Wednesday, 31 Mar 2021

Written Answers Nos. 110-129

Gender Equality

Ceisteanna (110)

Peter Fitzpatrick

Ceist:

110. Deputy Peter Fitzpatrick asked the Minister for Finance his plans to help bridge the gender pay gap across the banking sector; and if he will make a statement on the matter. [15407/21]

Freagraí scríofa

Minister for Finance

Given the importance of diversity and inclusion to the culture and resilience of financial services firms, the Government continues to support the industry-led initiative ‘Women in Finance Charter’ to place the spotlight on the need to improve diversity in the financial services sector. In particular, under the Ireland for Finance Strategy Action Plan for 2021 which the Government approved in February, stakeholders in the financial services industry have been working to develop ‘Ireland’s Women in Finance Charter’ which will allow firms to devise commitments to progress gender diversity in their firms.

As the Deputy is aware, all of the banks operating in Ireland, including those in which the State has a shareholding, are run on an independent and commercial basis, and any measures they may put in place to address the gender pay gap is first and foremost a matter for their respective boards.

I note, however, that the Central Bank has been a leader in the promotion of greater diversity within financial services firms. Specifically in relation to the gender pay gap, the Bank has sought to lead by example, by publishing a report on its own gender pay gap every year since 2018. The most recent report, for 2020, is available here: https://www.centralbank.ie/docs/default-source/careers/policies/gender-pay-gap-report-2020.pdf.

My colleague Roderic O'Gorman TD Minister for Children, Equality, Disability, Integration and Youth has recently restated his commitment to advance the Gender Pay Gap Information Bill, 2021. The proposals published by the EU Commission on 4 March this year for binding pay transparency measures will be reviewed in the context of the provisions of the Bill and existing legal provisions.

Social and Affordable Housing

Ceisteanna (111)

Pearse Doherty

Ceist:

111. Deputy Pearse Doherty asked the Minister for Finance his views on the concerns expressed by the Central Bank regarding the proposed affordable purchase shared equity scheme; his further views on its potential impact on financial stability, consumer protection and house prices; and if he will make a statement on the matter. [17179/21]

Freagraí scríofa

Minister for Finance

As the Deputy is aware the development of the Affordable Purchase Shared Equity Scheme is a policy initiative which falls under the remit of the Department of Housing, Local Government and Heritage following the allocation of funding as part of Budget 2021. A range of commercial and operational matters pertaining to the scheme are currently being examined by the Department of Housing but have not yet been finalised and therefore it would be premature to comment on such matters.

The Deputy will be further aware that the Central Bank of Ireland has recently outlined to the Joint Committee on Housing, Local Government and Heritage its views in relation to the scheme. I have attached a link to the letter below:

https://www.centralbank.ie/docs/default-source/publications/correspondence/oireachtas-correspondence/submission-to-the-oireachtas-committee-on-housing---general-scheme-of-the-affordable-housing-bill-published-16-march-2021.pdf?sfvrsn=2

Financial Services Regulation

Ceisteanna (112)

Peter Fitzpatrick

Ceist:

112. Deputy Peter Fitzpatrick asked the Minister for Finance his legislative plans to prevent the potential repeat of the type of unethical behaviour uncovered recently at a company (details supplied); and if he will make a statement on the matter. [15410/21]

Freagraí scríofa

Minister for Finance

As I have previously made clear, I believe that the behaviour revealed by the Central Bank of Ireland in relation to the company in question falls gravely short of the standards expected of leaders in positions of financial responsibility. The Central Bank has already robust enforcement powers which can be applied both to firms and individuals, and these have been enhanced by numerous legislative changes introduced since the financial crisis. These have included both EU legislation transposed into national law, and significant changes in domestic financial services legislation.

The enforcement action concluded by the Central Bank on 1 March 2021 was taken under the Markets in Financial Instruments Regulations 2007, which govern the provision of investment services in financial instruments. These were strengthened in 2017, and these MiFID II Regulations were supplemented by the Markets in Financial Instruments Act 2018.

These Regulations aim to reinforce the rules on securities markets by, among other things, improving the transparency of financial markets, strengthening governance rules for investment firms and stock exchanges, strengthening investor protection and increasing the powers of the Central Bank.

The Senior Executive Accountability Regime, to be included in the forthcoming Central Bank (Amendment) Bill, is to improve accountability in financial services organisations. It will significantly enhance the Central Bank's existing powers to hold firms and individuals to account for any breaches of financial services legislation, and to impose sanctions, where appropriate.

Question No. 113 answered with Question No. 71.

