by Revenue that, on retirement, an individual in a defined contribution pension savings arrangement has the option, after taking a tax free retirement lump sum, of either using the funds remaining to purchase an annuity or transferring those funds into an Approved Retirement Fund (ARF).
Where such an individual is under the age of 75 at the time of exercising the option and does not have a minimum guaranteed income of €12,700 per annum, she or he is required under section 784C of the Taxes Consolidation Act 1997 (TCA) to set aside an amount of €63,500 (or the entire fund if less than €63,500) in an Approved Minimum Retirement Fund (AMRF) or use that amount to purchase an annuity.
The minimum income requirement is to ensure the individual has an adequate and secure source of guaranteed retirement income for her or his remaining years.
While there is no exemption from this provision on medical grounds, the rules of an occupational pension scheme approved under section 772 of the TCA may permit commutation of a pension – that is, payment to an individual of her or his pension fund by way of lump sum – if the individual is suffering from a terminal illness at the time the pension becomes payable. Further details can be found in Paragraph 7.5 of Revenue’s Pensions Manual (https://www.revenue.ie/en/tax-professionals/tdm/pensions/chapter-07.pdf). Whether such a payment would be allowed depends on the rules of the specific pension scheme.
I do not currently have any plans to amend the existing provisions which relate to the transfer of funds into an AMRF or to allow for increased access to funds in an AMRF. However, these provisions, along with other taxation measures, are kept under review. The Deputy may be aware that the Government published A Roadmap for Pensions Reform 2018 – 2023 last February, which contains in Strand 3, “Improving Governance and Regulation”, a plan for a broad review of the utilisation and regulation of ARF products.
209. Deputy Marcella Corcoran Kennedy asked the Minister for Finance if all staff will be transferred to the National Shared Services Office in view of the transfer of his Department's functions in Tullamore back to Dublin; if staff expressing an interest in being transferred to the Department of Education and Skills or other Departments will be facilitated in circumstances in which a vacancy exists; and if he will make a statement on the matter. [24615/18]
Amharc ar fhreagraI wish to inform the Deputy that it is envisaged that all staff who currently work in the Tullamore office will have the opportunity to transition into the National Shared Services Office when the current functions transfer back to Dublin. Not all of the current functions completed in Tullamore will transfer back to Dublin as some functions are transitioning into the National Shared Services Office in the Tullamore facility and all the current Finance staff should have roles. It is planned that the overall number of staff working in the facility will increase requiring additional recruitment.
There are processes in place to accommodate staff who are interested in transferring to other Departments and the wider civil service and these can be used where required. All requests for a transfer to other Departments or locations are examined on a case by case basis and the Department will try to facilitate these requests in the context of the business needs of the area.
210. Deputy Anne Rabbitte asked the Minister for Finance the estimated annual losses to the Exchequer which result from retailer VAT reclaims owing to below invoice cost selling of alcohol; the estimated losses to the Exchequer since the repeal of the groceries order in 2006 relating to below invoice cost selling of alcohol; and if he will make a statement on the matter. [24618/18]
Amharc ar fhreagraVAT is a tax on the value added to a supply, and the collection and recovery of VAT takes place at each stage of the chain of supply from manufacturing to retailer. Under EU and domestic VAT rules, traders who are registered for VAT collect VAT on the goods and services that they sell. In turn, such traders are entitled to recover the VAT they incur on their business inputs used in the purchase or production of goods or delivery of services. Consequently, if there is a decrease in value at any stage in the process the trader is entitled to a refund of the excess of VAT incurred over that collected.
In this case, where a retailer is in a situation of net VAT gain as a result of below cost selling, this is not a loss to the Exchequer or an additional benefit to the retailer, it is merely how VAT is charged.
211. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 180 of 29 May 2018, the annual tax cost of the tax relief on professional membership fees before the changes made in 2011; the annual tax cost of the relief on professional membership fees after 2011; the amount of a tax revenue saving that resulted from the 2011 changes; and if he will make a statement on the matter. [24649/18]
Amharc ar fhreagraFor the tax years 2004 to 2010, section 118(5E) of the Taxes Consolidation Act 1997 provided that expenses incurred by an employer on behalf of an employee in connection with the payment (or reimbursement) of annual membership fees of a professional body were exempt from tax where such membership was regarded as "relevant to the business" of the employer. This section was repealed in Finance Act 2011 and ceased to apply from the tax year 2011. At the time this provision was expected to yield €3 million to the Exchequer in 2011 and €5 million in a full year.
