Oireachtas Joint and Select Committees
Wednesday, 10 November 2021
Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach
Corporation Tax Issues and General Scheme of the Central Bank (Individual Accountability Framework) Bill 2021: Minister for Finance
I welcome the Minister and his officials. Today's meeting is to continue pre-legislative scrutiny of general scheme of the Central Bank (individual accountability framework) Bill 2021 and to seek information from the Minister on corporation tax rate changes.
The minutes of the joint committee meeting on 20 October were agreed at the committee's previous private meeting. I remind members of privilege by which they are covered if they attend throughout the complex of the Houses. If they attend remotely from elsewhere, they may not have full privilege, so they should take care.
They will be separate questions. We might do whatever the Minister wants to do first. We might cover the tax issues first and then after some questions and then deal with legislation, if members are agreeable.
Okay, I thank the Chair. I apologise to the committee for being a few moments late. I had to move some financial resolutions and Supplementary Estimates in the House. I thank the committee for the opportunity to be here. From their outset in 2013, Ireland has constructively engaged with the global tax discussions and we have already significantly reformed our tax system to be in line with emerging international norms. Last month, Ireland joined 135 other countries in reaching a global two pillar agreement on addressing the tax challenges arising from digitalisation of the global economy.
Ireland did not join the interim agreement in July, primarily because it did not provide sufficient certainty with regard to what any globally agreed rate would be. My priority in recent months was to secure the necessary changes in the October agreement and to ensure our strategic interests would be protected.
There are two pillars to the agreement. Pillar 1 will see a reallocation of a proportion of profits to the jurisdiction of the consumer. This means a proportion of corporate tax revenue streams that now flow to the Irish Exchequer will flow to the exchequers of other countries when implemented. Pillar 2 will see the adoption of a global minimum effective tax rate of 15% applying to multinational companies with global revenues in excess of €750 million.
It is important to set out why I believe Ireland should be in the agreement. First, Ireland is one of the most highly globalised countries in the world. We have clearly benefited from the investment and good jobs that have accompanied the decision of many multinationals to make Ireland their home. It is vital we adapt and evolve in line with new international rules so that we can continue to be a world-class destination for inward investment. Second, while the agreement introduces a global minimum effective tax rate of 15% for companies that have a turnover greater than €750 million, my intervention was instrumental in ensuring the rate is moderate and will continue to permit tax competition within guardrails, recognising that other countries advocated for higher rates. In addition, removing a proposal for "at least" helps deliver the predictability that is a cornerstone of Ireland’s offering. Third, we will retain the 12.5% corporation tax rate for the 95% of companies in Ireland that are out of scope of the agreement. Discussions with the European Commission confirmed a forthcoming directive on pillar 2 will be faithful to the agreement. Further, we can continue to allow our tax system to support innovation and growth, including through the use of research and development tax credits.
I have long signalled there will be a cost to Ireland signing up to this agreement. My Department and Revenue have estimated the cost in terms of tax receipts forgone could be up to €2 billion in the medium term. This costing will be kept under review as the critical technical discussions proceed.
It is important, however, to consider the very real risks associated with staying outside the process. As a small, open economy within the EU, we have strong ties to the US and many of the other G20 countries. This makes it essential we stay in line with key international accords. Further, if Ireland was not in the agreement, we would lose influence in respect of the critical and ongoing technical discussions. The design of the global minimum tax means that if Ireland were outside the agreement, other jurisdictions could apply a top-up tax to the subsidiary of a multinational if it were taxed below the global minimum effective rate.
I believe the upsides of being in such a historic international agreement far outweigh the downsides of staying out. This has been a difficult and complex decision but I believe it is the right one, and I am confident Ireland will remain competitive into the future and we will continue to be an attractive location when multinational companies look to invest overseas.
I am in the Chairman's hands here. Would he like me to deal with questions on corporation tax now? I can continue with my opening statement on SEAR afterwards and deal with the questions then.