Banking Sector

Ceisteanna (114, 122, 359, 360, 363, 366)

Pearse Doherty

Ceist:

114. Deputy Pearse Doherty asked the Minister for Finance the status of his engagements with relevant parties regarding the withdrawal of a bank (details supplied) from the banking market; his views on the best course of action that would stabilise the banking sector, promote competition and further the interests of the taxpayer; and if he will make a statement on the matter. [17183/21]

Niamh Smyth

Ceist:

122. Deputy Niamh Smyth asked the Minister for Finance the discussions his Department has had with representatives of a bank (details supplied) following its announcement for further branch closures and diminution of services in rural Ireland; the context of these discussions; and if he will make a statement on the matter. [16830/21]

Brendan Smith

Ceist:

359. Deputy Brendan Smith asked the Minister for Finance if he will reiterate to a bank (details supplied) the need to retain its business network, which is particularly important for many rural communities; and if he will make a statement on the matter. [1827/21]

Brendan Smith

Ceist:

360. Deputy Brendan Smith asked the Minister for Finance if he will have further discussions with a bank (details supplied) concerning the need to retain its network of branches, protect employment also taking into account its importance to its customers and competition in the banking sector; and if he will make a statement on the matter. [1828/21]

Bernard Durkan

Ceist:

363. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he can take steps to make satisfactory provision for the customers and staff of a bank (details supplied) given the announcement by another bank in relation to the bank’s future here; the extent to which he can encourage other banks to become involved by way of replacing and restoring the role of the bank as a third bank here; and if he will make a statement on the matter. [10587/21]

Neale Richmond

Ceist:

366. Deputy Neale Richmond asked the Minister for Finance the engagement he has had with a bank (details supplied) in relation to its operation in the Irish market; and if he will make a statement on the matter. [1324/21]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 114, 122, 359, 360, 363 and 366 together.

The withdrawal of Ulster Bank from the market and the decision by Bank of Ireland to close 88 branches in the Republic of Ireland are regrettable, particularly for their customers and staff and they represent unfavourable developments for the Irish banking market.

Decisions in this regard, including the management of branch networks, are the sole responsibility of the board and management of the banks, which are run on an independent and commercial basis. The independence of banks in which the State has a shareholding is protected by Relationship Frameworks which are legally binding documents that cannot be changed unilaterally. I am advised by the Central Bank of Ireland that Ulster Bank’s withdrawal from the Irish market must be undertaken in accordance with the provisions of Irish financial services legislation, including the Central Bank’s codes of conduct.

I note that Bank of Ireland's announcement on the 1st of March set out the following key points:

- The decision to close these branches is in response to changing customer behaviour with a significant acceleration in digital banking.

- The branches closing are predominately self-service locations which do not offer a counter service.

- To preserve local access to physical banking for those who want it, the bank has agreed a new partnership with An Post which will allow personal and business customers use their local post office for a range of banking services – including to withdraw cash and make cash and cheque lodgements – at no additional cost. The closing Bank of Ireland branches all have a post office within, on average, less than 500 meters.

- The bank confirmed that the new partnership with An Post will be available to all Bank of Ireland customers before any branch closes.

- Furthermore, the bank stated that there will be no closures for six months.

On staff, Bank of Ireland commented that it will be working closely with all colleagues at these branches and will be setting out a range of options which include relocating to a different branch, moving to a new role in the bank, or voluntary redundancy for those who choose it.

I have met with representatives from both Ulster Bank and its parent company, NatWest in recent months. My most recent meeting was with Ulster Bank Chief Executive, Jane Howard, on the 19th February.

The Deputy will be aware that I have engaged with Ulster Bank, its parent company, NatWest and the Financial Services Union (FSU) prior to this announcement. In all of these engagements, I strongly emphasised the importance of timely communication with customers, staff and other stakeholders in relation to strategic decisions regarding Ulster Bank. I also met with the FSU shortly after the announcement and I have committed to further engagement with the FSU in relation to this issue.

I understand, that there are approximately 2,800 staff employed some of whom are located in Northern Ireland. Whilst the management of staff matters, including staffing levels, is entirely a matter for Ulster Bank and any counterparty who acquires its business, I would expect all stakeholders to be very sensitive in relation to the needs and rights of staff. This includes full compliance with European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (TUPE Regulations), and honouring all agreements in place between the bank and staff representative bodies. In addition, I would expect these entities to engage with staff representative bodies as appropriate.

NatWest is in early stage discussions with PTSB and other strategic banking counterparties about their potential interest in certain retail and SME assets, liabilities and operations. A Memorandum of Understanding which has been signed with AIB regarding certain corporate and commercial loans, signals a potentially important development for the Irish banking sector. While these are primarily commercial negotiations, the Government is supportive of trying to bring about an outcome that is good for both AIB and PTSB, but more importantly for Ulster Bank’s customers, staff and the Irish economy generally. NatWest, PTSB and AIB have confirmed that they will provide further updates to the market as negotiations progress in this regard. Both sets of negotiations potentially signal significant developments for the Irish banking system.