Since 2011, professional membership fees are only deductible under section 114 of the Taxes Consolidation Act 1997 where they are incurred wholly, exclusively and necessarily by an individual in the performance of the duties of his or her employment. In the context of professional fees, this generally means where:
- the duties of his or her employment necessitate that the employee is a member of a professional body, or holds a practicing certificate or licence, and
- the employee cannot exercise those duties without that membership or certificate
Where such fees are not reimbursed by the employer then the employee concerned can claim the appropriate tax relief. I am advised by Revenue that the information on tax returns relating to claims for expenses does not separately distinguish professional membership fees from other allowable deductions. It is therefore not possible to provide an estimate of the cost or yield related to any specific expense type and so it is not possible to give an exact figure for the annual cost of the relief in its present form. The Tax Expenditures Report 2017 published by my Department includes an estimated cost at €3.75 million per annum.
However I would stress that the figures above cited are very much estimates. The cost in any given year would obviously depend on a number of variables. These include the total of taxpayers claiming and the cost of the subscriptions or fees involved and Revenue do not hold separate data on these.
The Deputy may also be interested in the numbers and tax cost associated with all types of ‘Allowable Expenses’, details of which are given in Revenue’s ‘Cost of Tax Expenditures’ publication available at:
https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/costs-expenditures.aspx.
212. Deputy Kevin O'Keeffe asked the Minister for Finance if a provision will be considered whereby a specific industry (details supplied) can reclaim VAT paid on certain products. [24651/18]
Amharc ar fhreagraVAT is governed by the EU VAT Directive, with which Irish VAT law must comply. The transport of passengers is exempt from VAT under Irish VAT law and bus operators are exempt from VAT on the supply of transport in this respect. Where a service is exempt under VAT law this means that the supplier of the service does not charge VAT on the supply but it also means that they are not entitled to claim VAT on any business-related expenditure. Only businesses registered for VAT who make taxable supplies are entitled to claim back VAT incurred on their inputs.
Historically Ireland operates a VAT refund order whereby persons not registered for VAT can reclaim VAT paid on touring coaches in set circumstances. However, spare parts of buses and coaches are not included under this refund order. Because the refund order historically derogates from normal VAT rules, it is not possible under EU VAT law to extend this refund order to bus and coach parts.
213. Deputy Peter Fitzpatrick asked the Minister for Finance if he will address a matter (details supplied) regarding bank accounts closures; and if he will make a statement on the matter. [24765/18]
Amharc ar fhreagraAs the Deputy is aware notwithstanding the fact that the State is a shareholder in the institution, the Minister has no direct function in the relationship between Bank of Ireland and its customers. The Minister must ensure that the bank is run on a commercial and independent basis. It would not be appropriate therefore, for the Minister to intervene in the case of any particular customer.
However, I have received the following response from Bank of Ireland:
The Bank cannot comment on individual customer accounts. Banks operate in a highly regulated sector and are bound by a range of legislative and regulatory requirements emanating from national and international bodies, and national legislators in Ireland, the UK and the US. In the provision of all banking services, including the management and operation of accounts, banks must ensure that all transactions meet these regulatory and legislative requirements. Additionally banks must ensure that all transactions meet their risk appetite for the provision of banking services.
214. Deputy Michael McGrath asked the Minister for Finance the definition of "first-time buyer" used by the Central Bank and the Revenue Commissioners, respectively. [24791/18]
Amharc ar fhreagraThe Central Bank has advised that, for the purposes of the Central Bank mortgage lending rules, a first-time buyer is defined (in SI 47 of 2015) as "a borrower to whom no housing loan has ever before been advanced". The statutory instrument also provides that "where the borrower under a housing loan is more than one person and a housing loan has previously been advanced to any one of those persons, none of those persons is a first-time buyer".
