Written Answers Nos. 160-175
160. Deputy Brendan Griffin asked the Minister for Finance his views on a matter (details supplied) regarding insurance cover for adventure centres; the solutions that can be found; and if he will make a statement on the matter. [23649/19]
Amharc ar fhreagra171. Deputy Brendan Griffin asked the Minister for Finance his views on a matter (details supplied) regarding insurance; and if he will make a statement on the matter. [23894/19]
Amharc ar fhreagraI propose to take Questions Nos. 160 and 171 together.
At the outset, the Deputy should note that 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 price or the level of cover to be provided to consumers or businesses. The Deputy will appreciate that I, as Minister for Finance, cannot comment on individual cases mentioned in the details supplied relating to insurance matters.
However, I acknowledge the problems faced by many small businesses and voluntary/community associations in relation to the cost and availability of insurance as well as the frustrations that some may have with the pace of reform. Unfortunately, there is no single policy or legislative “silver bullet” to immediately stem or reverse premium price rises. This is because there are many constraints faced by the Government in trying to address this issue in particular the fact that for constitutional reasons, it cannot direct the courts as to the award levels that should be applied and for legal reasons it cannot direct insurance companies as to the pricing level which they should apply in respect of businesses seeking insurance.
Notwithstanding this, I wish to re-emphasise how important this issue is for the Government. Consequently, following the publication of its Report on the Cost of Motor Insurance in 2017, the Cost of Insurance Working Group undertook an examination of the employer liability and public liability insurance sectors. This second phase culminated in the publication in January 2018 of the Report on the Cost of Employer and Public Liability Insurance. I believe there has been significant progress in the implementation of the two CIWG Reports. Examples include the following:
- the establishment of the Personal Injuries Commission, and its subsequent recommendations relating to addressing award levels for soft tissue injuries – this has provided the objective evidence we need to be able to address award levels;
- the establishment of the National Claims Information Database in the Central Bank to increase transparency around the future cost of private motor insurance; the Central Bank is currently reviewing the possibility of expanding is scope to cover business insurance;
- reforms to the Personal Injuries Assessment Board through the Personal Injuries Assessment Board (Amendment) Act 2019;
- amendments to Sections 8 and 14 of the Civil Liability and Courts Act 2004 to make it easier for businesses and insurers to challenge cases where fraud or exaggeration is suspected;
- the reform of the Insurance Compensation Fund to provide certainty to policyholders and insurers; and,
- various reforms of how fraud is reported to and dealt with by An Garda Síochána, including increased co-ordination with the insurance industry, as well as the launch recently of Operation Coatee, a co-ordinated operation to tackle insurance fraud.
I believe that these reforms are having a significant impact with regard to private motor insurance (CSO figures from April 2019 show that the price of motor insurance is now 24.4% lower than the July 2016 peak). The Government is determined to continue working to ensure that these positive pricing trends can be extended to other forms of insurance, including those relevant to businesses.
Undoubtedly the single most essential challenge which must be overcome if there is to be a sustainable reduction in insurance costs particularly for small businesses is to bring the levels of personal injury damages awarded in this country more in line with those awarded in other jurisdictions. In this regard, the Personal Injuries Commission has highlighted the significant differential between award levels in Ireland and other jurisdictions, and has made a number of recommendations to address this issue, in particular the establishment of a Judicial Council to compile guidelines for appropriate general damages for various types of personal injury. Both I and Minister of State D'Arcy believe that this awards gap needs to be significantly closed and we are working with the Minister for Justice and Equality, Mr Charlie Flanagan TD, to ensure that this happens at the earliest opportunity.
Finally, I would like to assure the Deputy that the Cost of Insurance Working Group will continue to focus on implementing the recommendations of the Report on the Cost of Employer and Public Liability Insurance in parallel with implementing those from the Report on the Cost of Motor Insurance. I am hopeful that the cumulative effects of the completion of the two Reports' recommendations will include increased stability in the pricing of insurance for businesses and a more competitive insurance market.
In addition, you should note that Insurance Ireland operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance. Insurance Ireland can be contacted at feedback@insuranceireland.eu or 01-6761914.
161. Deputy Peter Burke asked the Minister for Finance his plans to introduce community banking on a wider scale; and if he will make a statement on the matter. [23743/19]
Amharc ar fhreagraAs the Deputy is aware, my Department in conjunction with the Department of Rural and Community Development, issued a report on Local Public Banking in Ireland last year. The report concluded that there is not a compelling case for the State to establish a new local public banking system based on the German Sparkassen model in Ireland.