However, it must be acknowledged that these decisions may have an impact on competition in the banking market and are a reflection of the wider challenges banking is facing, not only in Ireland but also abroad.

Innovations introduced by FinTechs and their increasing market penetration are also reducing traffic into the branch networks run by traditional banks. Competing with online firms while coping with high cost structures is posing a considerable challenge for the traditional full service sector.

The Irish retail banking system is concentrated with five retail banks accounting for the majority of new mortgage lending, and three retail banks accounting for the majority of new bank lending to SMEs. However, price competition is possible even in a concentrated system.

Notwithstanding the recent announcements in the banking sector, Ireland continues to have an extensive network for banking services, including post offices and credit unions. In addition, An Post offers counter services for AIB, allowing customers to lodge and withdraw cash at An Post branches. Bank of Ireland has announced that it is following suit.

The Government wants to ensure that the banking and financial system is one which will effectively contribute and support economic growth and employment. Competition in the sector is vital to ensure that businesses and consumers have a range of options available when using financial services and accessing credit.

Financial Services Regulation

Ceisteanna (115)

Pearse Doherty

Ceist:

115. Deputy Pearse Doherty asked the Minister for Finance his views on the adequacy of a company (details supplied) undertaking a third party review of activities from 2014 to 2021; the position of the interim CEO given their position on the board of the company during a period of the Central Bank investigation; and the extent to which these issues will inform the Government and the NTMA in their future dealings with the company. [17181/21]

Freagraí scríofa

Minister for Finance

The Deputy will understand, I am sure, that it would not be appropriate for me to comment on the internal affairs of a private company in which I have no role.

The board of the company in question has announced its decision to pursue a sale of the Group, and I have previously indicated my support for that decision. It is important to have a stable, well-managed, local stockbroking community to support indigenous companies.

The Central Bank is independent in the performance of any regulatory requirements around the appointment of the CEO to the board of the company and I as Minister, have no role in this process.

I am advised that the NTMA has withdrawn the authority of this firm to act as a primary dealer in Irish Government bonds. More generally, when entering into commercial contracts with any party the NTMA typically considers all appropriate information available to it at the time of such interaction.

Mortgage Lending

Ceisteanna (116)

Peter Fitzpatrick

Ceist:

116. Deputy Peter Fitzpatrick asked the Minister for Finance his plans to help young home purchasers gain mortgage approval in view of the fact that there has been a massive drop in approvals since the start of 2021; and if he will make a statement on the matter. [15408/21]

Freagraí scríofa

Minister for Finance

The Deputy will know that, in the immediate aftermath of the onset of the COVID-19 pandemic last year, there was a significant decline in the level of mortgage approvals. However, this was reversed in the latter part of last year with BPFI data indicating that the number and value of mortgage approvals for each month since September at their the highest level compared to the same month in any year since the BPFI started publishing such monthly data in 2011. Therefore, while the level of mortgage approvals in 2020 as a whole was somewhat lower when compared to 2019, the decline was not as large as could have initially been expected in the immediate aftermath of the onset of the pandemic.

This significant pick up in the level of mortgage approvals since last September has been maintained in the first two months of 2021, with the number of mortgage approvals 3.3% higher than the first two months of 2020 and the value of those approvals almost 10% higher. The BPFI data also indicates that a little over half of the mortgage approvals so far in 2021 were for first time buyers.

Question No. 117 answered with Question No. 89.

Value Added Tax

Ceisteanna (118)

Jackie Cahill

Ceist:

118. Deputy Jackie Cahill asked the Minister for Finance if the VAT concession on milk recording can be returned to the pre-January 2020 reduced rate of 4.5% rather than the current 13.5%, given that this would incentivise milk recording for herd health, herd management, fertility and sustainability; and if he will make a statement on the matter. [17171/21]

Freagraí scríofa

Minister for Finance

I am advised by Revenue that the rate of VAT applicable to supplies of goods and services is subject to EU VAT law, with which Irish VAT law must comply. The milk recording service is an agricultural service and the amounts payable by farmers for this service are chargeable to VAT, in the State, at the reduced rate of VAT, currently 13.5%. EU Member States are entitled to apply the reduced rate of VAT to this service in accordance with the provisions of the EU VAT Directive.

In relation to the application of VAT to these services, records held by the Revenue Commissioners show that the reduced rate of VAT has always applied to milk recording services supplied to farmers by the Irish Dairy Records Co-op (IDRC), through their local co-ops. However, in June 1993, the Revenue Commissioners met with the IDRC regarding the VAT payable in respect of these supplies and accepted that the IDRC was under the control of the Minister for Agriculture and acting on his behalf. At the time the agreement was reached, the State was not normally considered to be a taxable person for the purposes of VAT. The services provided by the IDRC did not therefore come within the scope of VAT and payments receivable by the IDRC, on behalf of the Minister, were not chargeable to VAT, as was normally the case in relation to services provided by the State.