In respect of the Revenue Commissioners, I am advised that a “First time buyer” is defined in the Taxes Consolidation Act 1997 for the purposes of both the Help to Buy scheme and the DIRT Refund scheme, as follows:
1. Section 477C (Help to Buy) provides for the definition of first-time buyer for the purposes of the Help to Buy scheme, as follows:
“first-time purchaser” means an individual who, at the time of a claim [for Help to Buy] 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."
2. Section 266A (Repayments of DIRT to first-time purchasers) provides a definition of first-time buyer for the purposes of any repayment of DIRT arising, as follows:
“first-time purchaser” means a person, being an individual who, at the time of a relevant purchase or on the relevant completion date, as the case may be, has not, either individually or jointly with any other person or persons, previously purchased or previously built directly or indirectly on his or her own behalf any other dwelling.".
215. Deputy Michael McGrath asked the Minister for Finance the reason the Central Bank deems a returning emigrant who never owned a residential property here but did abroad for a period as a non-first-time buyer; his views on whether this classification is unfair; and if he will make a statement on the matter. [24792/18]
Amharc ar fhreagraThe Central Bank has advised that for the purposes of the Central Bank mortgage lending rules, a first time buyer is defined as a borrower to whom no housing loan has ever before been advanced. It also provides that 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.
The Central Bank also advised that it introduced proportionate limits specifically to allow a certain flexibility by lenders when assessing individual cases, such as may be the case in instances referred to in the question. The proportionate limits mean that lenders are able to make decisions based on an individual borrower’s circumstances up to a specific limit. In the case of second and subsequent buyers, lenders can in any year lend up to 20 per cent of the value of PDH mortgages at LTV levels in excess of the 80 per cent LTV cap which generally applies to such borrowers. Also, lenders will still be required to assess an individual borrower’s affordability and lend prudently on a case by case basis, in line with the requirements of the Consumer Protection Code and other regulations.
216. Deputy Jackie Cahill asked the Minister for Finance if he will address a matter regarding the sale of a property (details supplied). [24837/18]
Amharc ar fhreagraAs the Deputy is aware notwithstanding the fact that the State is a significant shareholder in the institution, the Minister has no direct function in the relationship between AIB/EBS and its customers. The Minister must ensure that the bank is run on a commercial and independent basis. It would not be appropriate, therefore, for the Minister to intervene in the case of any particular customer.
However, I have received the following response from AIB:
It is the policy of EBS to bring all assets within its control to market in a timely and expeditious manner. There can be a number of reasons, such as legal or title issues, why this is not always possible, in addition assets can be placed on hold due to wider CBI controls. The bank reviews and monitors all these issues on an ongoing basis.
217. Deputy Fiona O'Loughlin asked the Minister for Finance if a person that is taking part in a community employment scheme must pay the universal social charge; and if he will make a statement on the matter. [24840/18]
Amharc ar fhreagraPayments made to participants in Community Employment Schemes are not liable to the Universal Social Charge. These payments are treated as social welfare payments and are therefore exempt from the Universal Social Charge under section 531 AM of the Taxes Consolidation Act 1997.
218. Deputy John Curran asked the Minister for Finance if the setting up of the national database to track insurance claims to develop an understanding of the way in which the cost of claims is affecting motor insurance premiums will be fast tracked in view of the high cost of motor insurance; and if he will make a statement on the matter. [24850/18]
Amharc ar fhreagraThe Deputy should note at the outset that the National Claims Information Database is a complex project which needs to be carefully developed and implemented in order for it to be effective over the longer term. A key requirement of the database is that information is collected in a consistent way from insurers in order that a clear picture in relation to claim levels and costs can be obtained. Therefore as well as the work my Department has been doing in developing the draft legislative framework for the database, the Central Bank has being carrying out a parallel technical specification exercise with insurers in relation to the specific type of information that needs to be collected for the database.
By way of further update, you should be aware that my officials established a data sub-group in 2017, which has been meeting since then to examine the issues regarding its development and to prepare the General Scheme of the legislation required. At the end of 2017, it completed its work on the development of this Scheme and on 19 December 2017, the Government approved the General Scheme of the Central Bank (National Claims Information Database) Bill.