However, a commitment was given in the report that my Department would arrange for an independent evaluation to consider how the objectives of community banking and how the local provision of banking and financial services could be furthered through other delivery mechanisms as well as continuing ongoing engagement with stakeholders and interested parties on this issue.
Following a procurement process, Indecon International Economic Consultants have been appointed to carry out this independent economic evaluation and run a stakeholder engagement forum. Work on the independent evaluation is underway and a stakeholder forum was held on 28 May 2019.
The purpose of this stakeholder forum was to obtain a better understanding of potential alternative models, as well as any gaps in or lack of such services that may exist. It provided an opportunity for stakeholders and interested parties to share their experiences, views, ideas and suggestions in relation to community banking and the local provisions of banking and financial services including ways to improve and further these services for the benefit of local, rural and regional communities and businesses.
Indecon will prepare a report on the economic evaluation and the work of the stakeholder forum. The findings and recommendations of this report will inform any future policy action taken by my Department in order to better support local access to banking and financial services and access to finance by small businesses.
162. Deputy Pearse Doherty asked the Minister for Finance the value of investments in property or property-related assets here held by investment funds domiciled here by types of funds and types of investments, for example, offices and apartments; and the gross value and percentage of gross total for each type of fund, in tabular form. [23757/19]
Amharc ar fhreagra163. Deputy Pearse Doherty asked the Minister for Finance the value of investments in property or property-related assets held by investment funds not domiciled here by types of funds and types of investments, for example, offices and apartments; and the gross value and percentage of gross total for each type of fund, in tabular form. [23758/19]
Amharc ar fhreagra164. Deputy Pearse Doherty asked the Minister for Finance the property-related tax incentives that are available for all types of investment funds here by type of fund; and if he will make a statement on the matter. [23759/19]
Amharc ar fhreagra165. Deputy Pearse Doherty asked the Minister for Finance the tax received annually in each year since 2008 from all types of investment funds holding property or property-related assets or holding shares and units in property or property-related assets by type of funds; and the gross total and percentage of the gross total in tabular form. [23760/19]
Amharc ar fhreagraI propose to take Questions Nos. 162 to 165, inclusive, together.
I will first refer to the Deputy's question relating to details of the property-related tax incentives that are available for all types of investment funds. I would like to advise the Deputy that there are no property related tax incentives for investment funds.
Irish collective investment vehicles which are authorised and regulated by the Central Bank of Ireland are taxed under the gross roll-up regime. This means that the investment undertaking is generally exempt from tax on the profits it earns on behalf of its unit holders. The profits are allowed to grow on a tax free basis within the fund and are taxed at the level of the investor rather than the fund, as is standard international practice. Investment Undertaking Tax (“IUT”) is deducted at source by the investment undertaking and paid over to Revenue on behalf of the unitholder. In general, IUT does not apply to non-resident investors provided the relevant declarations are in place with the investment undertaking.
Finance Act 2016 introduced the Irish Real Estate Funds (IREF) regime in response to concerns raised regarding the use of certain collective investment vehicles to invest in Irish property. The investors had been using the structures to minimise their exposure to Irish tax on Irish property transactions. IREFs are collective investment undertakings where 25% or more of the value of their assets is derived from real estate in the State. Unit holders in the Irish Real Estate Fund are subject to IREF withholding tax at a rate of 20% on payments made to them by the Irish Real Estate Fund. As with IUT, the IREF withholding tax is deducted by the Irish Real Estate Fund and paid to Revenue on behalf of the unit holder. Unlike IUT, non-resident unit holders are also subject to IREF withholding tax. In some circumstances the non-resident can make a claim to Revenue that the IREF withholding tax can be reduced under the terms of a double taxation treaty. However, if a unit holder in an Irish Real Estate Fund holds more than 10% of the assets of the Irish Real Estate Fund, any payment from the Irish Real Estate Fund will be regarded as from immovable property and the IREF withholding tax deducted can not be reduced. This contrasts with the gross roll-up regime where non-residents are exempt from exit tax entirely.
For both the gross roll-up regime and the IREF regime certain categories of investors such as pensions schemes, companies carrying on life business and charities are exempt from IUT and IREF withholding tax provided the appropriate declarations are in place. This exemption is provided for as these categories of investor are more generally tax exempt.