Resulting from that meeting, an agreement was reached between Revenue and the IDRC that, of the amount payable by farmers to their local co-op in relation to milk recording, two thirds related to payments collected on behalf of the IDRC (and therefore on behalf of the State) and were not chargeable to VAT. The balance of the payments, being payments in return for separate services, identified as being provided by the co-ops to its members in connection with milk recording, were chargeable to VAT at the reduced rate.

The agreement in place therefore was not that there was a special rate of VAT applicable to milk recording services, but that only a proportion of the milk recording payments (one third) constituted payment for a taxable supply of services. In this regard, taxing one third of the full payment at the reduced rate of VAT is equivalent to taxing the full payment at one third of the correct VAT rate applicable, i.e. one third of the reduced rate of VAT, 13.5% being 4.5%.

Subsequent to the agreement between the IDRC and Revenue, the commercial arrangements for the provision of milk recording services changed and these services were no longer supplied by the State through the IDRC. Revenue was not made aware of those changes at that time. As a consequence of the changes, the full payment for these services became chargeable to VAT at the reduced rate of VAT, being services provided in full by private taxable persons. Revenue engaged with the suppliers of these services and accepted that the correct VAT treatment could be implemented from 1 January 2020. It should be noted that if these services had continued to be supplied by the State the matter of whether or not they would be considered taxable supplies would need to be reviewed in light of changes in VAT legislation, introduced in 2010, regarding the treatment of the State as a taxable person for VAT purposes.

There are no provisions in the VAT directive, which would permit a rate of VAT of 4.5% to apply to milk recording services.

It should also be noted that farmers may register for VAT or be treated as flat-rate farmers for VAT purposes. Farmers who elect to register for VAT have an entitlement to reclaim VAT on costs, including the cost of milk recording services, incurred in relation to their farm business; if they remain unregistered they are entitled to apply a flat-rate addition to their supplies to VAT registered businesses. The flat rate addition compensates farmers at the aggregate level for the VAT borne on input costs, including milk recording costs.

Tax Avoidance

Ceisteanna (119)

Denis Naughten

Ceist:

119. Deputy Denis Naughten asked the Minister for Finance the steps he plans to take to stop the use of the Irish taxation system for tax avoidance purposes by companies that source their income from international activities that undermine both the Government public health policy and climate policy and the divestment actions of the Ireland Strategic Investment Fund in tobacco companies and fossil fuel companies; and if he will make a statement on the matter. [14521/21]

Freagraí scríofa

Minister for Finance

I recall that the Deputy and I discussed this issue during at the Committee and Report Stages of Finance Bill 2020, where I explained that aggressive tax planning by multinational companies is a global problem that requires countries to work together to find an effective global solution.

Ireland is actively participating in the on-going discussions at the OECD to reform the international tax landscape, which seek to address the tax challenges of digitalisation. In addition, we continue to work with our fellow EU Member States, and have agreed and implemented an unprecedented number of Directives on tax cooperation in recent years which have been highly successful in addressing aggressive tax planning.

At the domestic level, a succession of significant measures have been introduced in recent years on Corporation Tax, and this work continues. Budget 2021 contained revisions to Ireland’s capital allowances for intellectual property in order to ensure such assets are fully within balancing charge rules in line with international best practice for such reliefs in other jurisdictions. Finance Act 2020 introduced certain legislative defensive measures which provide that Ireland’s Controlled Foreign Company rules apply more strictly to companies with subsidiaries operating in jurisdictions that remain on the EU list of non-cooperative tax jurisdictions.

It is worth re-iterating that aggressive tax planning arrangements are not designed by Governments but by advisers, lawyers and business devising complex plans to exploit mismatches or gaps in legislation including between different jurisdictions. Where instances of aggressive tax avoidance emerge, Revenue will rigorously investigate and challenge such cases through the various anti-avoidance legislative provisions available to them.

The Deputy will be aware that, in January, I published an update to the Corporation Tax Roadmap. This update takes stock of the significant actions we have taken to date, reflects on the global tax reform work at the OECD at what is a crucial moment, and sets out the next steps in the ongoing process of modernising and further strengthening our corporation tax system, to ensure it continues to meet the needs of the modern economy.

I have considered the Deputy’s request, but I believe that the systematic approach we are taking is the best way of continuing to ensure that all companies pay the appropriate level of tax, and ensure that the tax system meets the needs of the modern economy.