The Bill is included in the Government Legislative Programme on the list of Priority Legislation for publication this session. The Joint Oireachtas Committee on Finance, Public Expenditure and Reform and the Taoiseach indicated to me in February that it would not be conducting pre-legislative scrutiny on the Bill.
The Office of the Parliamentary Counsel assigned a drafter to the Bill on 26 January 2018 and officials in the Department of Finance are currently working with the drafter to finalise a draft of the Bill as soon as possible. I am hopeful that the Bill will be published in the coming weeks. A consultation will also have to take place with the European Central Bank on the Bill once it is published.
As the Deputy will appreciate, it will take a certain amount of time following publication of the Bill, for it to pass through the Houses of the Oireachtas. However I am hopeful that with the cooperation of all parties in the Houses, it can be considered and approved expeditiously and thus meet yours and others wishes to have the database in place as soon as possible.
219. Deputy Michael McGrath asked the Minister for Finance if the Financial Services and Pensions Ombudsman is permitted to receive and consider complaints from persons that are of the view they were mis-sold payment protection insurance prior to the six year limit prior to July 2007, that is, the scope covered by the Central Bank's review and prior to 2002 since the enactment of the Financial Services and Pensions Ombudsman Act 2017; and if he will make a statement on the matter. [24855/18]
Amharc ar fhreagraThe Financial Services and Pensions Ombudsman Act 2017 provides for the following time limits in relation to long-term financial services.
"(2) A complaint in relation to -
(a) conduct referred to in section 44(1)(a) that, subject to the requirements specified in subsection (3), relates to a long-term financial service, or
...
shall be made to the Ombudsman within whichever of the following periods is the last to expire:
(i) 6 years from the date of the conduct giving rise to the complaint;
(ii) 3 years from the earlier of the date on which the person making the complaint became aware, or ought reasonably to have become aware, of the conduct giving rise to the complaint;
(iii) such longer period as the Ombudsman may allow where it appears to him or her that there are reasonable grounds for requiring a longer period and that it would be just and equitable, in all the circumstances, to so extend the period.
(3) The requirements referred to in subsection (2)(a) are that -
(a) the long-term financial service concerned has not expired or otherwise been terminated more than 6 years before the date of the complaint, and the conduct complained of occurred during or after 2002, or
(b) the Ombudsman has allowed a longer period under subsection (2)(iii)."
In relation to Payment Protection Insurance (PPI), I understand from the Financial Services and Pensions Ombudsman's Office that this may, in certain circumstances, be considered a long term financial product when there is a life cover or death benefit attaching. In addition if the loan to which the payment protection is attached is over five years and one month in duration, it would be considered a long term financial product. In these circumstances the Ombudsman may investigate a complaint where the conduct complained of occurred during or after 2002 or at his discretion before this date.
I should stress that it must appear to the Ombudsman that there are reasonable grounds for requiring the longer period and it would be just and equitable in all the circumstances to extend the period.
I further understand from the Central Bank that a total of €71.0m was refunded to approximately 83,500 customers since 1 July 2007 by the eleven credit institutions covered by the Central Bank's PPI review.
220. Deputy Michael McGrath asked the Minister for Finance the amount of income tax paid by persons aged over 65 years of age in each of the years 2015 to 2017; and if he will make a statement on the matter. [24873/18]
Amharc ar fhreagra221. Deputy Michael McGrath asked the Minister for Finance the amount of income tax paid in respect of occupational and other non-social protection pensions in each of the years 2015 to 2017; and if he will make a statement on the matter. [24874/18]
Amharc ar fhreagra222. Deputy Michael McGrath asked the Minister for Finance the amount of income tax paid in respect of social protection pensions in each of the years 2015 to 2017; and if he will make a statement on the matter. [24875/18]
Amharc ar fhreagraI propose to take Questions Nos. 220 to 222, inclusive, together.
In relation to [Question 24873/18], I am advised by Revenue that for 2015, the most recent year for which data are available, it is tentatively estimated that €1,340m in Income Tax was paid where the taxpayer (either partner in the case of jointly assessed couples) was aged over 65.
