Michael D'Arcy (Wexford, Fine Gael)
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As there has been no meeting of minds on this point, it may be helpful to the Deputy to read my briefing note. The definition of the term "long-term financial service" has been considered in great detail during the passage of this Bill and Deputy Pearse Doherty's Private Members' Bill through the Houses. As the time limit is one of the biggest changes for consumers in the Bill, it was paramount that an effective definition was constructed. I am pleased to note that the Department listened carefully to the contributions made by Deputies during the various Stages of both Bills and extensively engaged with the ombudsman, the Central Bank of Ireland and Office of Parliamentary Counsel on this drafting issue in recent weeks.

While we may not achieve a meeting of minds on the definition, the Department believes it has got the definition in the section broadly correct. Deputy Doherty's argument is essentially that an annualised insurance contract entered into a decade previously and renewed annually with the same company merits being treated as a long-term financial product. The Department does not agree with this view. Some concern was expressed that if a company attempted to insert some form of break in a long-term plan, the product would no longer be defined as a long-term financial service.

A great deal of work has been done on this complex issue. Following consultations with the entities to which I referred, the Department believes it has got the definition broadly correct. The definition set out in amendment No. 4 in general terms encompasses all financial products and services of a fixed term of five years and one month or more, such as mortgages, payment protection in connection with a long-term service, long-term loans and life assurance to pay annuities on human life. The definition of the term "life assurance" comes from the definition of that term on the Statute Book and also includes contracts of insurance to provide a sum on marriage or on the birth of a child, life assurance linked to investment funds, permanent health insurance, also known as income continuance plans, a "tontine", as it is known, where capital is paid into a common pool and each investor receives dividends until his or her death, and capital redemption products. Those are the areas that we believe are best served by this legislation.

The revised wording clarifies, for the avoidance of doubt, that a range of policies or services which are short-term financial services, for example, house and travel insurance, are not included in the definition of long-term financial services. There is no intention to change the meaning of the definition the Minister for Finance set out at various stages.

However, the drafting has now improved the wording for the avoidance of doubt and set out anti-avoidance type wording to prevent a provider from introducing a sham annual renewal process to avoid falling within the definition of long-term financial service. The Government rationale for excluding annual policies from the definition of long-term financial services and concern to avoid passing extra cost to consumers is well set out during the various Stages of these Bills. In essence, insurance companies would have to be mindful of the possibility of claims being taken in a longer timeframe for these products and would accordingly pass the extra costs onto consumers. Additionally they could perhaps seek to refuse to cover customers after a five year period or increase the annual premiums substantially after a five year period to deter them from becoming a long-term product, which would include customers on the current definition in the Private Members Bill. This would have a negative impact on customers.