European Central Bank

Ceisteanna (120)

Richard Bruton

Ceist:

120. Deputy Richard Bruton asked the Minister for Finance the level of activity by the European Central Bank in the Irish bond market over the past 12 months; and if he will make a statement on the matter. [1504/21]

Freagraí scríofa

Minister for Finance

As the Deputy is aware, the Eurosystem (that is, the national central banks of the euro area plus the ECB) conducts purchases of public sector securities under the public sector purchase programme (PSPP) and as part of the pandemic emergency purchase programme (PEPP).

The PSPP forms part of the ECB’s Asset Purchase Programme (APP), which is part of a package of non-standard monetary policy measures initiated to support the monetary policy transmission mechanism and provide the amount of policy accommodation needed to ensure price stability.

On 12 September 2019, the ECB Governing Council decided that net purchases would restart under the APP at a monthly pace of €20 billion from 1 November 2019. The Governing Council expects net asset purchases to run as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates. On 12 March 2020, the ECB Governing Council decided to add “a temporary envelope of additional net asset purchases of €120 billion” under the APP until the end 2020. The Governing Council also intends to continue reinvesting the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. On 11 March 2021, the Governing Council took a decision, along with other changes, that purchases under the PEPP over the next quarter would be conducted at a significantly higher pace than during the first months of this year.

PEPP is a non-standard monetary policy measure initiated in March 2020 to counter the serious risks to the monetary policy transmission mechanism and the outlook for the euro area posed by the coronavirus (COVID-19) outbreak. PEPP is a temporary asset purchase programme of private and public sector securities.

The Governing Council decided to increase the initial €750 billion envelope for the PEPP by €600 billion on 4 June 2020 and by €500 billion on 10 December 2020, for a new total envelope of €1,850 billion with net purchases to run until at least March 2022. The Governing Council will continue to reinvest the principal payments from maturing securities purchased under the PEPP until at least the end of 2023.

For both programmes, the benchmark allocation across jurisdictions is the Eurosystem capital key of the national central banks.

Under the PSPP, cumulative net purchases of Irish government bonds amounted to € 4,342 million over the last twelve months (period covering March 2020 to end-February 2021). Purchases under the PEPP began in March 2020 and cumulative net purchases of Irish government bonds amounted to € 12,123 million as at end-January 2021.

Banking Sector

Ceisteanna (121, 130)

Pádraig O'Sullivan

Ceist:

121. Deputy Pádraig O'Sullivan asked the Minister for Finance the measures he proposes to take to strengthen the banking sector following recent announcements of branch closures nationally; and if he will make a statement on the matter. [17072/21]

Brian Stanley

Ceist:

130. Deputy Brian Stanley asked the Minister for Finance if consultations are taking place on strengthening existing financial institutions following recent announcements of closures by banks (details supplied). [16748/21]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 121 and 130 together.

NatWest's decision to withdraw Ulster Bank from the Irish market and the decision by Bank of Ireland to close 88 branches in the Republic of Ireland are regrettable and they represent unfavourable developments for the Irish banking market.

NatWest is in early stage discussions with PTSB and other strategic banking counterparties about their potential interest in certain retail and SME assets, liabilities and operations. A Memorandum of Understanding which has been signed with AIB regarding certain corporate and commercial loans, signals a potentially important development for the Irish banking sector. While these are commercial negotiations, the Government is supportive of trying to bring about an outcome that is good for both AIB and PTSB, but more importantly for Ulster Bank’s customers, staff and the Irish economy generally. NatWest, PTSB and AIB have confirmed that they will provide further updates to the market as negotiations progress in this regard. Both sets of negotiations potentially signal significant developments for the Irish banking system.

Ireland continues to have an extensive network for banking services, including post offices and credit unions that are spread right across the country in addition to the bank networks.

Credit unions are offer a wide range of services. They are also authorised by the Central Bank of Ireland to provide a Member Personal Current Account Service (MPCAS), under which approved credit unions may offer personal current accounts with debit cards, overdrafts and a wide range of payment services within an appropriate risk framework. 51 credit unions, representing circa 50% of sector assets, currently have approval to provide current accounts and debit cards.

An Post also offers a range of financial services and products, including counter services for AIB, allowing customers to lodge and withdraw cash at An Post branches. As part of its announcement about branch closures, Bank of Ireland has also agreed a new partnership with An Post which will allow personal and business customers use their local post office for a range of banking services , including to withdraw cash and make cash and cheque lodgements, at no additional cost.

A range of other initiatives are underway that will strengthen the sector and enhance the sustainability, culture and accountability of the banking sector and improve customer outcomes. These include:

1. The Senior Executive Accountability Regime (SEAR) The Government intends to further enhance the Central Bank’s existing powers through new legislation to be introduced in the Central Bank (Amendment) Bill.