Regarding [Question 24874/18], I am advised by Revenue that it is tentatively estimated that individuals in receipt of occupational pensions (and not receiving or earning any other taxable income) contributed approximately €300m in Income Tax in 2015. Due to the manner in which data are recorded on Revenue systems, it is not possible to report on the tax paid by those in receipt of both occupational pensions and other sources of income. Nor can the tax paid on income from other, non-social welfare pensions be separately identified.
In relation to [Question 24875/18], I am advised by Revenue that income from social welfare pensions is not separately recorded on tax returns and is amalgamated with income from other sources in the calculation of tax liabilities. As such, it is not possible to report on the tax paid in respect of social protection pensions. In addition, it is important to note that while in general all income arising from social welfare pensions is liable to Income Tax (though not Universal Social Charge), in most cases an individual solely in receipt of a social welfare pension will be below the threshold to pay tax, after tax credits are taken into account.
223. Deputy Jackie Cahill asked the Minister for Finance if under current legislation it is possible for a local authority to secure a banking licence to enable it to raise funds for the purpose of issuing mortgages; and if he will make a statement on the matter. [24888/18]
Amharc ar fhreagraAny person seeking a licence to carry out banking business in Ireland will need to satisfy the relevant statutory requirements set out in the Central Bank Act 1971, which transposes the authorisations provisions of the Capital Requirements Directive (Directive 2013/36/EU). These requirements relate to, inter alia, initial capital, the suitability of shareholders and members, the programme of operations and structural organisation, and the corporate characteristics of the applicant. Under the Single Supervisory Mechanism, the European Central Bank (ECB) has exclusive competence for granting licences. Pursuant to section 9 of the Central Bank Act 1971, the Central Bank of Ireland’s role is to propose decisions to the ECB to grant licences. In the absence of all relevant information and the completion of the full assessment of an application in the normal course, the Central Bank is not in a position to provide any views on potential decisions that may be made in this context.
The prohibition on accepting deposits from members of the public without a banking licence does not apply to local authorities by virtue of section 7(4)(f) of the Central Bank Act 1971 (provided that this activity is subject to regulations and controls intended to protect depositors and investors). However, this exemption does not appear to preclude an application for a banking licence by a local authority. In addition, notwithstanding any exemption from an obligation to hold a banking licence in order to engage in deposit-taking such person may still require an authorisation to engage in lending to retail consumers, e.g. a retail credit firm authorisation under Part V of the Central Bank Act 1997.
Regarding the remit of local authorities, the statutory role and responsibilities assigned to local authorities are as provided for in legislation and overall policy responsibility for such matters are a matter for my colleague the Minister for Housing, Planning and Local Government. Nevertheless, in relation to mortgage lending, the Deputy will note that, under section 11 of the Housing (Miscellaneous Provisions) Act 1992, a local authority, subject to regulations made by the Minister for Housing, Planning and Local Government with the consent of the Minister for Public Expenditure and Reform, may make loans for the purpose of acquiring or constructing houses.
Under the powers conferred by this provision, the Minister for Housing, Planning and Local Government, Mr Eoghan Murphy T.D. launched the Rebuilding Ireland Home Loan Scheme earlier this year. It was set up in accordance with the Housing (Rebuilding Ireland Home Loans) Regulations 2018, which set out the criteria for local authorities to issue loans and the eligibility to avail of loans under the Scheme.
The Scheme which replaced the Home Purchase Loan and the Home Choice Loan Schemes, enables credit-worthy first-time buyers to access sustainable mortgage lending to purchase new or second-hand properties in a suitable price range.
The scheme is targeted at first-time buyers who have access to an adequate deposit and have the capacity to repay a mortgage, but who are unable to access a mortgage sufficient for them to purchase their first home from a commercial lender. The Scheme is operated by the local authorities with support from the Housing Agency, which carries out assessments of applications on behalf of the authorities.
At the end of May 2018, the Agency had received approximately 1,500 applications for assessment from the local authorities. The Minister for Housing, Planning and Local Government is confident that the Scheme is working well and will achieve its objective of providing loans to people who meet the criteria set out in the Regulations.