There are obviously major changes in the international landscape. I am conscious the last time the Minister was before the committee, there was agreement in July of a rate of at least 15%. The Minister made the case he was still convinced that we could secure the 12.5% rate within the agreement. It has not turned out that way. However, I believe the 15% rate still allows us to be competitive and is still an area which makes us a very attractive place to invest, but we also need to look at some of the other competitiveness issues, not least housing, childcare, infrastructure and connectivity on which we are lagging way behind.
I want to ask about some of the detail. How many companies will come under scope of this agreement? Pillar 1 has a threshold of €20 billion turnover. How many companies that are tax resident here, either headquartered or subsidiaries, will come under the scope of pillar 1?
The threshold for pillar one 1 change within seven years of its operation and will decrease from €20 billion turnover to €10 billion. How many companies are anticipated will fall under the scope of pillar 1 then?
On pillar 2, which has an annual turnover of €750 million, how many companies that are tax resident here, either headquartered or subsidiaries, will come under its scope?
We anticipate there will be about 100 multinational enterprises worldwide, the majority of which that are located in Ireland will be subject to this agreement. I cannot give a forecast at the moment on changes over time in the event of changes to the entry threshold to this.
I will see if I can get that information for the Deputy as the meeting goes on. I did use information when I was making the announcement on how many presences here in Ireland would be covered in the agreement.
I will get that information as proceedings go on and I will make it available to the committee.
It is very difficult to say if it will increase at all after seven years. It is difficult for me to give a forecast on that. If it does increase further I would expect it to be an incremental increase as opposed to an increase of multiples.
The Minister made the point that the assessment is that the agreement will impact on corporation tax receipts to the tune of approximately €2 billion. That will be kept under review, as he said, but we can all agree that number is well outdated at this stage. That was an earlier number from even before the July agreement, which gave greater clarity. Now we have the final agreement and more clarity. Surely, given the fact that we now have an effective minimum tax rate of 15%, that number is going to change because there will be an increase in tax receipts to the State. The July agreement stated that the proportion of profits above 10% that would be allocated would be between 20% and 25%. It is now settled at 25%, which could take a hit on the other end. Are there any updated estimates as to the impact now? I am sure the Department of Finance was running the numbers during the negotiations, and afterwards, as to what a 15% effective tax rate would look like from a State revenue point of view.
We do not have any revised figures on the revenue loss. We are currently engaged in 11 days of meetings on the technical nature of the agreement on the rate. I anticipate that, at the end of this year and early next year, a huge amount of technical work will develop within the OECD on the reallocation of taxing rights. The point at which I can offer a revision of the revenue impact will be when the detailed nature of this agreement is negotiated and made clearer. At the moment, I anticipate that it will be the second quarter of next year before we are in a position to revise the forecast we have, if at all. While some things are clearer in this agreement than they were in July, the Deputy will observe that it is still a very high-level agreement with a huge amount of fleshing out to be done. At this point in time, my officials are advising me that they do not have enough further detail to revise the forecast.
I wish to deal with a point that is implicit in the Deputy's question. He is correct that when we discussed this matter earlier in the year I was not acknowledging any revenue gain that might have come from the rate going up. I want to acknowledge that if we are going into a discussion on that point. Likewise, the area of revenue loss for us was in the pillar relating to the reallocation of taxing rights. The technical work on that is going to begin, at the earliest, later this year.
I fully appreciate that. Pillar 1 was always where the €2 billion figure came from. The Department of Finance estimates never envisaged what the rate would be, and rightly so because there were negotiations going on. It was always factored in at 12.5%. We now know that it will be a minimum effective tax rate of 15%, so it not just about the tax rate but the effective tax rate. That is obviously going to boost the coffers of our Exchequer. There is no doubt about that. The only danger to the Exchequer revenues would be a future pipeline of investment or companies deciding to move jurisdictions, which is thankfully not on the cards. While the technical assessment may not be done, and I appreciate that there is quite a bit of detail to be worked out, surely that €2 billion figure is going to come down. It could come down quite substantially given that the companies that will come under the scope of pillar 2 make up nearly 50% of our corporation tax rate in this State. They are currently paying a headline rate of 12.5% and an effective rate of less than that and now they will have to pay a 15% effective tax rate. Surely there is going to be a boost to the Exchequer coffers due to that.