In addition to the above and in the context of the question asked by the Deputy it may be appropriate to include commentary on the Real Estate Investment Trusts (“REITs”) regime. While REITs must be Plcs which are listed on the main exchange of an EEA Member State, the Central Bank of Ireland requires that they have an Alternative Investment Fund Manager (“AIFMs”). REITs are used as collective investment vehicles to invest in Irish rental property assets. While they are not generally, in tax terms, described as funds, they are collective investment vehicles which are subject to Central Bank regulation and supervision and therefore may be within the scope of the Deputy’s question. The function of the REIT framework is not to provide an overall tax exemption, but rather to facilitate collective investment in rental property by removing a double layer of taxation which would otherwise apply to property investment via a corporate vehicle. Subject to various conditions, REITs are exempt from tax in respect of their property rental business, subject to a requirement to distribute profits annually for taxation at the level of the investors. This distribution is subject to Dividend Withholding Tax (“DWT”) at 20%.
In relation to the Deputy's question on annual tax yields, I am advised by Revenue that it is not possible to separately identify investment funds holding property or property related assets or holding shares and units in property or property related assets. However, the aggregate amounts of taxes paid by entities of this type, including tax paid by Real Estate Investment Trusts (REITs) and Irish Real Estate Funds (IREFs), are provided under ‘Financial & Insurance activities’ in the ‘Revenue Net Receipts by Sector’ information available at link: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/receipts/receipts-sector.aspx.
The Deputy may be interested to note that the amount of IREF withholding tax in 2018 was €9m, while net Dividend Withholding Tax amounting to €11.8m in 2017 and €12.8m in 2018 was collected in respect of dividends paid by REITs.
I refer now to the Deputy's questions regarding the value of investments in property or property related assets located in Ireland held by investment funds, domiciled in both the State and abroad.
I am advised by Revenue that it is not possible to identify the value of investments in property or property related assets held by investment funds domiciled in the State from the information filed with Revenue.
In respect of Irish Real Estate Funds (IREFs), only partial information is available from the IREF tax returns filed with Revenue for the years 2017 and 2018. In this regard, IREFs are required to file an IREF tax return only where they have a taxable event in a particular year and therefore not all IREFs will have made returns for these years. IREFs, were required by regulation to file annual financial statements on or before 30 January 2019 with Revenue for accounting periods which ended during 2017 and accounting periods which ended on or before 30 June 2018. The information contained on the financial statements is currently being reviewed and analysed by Revenue. Once this analysis is completed, Revenue will be in a position to provide more detail on the value of Irish real estate held by IREFs.
Irish domiciled funds are all treated as “investment undertakings” under the TCA 1997. Revenue collects annual financial statements from IREFs (being the Irish domiciled funds that had significant exposure to Irish property) but it does not collect the same data for non-domiciled investment funds.
A small number of non-domiciled funds may be indirectly investing in Irish property. This matter is currently receiving attention in Revenue, and any Exchequer exposure is being kept under review. Funds are described as non-domiciled in Ireland if they are administered here but subject to regulation by a regulator other than the Central Bank of Ireland, e.g. they are regulated in the UK.
Non-domiciled funds are, under the Tax Consolidation Act 1997, treated in the same manner as any other non-resident taxpayer when it comes to charges to tax in relation to Irish property. While section 1035A and section 747G both provide that a non-domiciled fund will not be treated as having a taxable presence in Ireland by virtue of fund management services provided by an independent agent, they do not dis-apply the standard Irish property charging provisions (e.g. s.29 for CGT). Therefore, if a non-domiciled fund has Irish property, or an interest in Irish property (for example through a shareholding in a non-resident Property Company), it will be subject to Irish tax on its profits or gains in the same way as any other non-resident, depending on the relevant double tax agreements that may be applied.
166. Deputy Catherine Murphy asked the Minister for Finance the status of complaints made under section 172 of the National Asset Management Agency Act 2009; the progress made on same; the conclusions of same; the status of complaints referred to An Garda Síochána under the Act; and if he will make a statement on the matter. [23793/19]
Amharc ar fhreagraI am informed by NAMA that two complaints regarding potential breaches of Section 172(3) of the NAMA Act 2009 have been brought to their attention.
In relation to one of the alleged breaches, I am advised that NAMA has concluded its investigations and is satisfied that no breach has occurred. In relation to the second alleged breach, I am advised that An Garda Síochána is separately investigating it and their investigation is ongoing. Criminal investigations, such as this, are a matter for An Garda Síochána and the DPP and I am advised that, to date, their investigations have not resulted in a prosecution.
167. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of decreasing the floor at which the diesel rebate scheme becomes available to hauliers to 85 cent before VAT; and if he will make a statement on the matter. [23817/19]
Amharc ar fhreagraA relief on Mineral Oil Tax (MOT) paid on auto-diesel purchased within the State by qualifying operators is provided for by Section 99A of the Finance Act 1999 (as inserted by Section 51 of the Finance Act 2013). The repayment amount is calculated by reference to a sliding scale based on the average price at which auto-diesel is available for purchase during a repayment period. The maximum relief is 7.5c per litre for fuel purchased at €1.25 (VAT exclusive) and no relief applies where the purchase price is €1.00 (VAT exclusive) or less. For each 1c in the price above €1.00, the repayment is 0.3c per litre, as shown in the following table.
|
Price (euro per litre, excluding VAT) |
Amount repayable (cent per litre) |
|
1.25 |
7.5 |
|
1.22 |
6.6 |
|
1.18 |
5.4 |
|
1.14 |
4.2 |
|
1.10 |
3.0 |
|
1.06 |
1.8 |
|
1.03 |
0.9 |
|
1.00 |
0 |
It is assumed the Deputy means to decrease the floor at which the scheme becomes available to €0.85 (VAT exclusive) while maintaining the current €1.25 (VAT exclusive) ceiling and the 0.3c per litre repayment rate (above the new floor value). With these assumptions the maximum rebate rate per litre increases from 7.5c to 12c.
The following table shows the estimated cost of the proposal for a range of possible volumes of diesel and VAT exclusive prices. To provide some context, the largest annual volume claimed under the scheme to date was 413 million litres in 2014 while the current (VAT exclusive) price per litre of diesel is approximately €1.11.
|
|
€0.85 |
€0.90 |
€0.95 |
€1.00 |
€1.05 |
€1.10 |
€1.15 |
€1.20 |
€1.25 |
|
500m litres |
€0m |
€7m |
€15m |
€22m |
€30m |
€37m |
€45m |
€52m |
€60m |
|
400m litres |
€0m |
€6m |
€12m |
€18m |
€24m |
€30m |
€36m |
€42m |
€48m |
|
300m litres |
€0m |
€4m |
€9m |
€13m |
€18m |
€22m |
€27m |
€31m |
€36m |
|
200m litres |
€0m |
€3m |
€6m |
€9m |
€12m |
€15m |
€18m |
€21m |
€24m |
Taking the largest annual volume claimed to date (413 million litres in 2014) and applying the proposed change to the scheme would result in an estimated cost of €50 million if all claims were based on the (VAT exclusive) price of a litre of diesel being €1.25 or greater.
168. Deputy Thomas Byrne asked the Minister for Finance when a response to a query will issue (details supplied). [23833/19]
Amharc ar fhreagraI am advised by Revenue that it recently made direct contact with the person in question and also issued a written response to the queries raised.
Revenue also confirmed, that it clarified to the person that it cannot grant the tax credit in question where a medical practitioner does not confirm that there is reasonable expectation that the patient will not be capable of maintaining himself or herself after the age of 18.
Revenue also advised the person on how to seek a review of the decision made and/or appeal it to the independent Tax Appeals Commission.
169. Deputy James Browne asked the Minister for Finance the position regarding changing tax regulations affecting self-employed fishermen; if he will consider changes to allow the taxes of self-employed fishermen to be deducted at source; and if he will make a statement on the matter. [23840/19]
Amharc ar fhreagraI am advised by Revenue that there is no statutory definition of employment or self-employment in tax law. In general, an individual is an employee if he or she is directed by a person on how, when and where to work, has set working hours, has no personal financial risk relating to the work, receives a fixed wage, supplies labour only and cannot subcontract the work.
Some years ago, the Employment Status Group published a Code of Practice for determining Employment or Self-employment status of Individuals. This Group included representatives from the Department of Finance, the Department of Employment Affairs and Social Protection and the Office of the Revenue Commissioners, amongst other public and private bodies. The Code of Practice is for guidance only and the employment status of an individual in relation to an engagement may in some instances fall to be determined by the Courts.
The question of whether an individual is engaged under a contract of service (an employee) or a contract for service (self-employed/partner) is a question of fact and general law. To make a determination on employment or self-employment status the full terms of the contract and the circumstances in which it was made must be established.
In the case of share fishermen and women, the High Court has determined on a number of occasions that share fishermen and women were not employees but had a relationship with the boat owner or skipper in the nature of a partnership. There are complex issues around the nature of this relationship, including the application of partnership law and capital allowances. Revenue has published a Tax and Duty Manual (TDM 04-01-11) which outlines some of the issues that may arise. This is available at the link: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-01-11.pdf.