224. Deputy Ruth Coppinger asked the Minister for Finance if his attention has been drawn to difficulties musicians face in obtaining commercial motor insurance (details supplied); his plans to address this matter; and if he will make a statement on the matter. [24890/18]
Amharc ar fhreagraAs Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Neither I nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products. Consequently, I am not in a position to direct insurance companies as to the pricing level or terms or conditions that they should apply in respect of particular categories of drivers or vehicles.
In making their individual decisions on whether to offer cover and what terms to apply, insurers will use a combination of rating factors, which include how the vehicle is used, as well as the age and type of the vehicle, the age of the driver, the relevant claims record and driving experience, and the number of drivers. My understanding is that insurers do not all use the same combination of rating factors, and as a result prices and availability of cover varies across the market. In addition, insurance companies will price in accordance with their own past claims experience, meaning that in relation to particular categories, different insurance companies will have different views.
However, it is acknowledged that pricing in the motor insurance sector has been subject to a lot of volatility in recent years with a related problem, as referred to in the PQ, being the availability of cover in the first place. These issues were the main impetus for the establishment of the Cost of Insurance Working Group. Its Report on the Cost of Motor Insurance was published in January 2017. The Report makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, set out within an Action Plan.
Work is ongoing on the implementation of the recommendations by the relevant Government Departments and Agencies and there is a commitment within the Report that the Working Group will prepare quarterly updates on its progress. The fifth such update was published on 11 May and shows that of the 50 separate deadlines set to date within the Action Plan, 40 have been met. Substantial work has also been undertaken in respect of the nine action points categorised as “ongoing”. Both the Report and the quarterly updates are available on the Department’s website, within “The Cost of Insurance Working Group” sub-section of the main “Insurance” section.
It should be noted that the most recent CSO data (for May 2018) indicates that private motor insurance premiums have decreased by 19% since peaking in July 2016. While the CSO statistics indicate a greater degree of stability on an overall basis, these figures represent a broad average and therefore I appreciate many people may still be seeing increases. However, I am hopeful that the improved stability in pricing will be maintained and that premiums should continue to fall from the very high levels of mid-2016. In addition, with the full implementation of the Motor Report, I believe that Ireland will be more attractive to new entrants thus increasing capacity as well as competition which should have a positive impact in niche areas such as motor insurance for musicians.
Finally, as the Deputy may be aware, if a consumer is unable to secure a quotation on the open market, he/she may be in a position to avail of the Declined Cases Agreement (DCA) process. Under the terms of the DCA, which is adhered to by all motor insurers in Ireland, the insurance market will not refuse to provide insurance to an individual seeking insurance if the person has approached at least three insurers and has not been able to obtain cover from them. In this regard, there are further details available on the Insurance Ireland website, while more generally, Insurance Ireland also operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance. The relevant contact details are: feedback@insuranceireland.eu or declined@insuranceireland.eu or 01-6761914.
226. Deputy Michael McGrath asked the Minister for Finance the maximum age that a borrower can be scheduled to have normal repayments for the duration of a mortgage; and if he will make a statement on the matter. [24986/18]
Amharc ar fhreagraThere are a number of measures in place in order to protect consumers who are taking out a mortgage. These measures seek to ensure that lenders act with due skill, care and diligence in the best interests of their customers and that borrowers are protected from the beginning to the end of the mortgage life cycle; for example, through protections at the initial marketing and advertising stage, in assessing the affordability and suitability of the mortgage and at a time when borrowers may find themselves in financial difficulties during the course of the credit agreement.
For example, the European Union (Consumer Mortgage Credit Agreements) Regulations 2016, which transposed the Mortgage Credit Directive into Irish law, provides that lenders must act honestly, fairly, transparently and professionally, taking account of the rights and interests of the consumer, in relation to the provision of mortgage credit. In particular, lenders must assess the creditworthiness of consumers (which must be carried out on the basis of information on the consumer’s income and expenses and other financial and economic circumstances which is necessary, sufficient and proportionate) and that assessment shall take account of factors relevant to verifying the prospect of the consumer being able to meet his or her obligations having regard to the terms of the proposed credit agreement. Furthermore, it provides that the lender shall only make mortgage credit available where the creditworthiness assessment indicates that the consumer's obligations resulting from the credit agreement are likely to be met in the manner required under the agreement. In addition, the European Banking Authority has published Guidelines on Creditworthiness Assessment which provides additional detail on the creditworthiness requirements of the Mortgage Credit Directive which indicates, in guideline 4.3, that if the mortgage loan term extends past the consumer's expected retirement age, the lender should take appropriate account of the adequacy of the consumer's likely income and ability to continue to meet obligations under the credit agreement in retirement. Furthermore, where advisory services are being provided in relation to mortgage credit, the Regulations provide that it will be necessary to obtain information regarding the consumer’s personal and financial situation, preferences and objectives and that any assessment shall take into account reasonable assumptions as to risks to the consumer's situation over the term of the proposed credit agreement.