The centrepiece of the new legislation is the Senior Executive Accountability Regime (SEAR), a commitment of the Programme for Government, which seeks to improve the culture of the financial sector and restore public trust in the sector. SEAR is expected to drive positive changes in terms of culture in the financial services industry and enhanced accountability while simplifying the taking of sanctions against individuals who fail in their financial sector roles.

The proposed legislation will seek to address proposals put forward by the Central Bank arising from the recommendations in its Culture Report which was requested by me on foot of the Tracker Mortgage Examination.

The legislation is intended to drive greater accountability in the financial sector, raising the standards of expected behaviour for individuals and firms, in order to achieve better outcomes for consumers and improve the sustainability of the financial system.

2. Banking Union Development of the European Banking Union began in response to the 2008 financial crisis. The European Commission pursued a number of initiatives to create a safer financial sector for the Single Market, consisting of a set of legislative texts that are applied to all financial institutions and all financial products across the EU which are designed to ensure that Europe has a safer banking sector which can support the financing needs of the economy. Specifically, its rules include capital requirements for banks, rules for managing failing banks and improved deposit guarantee schemes.

The completion and improvement of the Banking Union is a priority. Recently, my Department completed the transposition of the “Risk Reduction Measures” package of reforms which updated existing rules to keep them in line with standards agreed by the Basel Committee on Banking Supervision. These reforms included new supports for investments in infrastructure and increased supports for lending to SMEs, revised regulations regarding remuneration practices and a new moratorium power to suspend an institution’s payment obligations during a resolution process.

3. Digital Finance Package The European Commission published the Digital Finance Package in September 2020 containing measures developed to further enable and support the potential of digital finance in terms of innovation and competition while mitigating risks.

The Package contained a number of components – both legislative proposals and Commission Communications – including a proposal for a Regulation and Directive on Digital Operational Resilience (DORA), a proposal for a Regulation on Markets in Crypto-Assets (MiCA) and a Commission Communication on a Retail Payments Strategy.

The suite of measures proposed promotes and enables a more digitalised financial services sector across Europe by regulating emerging technologies such as crypto-assets, evaluating existing legislation such as the Payment Services Directive 2 and the Electronic Money Directive and setting out a framework for a more resilient and stable financial services sector. At the same time, the proposals help to protect consumers in this changing environment.

4. COVID-19 Credit Guarantee Scheme The COVID-19 Credit Guarantee Scheme will ensure ongoing availability of credit throughout the remainder of this year to our vitally important SME sector who are facing the significant challenges of not only COVID-19 but also adjusting to Brexit. In particular, I welcome the recent expansion in the on-lenders to beyond the retail banks, including 19 credit unions spread between three groups and non-bank lenders. This extension means that more SMEs will be able to access credit from an increased diversity of sources in both bank and non-bank credit.

Question No. 122 answered with Question No. 114.

Customs and Excise

Ceisteanna (123)

Matt Carthy

Ceist:

123. Deputy Matt Carthy asked the Minister for Finance if he will review the charges that apply to the purchase of second-hand cars sourced from the UK as a result of Brexit; and if he will make a statement on the matter. [17196/21]

Freagraí scríofa

Minister for Finance

Following the withdrawal of the UK from the European Union, an import of a vehicle from Great Britain is treated as an import from a third country, i.e. a non-EU country. If a vehicle is imported from Great Britain into Ireland, the importer is required to complete a customs declaration and pay customs duty, if applicable, and VAT at 23% prior to presenting the vehicle for registration. Under customs law, VAT at import is chargeable on the customs value of the goods. The fact that VAT has been charged in Great Britain on used vehicles subsequently imported into the State has no bearing on their liability to VAT at import when imported into the EU.

The EU-UK Trade and Cooperation Agreement (TCA), which has been provisionally applied since 1 January 2021, has eliminated tariff duties for trade between the EU and Great Britain where the relevant rules of origin are met. If the goods are of UK origin, then a 0% tariff rate applies. It is important to note that the preferential tariff treatment must be claimed on import on the Customs declaration. Details on how to do this are also available on the Revenue website at the following link: https://www.revenue.ie/en/customs-traders-and-agents/customs-electronic-systems/aep/ecustoms-notifications/2021/ecustoms-notification-04-2021.pdf

Under the terms of the TCA, goods of EU origin that were in use in the UK and that were subsequently imported into Ireland from Great Britain are not eligible for the 0% tariff rate as they do not qualify as UK origin under the rules of origin. To import a car of EU origin from Great Britain into Ireland, a customs declaration must be completed. Customs duty of 10% applies on the customs value of the car. The customs value is the invoice price plus the cost of transport and insurance. VAT at 23% is calculated on the customs value plus customs duty.

