Time for the financial sector to fund its own regulation – Doherty
Sinn Féin Finance Spokesperson Pearse Doherty TD has said it is high time the financial sector funded its own regulatory costs. In a recent parliamentary reply, the Minister for Finance stated that this would allow €67m of the Central Bank’s profits to be redirected to the State’s coffers or to other areas in the Bank. Deputy Doherty compared the consultation process that takes place in such matters with the lack of discussion on cuts such as the lone parents’ cut passed only last week.
Deputy Doherty said:
“It is high time the financial sector stopped being subsidised in this way by the State. Over the last number of years, we have had glaring failures in regulation at Setanta and in the banking and other financial sectors. The time has come for the sector to pay its own way in regulation.
“I note that the Minister has launched a consultation on this issue. The shifting of the cost of the entire burden onto the sector itself is something I have called for and Governor Honohan has also voiced his support for such a move. There is no need for these drawn out consultation processes which are designed only to delay a decision and which are open to abuse by vested interests. If the Minister thinks it is time to have the banks and others pay for the regulation then let him say so.
“I can only contrast this approach of drawn out consultation period with the complete lack of debate on the savage cut to the one parent family payment recently passed by the government. Where was the months longs consultation period then?” ENDS
Note: See below the PQ in Question
QUESTION NO: 117
DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)
by Deputy Peadar Tóibín
for WRITTEN ANSWER on 24/06/2015
To ask the Minister for Finance the savings that would accrue from moving the entire cost of regulation of the financial sector onto the industry, as opposed to the current 50%.
The Central Bank's total funding requirement for financial regulation activity is determined on an annual basis by the resources required to discharge its legal responsibilities under domestic and EU law. Section 32D and 32E of the Central Bank Act 1942, as amended, provide that the Central Bank Commission may make regulations relating to the imposition of levies and fees on the financial services sector in respect of the recoupment of the costs of financial regulation. Regulations made under Section 32D and 32E of the Central Bank Act 1942, or any amendment or revocation of these regulations, do not take effect until approved by the Minister for Finance.
The financial services industry currently funds 50% of the costs incurred by the Central Bank for financial regulation with certain exceptions including the banks which had participated in the Eligible Liabilities Guarantee Scheme, AIB, Bank of Ireland and Permanent TSB, which are required to fund 100% of the Central Bank's regulatory costs. Credit Unions currently contribute approximately 8% to the cost of their regulation.
The current 50% funding arrangement translates into a corresponding reduction in the annual surplus remitted by the Central Bank to the Exchequer. I have been informed by the Central Bank that it is estimated that €67 million of the Central Bank's 2015 surplus income will be redirected, to make up for the difference between the costs of regulation and the funding received from the financial services industry.
My Department and the Central Bank will shortly issue a joint consultation paper to canvass views on the potential for changing the current funding model. I am cognisant of the increased regulatory burden on industry in recent years and the need to ensure that any changes to the current funding model do not adversely impact the competitiveness of the financial services sector, which is an source of high value employment in Ireland