Under Part 41A of the Taxes Consolidation Act 1997, a chargeable person (self-employed taxpayer) is required to submit a tax return to Revenue by 31 October in the year following the tax year to which the return relates (or by mid-November, if paying and filing through ROS) and to pay any balance of the liability (net of preliminary tax paid) in respect of income tax, USC and PRSI for the year to the Collector-General at the same time. In effect, a self-employed individual discharges the combined income tax, USC and PRSI liability through the self-assessment system.
Where an individual is an employee, his or her salary or wages is chargeable to income tax under Schedule E and is subject to deductions under the PAYE system by his or her employer. Emoluments is the term used to describe any remuneration assessable to tax under Schedule E. Part 42 Chapter 4 TCA 1997 imposes a legal obligation on employers to make deductions at source under the PAYE system from the payment of emoluments to an employee. The employer is obliged to pay a PRSI contribution for employees under the PAYE system. This employer contribution is paid for employees whose employment is insurable under the Social Welfare Acts.
170. Deputy Pearse Doherty asked the Minister for Finance the contact he or the Central Bank has had with authorities in New Zealand regarding investigations into the behaviour of the incoming Governor of the Central Bank; and if he will make a statement on the matter. [23886/19]
Amharc ar fhreagraThe New Zealand State Services Commissioner is carrying out an investigation into the unauthorised access of New Zealand Budget material and the events surrounding it. The State Services Commissioner, Peter Hughes, has stated that his office will not be making any comment on the matter until his investigation is concluded and all of the facts have been ascertained. The investigation aims to conclude by 27 June 2019, if possible. Consequently, it would not be appropriate for me or the Government to comment on the matter at this time.
My officials have been in contact with our Embassy in New Zealand to obtain updates on the matter and for the reasons above it was agreed that it would not be appropriate for me or my officials to contact the State Services Commissioner.
I understand that Mr. Makhlouf has agreed to the ongoing investigation as the best approach to establishing the facts of the matter. He is continuing to work as usual in his role as CEO of the New Zealand Treasury.
172. Deputy Catherine Murphy asked the Minister for Finance the preparedness of his Department and NAMA to contribute to and comply with the European Union: (Anti-Money Laundering Beneficial Ownership and Corporate Entities) Regulations 2019; the number of ultimate beneficial owners identified to date ahead of 22 November 2019; and if he will make a statement on the matter. [24086/19]
Amharc ar fhreagraStatutory Instrument 110 of 2019, the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019, was signed into law on 22 March 2019. These Regulations transpose Article 30 of the Fifth Anti-Money Laundering Directive and maintain the obligation, first established in 2016, for corporate entities to obtain and hold information on their beneficial ownership.
The Regulations also provide for the establishment of a central register of beneficial ownership information. It is a requirement of the Fifth Anti-Money Laundering Directive that such a register be established by January 2020. This central register will be operated by the Companies Registration Office and is not scheduled to begin accepting filings until 22 June 2019. After that, companies will have five months in which to file the required information. Therefore at this time details are not available regarding the number of beneficial owners so far identified or the number which will ultimately be identified.
While the relevant legislation was signed by myself as Minister for Finance, the register shall be maintained by a “Registrar of Beneficial Ownership of Companies and Industrial and Provident Societies”, as provided under Regulation 18 of SI 110/2019, who will be appointed by the Minister for Business, Enterprise and Innovation.
The responsibility to obtain and hold this information, and to file it with the central register, lies with each corporate entity.
Lastly, notwithstanding the timelines for the establishment of the central register of beneficial ownership for companies set out above, I understand that, as with all legal obligations, NAMA will fully comply with the EU (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations insofar as they relate to NAMA and the NAMA group entities. I am advised that NAMA is advancing its preparations for compliance in advance of the central register’s filing deadline of 22 November 2019.
173. Deputy Jack Chambers asked the Minister for Finance the processing times for complaints lodged with the Financial Services and Pensions Ombudsman; if his attention has been drawn to the delays in investigating and deciding complaints; the steps being taken to address these delays; and if he will make a statement on the matter. [24117/19]
Amharc ar fhreagraAs the Deputy will be aware, the Financial Services and Pensions Ombudsman (FSPO) is independent in the performance of his statutory functions. I have no role in the day to day workings of the office or in the decisions which he takes.