The changes in the charges that apply to the purchase of second-hand cars sourced from the UK are a direct result of Brexit and the application of EU and Irish legislation in relation to the sourcing of second-hand cars from the UK.

Insurance Costs

Ceisteanna (124, 138)

Ruairí Ó Murchú

Ceist:

124. Deputy Ruairí Ó Murchú asked the Minister for Finance the engagement he has had in relation to public liability insurance specifically the lack of provision and high premiums; and if he will make a statement on the matter. [17206/21]

Niamh Smyth

Ceist:

138. Deputy Niamh Smyth asked the Minister for Finance his plans to implement reforms in view of the increasing cost of insurance premiums; the latest discussions his Department has had on this issue; the persons or bodies with whom discussions have been held; and if he will make a statement on the matter. [16829/21]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 124 and 138 together.

The Programme for Government prioritises the reform of the insurance sector with particular emphasis on motor, public, and employer liability insurance. As such, the Action Plan for Insurance Reform sets out 66 actions across several Government policy areas, including in my Department, to improve the availability of insurance and tackle costs for businesses and consumers. At its most recent meeting, the Cabinet Committee Sub-Group on Insurance Reform, which oversees the implementation of the Action Plan, reflected upon the progress made in the first three months. This includes:

- The creation of an Office to Promote Competition in the Insurance Market within the Department of Finance.

- The adoption of new Personal Injuries Guidelines by the Judicial Council.

- The launch of a public consultation on proposals to reform the Personal Injuries Assessment Board.

It is my belief that the impact of these reforms, in conjunction with other strands of the insurance reform agenda, will improve both the cost and availability of insurance for consumers, businesses and voluntary groups. My Department has worked with the Central Bank of Ireland to expand the scope of the National Claims Information Database (NCID) to now include employer and public liability insurance. I look forward to the publication of the first NCID report on employer and public liability insurance this summer, which should bring much greater transparency to developments in these markets.

Minister of State Fleming and I have had extensive engagement with insurers and other key stakeholders in this policy area, including civic groups and state regulatory bodies. In particular, there has been frequent engagement with both the Alliance for Insurance Reform and Insurance Ireland on several aspects of the Action Plan. Minister of State Fleming is meeting with the main insurers shortly to hear their reaction to the new Personal Injuries Guidelines and to press their previous commitment to reduce premiums in line with lower award levels.

In conclusion, I can assure the House that we will continue to engage with a wide variety of stakeholders as the Government drives forward the insurance reform agenda that we have developed. I look forward to working with colleagues to implement further aspects of the Action Plan, with a view to achieving a more competitive and consumer-friendly insurance market to the benefit of all of Irish society.

Banking Sector

Ceisteanna (125)

Cathal Crowe

Ceist:

125. Deputy Cathal Crowe asked the Minister for Finance if he will work with the Central Bank to ensure that lodgement ATMs will be put in place in locations in which a bank (details supplied) has withdrawn its physical bank presence. [17071/21]

Freagraí scríofa

Minister for Finance

As the Deputy may be aware, as Minister for Finance, I have no role in the commercial decisions made by any bank in the State. This includes banks in which the State has a shareholding.

Decisions in this regard, including the management of branch or ATM networks, are the sole responsibility of the board and management of the banks, which must be run on an independent and commercial basis. The independence of banks in which the State has a shareholding is protected by Relationship Frameworks which are legally binding documents that cannot be changed unilaterally. These frameworks, which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market. The Bank of Ireland Relationship Framework can be found at the following link:

https://www.gov.ie/en/publication/fc36e6-bank-of-ireland-relationship-framework-march-2012/

Bank of Ireland did provide me with a briefing in advance of their announcement on branch closures and they released the following details:

- The decision to close these branches is in response to changing customer behaviour with a significant acceleration in digital banking.

- The branches closing are predominately self-service locations which do not offer a counter service.

- To preserve local access to physical banking for those who want it, the bank has agreed a new partnership with An Post which will allow personal and business customers use their local post office for a range of banking services – including to withdraw cash and make cash and cheque lodgements – at no additional cost. The closing Bank of Ireland branches all have a post office within, on average, less than 500 meters.

- The bank confirmed that the new partnership with An Post will be available to all Bank of Ireland customers before any branch closes.

- Furthermore, the bank stated that there will be no closures for six months.

On ATMs specifically, the bank confirmed that no location will be left without access to financial services or cash facilities. Many locations will see an enhancement of services through the bank’s new partnership with An Post. However, in the small number of locations (four) where there is no alternative ATM available, Bank of Ireland will maintain an ATM.

In relation to staff, the bank commented that it will be working closely with all colleagues at these branches and will be setting out a range of options which include relocating to a different branch, moving to a new role in the bank, or voluntary redundancy for those who choose it.