Also, the Central Bank’s Consumer Protection Code 2012 imposes ‘Knowing the Consumer and Suitability’ requirements on lenders. Lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower, including the age of the borrower. In particular, a regulated entity must gather and record sufficient information from the consumer prior to offering, recommending, arranging or providing a product or service appropriate to that consumer. The level of information gathered should be appropriate to the nature and complexity of the product or service being sought by the consumer, but must be to a level that allows the regulated entity to provide a professional service and must include details of the consumer’s needs and objectives, personal circumstances (including age where relevant) and their financial situation. Also, prior to offering, recommending, arranging or providing a credit product to a personal consumer, a lender must carry out an assessment of affordability to ascertain the consumer’s likely ability to repay the debt, over the duration of the agreement. A regulated entity must take account of the result of the affordability assessment when deciding whether a personal consumer is likely to be able to repay the debt for that amount and duration in the manner required under the credit agreement.
Under the provisions of the Code, when assessing the suitability of a product or service for a consumer, the regulated entity must, at a minimum, consider and document whether, on the basis of the information gathered:
- the product or service meets that consumer’s needs and objectives;
- the consumer is likely to be able to meet the financial commitment associated with the product on an ongoing basis and is financially able to bear any risks attaching to the product or service;
- the consumer has the ability to repay the debt in the manner required under the credit agreement, on the basis of the outcome of the assessment of affordability; and
- the product or service is consistent with the consumer’s attitude to risk.
However, subject to complying with relevant consumer protection and other regulatory/macro prudential requirements, it is then a matter for individual lenders to set their own lending policies and to make their own commercial decisions on individual mortgage or other credit applications.
227. Deputy Willie Penrose asked the Minister for Finance when the legislation which will permit the compensation of victims arising from road traffic accidents which involved vehicles which were insured with a company (details supplied) will be brought before Dáil Éireann; if same can be expedited in the context that such accident victims to date are only receiving 65% of their due compensation; and if he will make a statement on the matter. [24994/18]
Amharc ar fhreagraSetanta 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.
The Deputy will be aware that under the Insurance Act 1964, as amended, monies may be paid out of the Insurance Compensation Fund (ICF), with the approval of the High Court, in relation to an insolvent insurer, to meet claims up to a limit of 65% or €825,000 of the claim, whichever is the lesser.
The Deputy will also be aware of my decision in principle that the State will ensure that Setanta third party claimants are compensated in full, which was announced on 30 January. My Department has subsequently received confirmation from the Office of the Attorney General that there are no state-aid or other legal issues with this decision, and therefore an additional provision to give effect to it has been included in the Insurance (Amendment) Bill, which has now been finalised in liaison with the Office of Parliamentary Counsel.
I obtained Government approval last week to proceed with publication of this Bill. I am hoping that, with the cooperation of Members of the House, the Bill will pass all Stages in an efficient manner. Once enacted, it will allow for the payment of 100% of the compensation due to Setanta third party personal injury motor insurance claimants including the additional 35% to those who have settled their claims and have already received compensation of 65% of their claim. The same principle of full payment will apply to third party property motor insurance claimants subject to a limit of €1.22m (in line with Motor Insurance Bureau of Ireland limits).
It is however important to note that only claims which have been settled can be included in applications to the High Court for payment from the ICF. The process of settling claims is still ongoing and is subject in some cases to complex negotiations between all relevant parties. It is hoped that by the State taking steps to ensure that third party claimants are compensated in full, this will continue to encourage the settlement of all outstanding claims as quickly as possible.