One of the main roles of the Ombudsman is to investigate, mediate and adjudicate complaints about the conduct of financial or pension service providers. The FSPO was established to provide an alternative to the Courts for consumers who have unresolved disputes with a financial or pension service provider and all investigations by the Ombudsman are free of charge to the consumer. Subject only to an appeal to the High Court, a finding of the Ombudsman in respect of a complaint is legally binding on all parties.
On the issue more generally, the Office of the Financial Services and Pensions Ombudsman (FSPO) was established on 1 January 2018 to resolve complaints from consumers, including small businesses and other organisations, against financial service or pension providers. The establishment of the FSPO resulted from the merger of the Office of the Pensions Ombudsman and the Financial Services Ombudsman’s Bureau.
In March 2019, the Financial Services and Pensions Ombudsman published an “Overview of Complaints” which provided a summary of the 5,588 eligible complaints made to the FSPO in 2018, its first year of operations. While acknowledging the successful closure of 4,443 complaints in 2018, this report confirms that the volume of complaints received caused the FSPO to be unable to process complaints as quickly as it would wish to and a main priority for 2019 would be to improve the timeliness of its service and deliver faster resolution of complaints.
A Workforce Plan for the period 2019 to 2023 was submitted to my Department in December 2018, which included an objective analysis of the level of resources currently available to the FSPO against both current and future demand for its services. The Workforce Plan aimed to address the large existing caseload of 3,187 complaints which the Office inherited on 01 January 2018, along with the sustained pattern of increased demand which the office continues to experience.
I approved a substantial increase in staff in the FSPO of 35 additional position and the Ombudsman has informed me that recruitment campaigns are currently ongoing. Such additional resources will allow the FSPO to deliver a better faster service for its customers, keep pace with the speed of change, tackle existing waiting times, and deliver the objectives in its Strategic Plan 2018 – 2021.
174. Deputy Catherine Connolly asked the Minister for Finance the estimated full-year cost if the earned income tax credit for the self-employed increased to €1,500 per year; and if he will make a statement on the matter. [24118/19]
Amharc ar fhreagraI am advised by Revenue that the estimated cost associated with an increase to the Earned Income Credit can be found on page 6 of the Revenue Ready Reckoner, which is available at the link: https://www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf.
It is estimated that an increase in the value of the Earned Income Credit from its current level of €1,350 to €1,500 would have a first year cost of €20 million and a full year cost of €36 million.
175. Deputy Billy Kelleher asked the Minister for Finance his plans to update the Credit Union Act 1997. [24121/19]
Amharc ar fhreagraAs the Deputy may be aware, the Credit Union Act 1997 has already been subject to significant amendment.
The Commission on Credit Unions was established on 31 May 2011 to review the future of the movement and make recommendations in relation to the most effective regulatory structure for credit unions, taking into account their not-for-profit mandate, their volunteer ethos and community focus, while paying due regard to the need to fully protect members’ savings and financial stability.
Following a detailed review by the Commission of Credit Unions the Credit Union and Co-Operation with Overseas Regulators Act 2012 (CUCOR Act) implemented a wide range of amendments to the Credit Union Act 1997 which were in the main introduced in legislation in 2012/2013 and in subsequent regulations issued by the Central Bank.
The CUCOR Act provided for the delegation of regulation making power to the Central Bank in respect of specific matters, including: savings; borrowing; lending; investments; reserves; liquidity; systems, controls and reporting arrangements; and additional services. These regulations were introduced on 1 January 2016 following a detailed consultation process with the sector (Central Bank Consultation Paper 88). The Investment Regulations have since been amended with effect from 1 March 2018 following public consultation (Consultation Paper 109) and revised Lending Regulations will be introduced later this year following a consultation process which closed in February this year (Consultation Paper 125).
The Deputy may also be interested to note that, following a policy paper it published in December 2017, the Credit Union Advisory Committee (CUAC) proposed that credit unions should be permitted to charge an interest rate on loans greater than the present ceiling of 1% per month. The CUAC recommendation proposed that this ceiling be raised to 2% per month. This amendment would provide credit unions with greater flexibility to risk price loan products and in so doing may create an opportunity for new product offerings. This recommendation from the CUAC followed a survey of the credit union sector which received responses from 117 credit unions.
The CUAC Implementation Group considered this proposal and agreed in principle to recommend that the Minister raise the interest rate ceiling to 2% per month, and for flexibility to be introduced to allow the interest rate to be amended in future by Statutory Instrument following consultation with the Central Bank and CUAC. This proposal will be considered by Government shortly.