The full Bank of Ireland announcement on the matter can be found at the following link:

https://www.bankofireland.com/about-bank-of-ireland/press-releases/2021/bank-of-ireland-announces-significant-changes-to-branch-network-and-local-banking-services/

Credit Register

Ceisteanna (126)

Thomas Gould

Ceist:

126. Deputy Thomas Gould asked the Minister for Finance the credit implications of missed mortgage payments due to the economic impact of the Covid-19 pandemic; and the actions he has taken to mitigate same. [17159/21]

Freagraí scríofa

Minister for Finance

A key focus of the Government and the Central Bank is to ensure lenders are acting in a way that protects the best interests of borrowers, and in line with relevant codes and regulations. In particular, in respect of mortgages which are secured on a primary residence, regulated entities are required to comply with the Code of Conduct on Mortgage Arrears and deal with all arrears (and pre-arrears) cases in a sympathetic and positive manner with the objective at all times of assisting the borrower and to deliver appropriate and sustainable solutions and facilitate as many borrowers as possible to return to making loan repayments.

Borrowers who are experiencing financial difficulty should engage early with their lenders, and lenders have specific obligations to support borrowers. Borrowers should consider what they can pay and should be cautious about accruing significant amounts of arrears where it is not necessary. Lenders must engage with borrowers to identify appropriate and sustainable solutions to a mortgage or other loan difficulty. Lenders should use the full suite of restructuring solutions available to them, including short-term forbearance (and which can include further short-term payment breaks). Borrower circumstances differ, so the right solution for each borrower differs too and borrowers will need to be assessed on a case-by-case basis.

Where reporting to the Central Credit Register (CCR) is concerned, lenders are obliged under the Credit Reporting Act 2013, to submit information to the CCR. Submission of information to the CCR must be consistent with the arrangements agreed and in accordance with lenders obligations under the Credit Reporting Act 2013. This may include details in respect of restructures if agreed by the parties. The CCR produces credit reports, based on factual information submitted by lenders. However, it does not produce credit scores or ratings, or provide guidance or instructions to lenders on the approach they should take to future applications for credit. Subject to compliance with all relevant financial services legal and consumer protection requirements, the decision on applications for credit is a commercial matter for the individual lender.

Borrowers can get their credit report, free of charge, at www.centralcreditregister.ie and they can also amend information on the CCR if it is inaccurate or not up to-date. More generally, if a mortgage or other loan applicant is not satisfied with how a regulated firm is dealing with them in relation to an application for credit, or they believe that the regulated firm is not following the requirements of the Central Bank’s codes and regulations or other financial services law, they should make a complaint directly to the regulated firm. If the mortgage applicant is still not satisfied with the response from the regulated firm, he or she can refer the complaint to the statutory Financial Services and Pensions Ombudsman.

In terms of the impact of COVID-19 on mortgages, the Deputy may wish to note that BPFI data indicated that, at the end of 2020, almost 74,000 primary dwelling mortgage payment breaks were provided. Of these almost 72,000 had expired and almost 89 per of these expired payment breaks had returned to full repayments. However, I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that still need support at this time.

Question No. 127 answered with Question No. 99.

Question No. 128 answered with Question No. 85.

Credit Unions

Ceisteanna (129)

Thomas Gould

Ceist:

129. Deputy Thomas Gould asked the Minister for Finance if his attention has been drawn to a situation in relation to a credit union (details suppled) that has continued to refuse to supply a death grant to members despite a motion passed unanimously at its last AGM. [17158/21]

Freagraí scríofa

Minister for Finance

The Central Bank have informed me that credit unions may participate in Death Benefit Insurance schemes whereby a payment, intended to assist with funeral expenses, is made following the death of a member. Central Bank credit union regulations do not place any specific requirements on credit unions that participate in Death Benefit Insurance schemes. The Death Benefit Insurance is provided by insurance undertakings. Some credit unions discharge some or all of the cost of the insurance on behalf of their members, while other credit unions have adopted a member pay approach.

The Credit Union Act, 1997 is silent on withdrawal of services or the notice to be provided to members by credit unions before the withdrawal of services. However, the Registry of Credit Unions expects credit unions to communicate with their members in a clear and transparent manner, including in circumstances where they intend to amend or discontinue an existing service. The Registry of Credit Unions also expects credit unions to give reasonable notice to affected members in such circumstances.

Part V of the 1997 Act sets out provisions relating to meetings and resolutions. However, it is silent on motions moved at general meetings.

As Minister for Finance, I recognise the important role of credit unions as a volunteer co-operative movement and the Government is determined to continue to support a strengthened and growing credit union movement. However, it is a commercial decision for individual credit unions to determine whether they decide to offer Death Benefit Insurance or indeed whether they decide to discontinue providing the service.