The Deputy's logic as regards the pillar relating to the rate is correct. If the rate goes up, assuming no change in our revenue base, that in isolation will lead to higher revenue. That assumption is correct. I have always said that where we will lose revenue will not be on the change in the rate; it will be due to the reallocation of taxing rights. A key issue that I have always been focused on is whether we can we get a dynamic evaluation of where we are with any revenue loss, which I expect to happen, from the reallocation of taxing rights. Those who are representing Ireland in these negotiations and the Revenue Commissioners are clear that we need to see significantly more detail. We will play a role in trying to shape that before we can inform the Deputy of what the revenue loss due to the reallocation of taxing rights would be. It is for those reasons that I believe the €2 billion figure is the best guide we can give but I will be frank that it is a guide. I have said ever since I brought that figure into the public arena that it is based on guidance and judgment and how the situation is at any one point in time. I am not going to revise that until I am clearer on where we are in the OECD process. My best judgment is that will be in the second quarter of next year.
I do not want to labour this point but pillar 1 is a guide of €2 billion and that may move as the technical details are worked out. That is fine but there is no guide on pillar 2 and there is going to be an increase in tax revenue if things remain the same. There is no guarantee that they will but there is no guide provided as to what will happen as a result of the effective rate going up to 15%. We are in the dark. We have a guide of €2 billion of a hit to the Exchequer because of pillar 1 but we do not know how much of that is going to be offset by pillar 2 increases in the taxation rate. Is it half, all of it or a quarter of it? Are we going to be in surplus? There is no guide. I know the officials in Revenue and the Department have a guesstimate and I appeal to the Minister to provide that type of information at the earliest stage because we now have a set rate.
At the earliest stage that I have a figure I am confident I can stand over, I will, of course, share it. For so long we have worked under the shadow of what global tax reform will look like and what impact it will have on our Exchequer. As soon as I have figures that I am confident are robust and that I can share with the Exchequer, we will share them with the Deputy and this committee. I would respectfully offer the committee two warnings. First, what we have at the moment is a guide. Second, we should never assume that we can take for certain the stock of foreign direct investment we have in Ireland continuing indefinitely into the future. With those guides in place, as soon as I am in a position to give the committee and the Deputy a better evaluation of the revenue impact of course I will share it.
My final question relates to the transposition of this agreement. I understand that pillar 1 will be dealt with domestically but pillar 2 is going to be transposed through the use of a directive at EU level. I support this agreement but I have serious concerns about how we transpose it. For the first time, this would allow the EU the right to set the effective rate of tax by taking this agreement and transposing it in the form of a directive. I do not think that should happen. We should bring this agreement into international law in the same way many countries throughout the world will, which is in domestic legislation. What are the Minister's thoughts on that? We have had so much discussion about vetoes and tax issues for so many years.
What security do we have if the Minister gives up Ireland's veto on this issue - he has a veto on this matter - to allow for the legislation to be passed? He could argue what difference does it make if this is done by way of a European directive or domestic legislation as we will do the same thing in any event, but it is the principle of the matter. For the first time, the European Union will bring forward a directive that directly impacts on our tax issues. I am concerned we have not teased that out to any great extent. What are the chances it could do that again? That is a precedent that could be set. I do not understand why we do not transpose pillar 2 ourselves, like other countries throughout the world.
I acknowledge it is a very significant moment. The European Commission will be bringing forward a directive regarding this change. The reason it will do that is that most of the changes that have been made through the OECD base erosion and profit shifting, BEPS, process have been implemented via a directive. We will have to consider that directive carefully when it is published and I anticipate it will be published at the end of December. I am well aware of the precedent and consequences of that approach, which is why the engagement I had on this agreement was not only with the OECD but with the European Commission regarding my confidence the directive would look to implement the OECD agreement, and that is it.
The Deputy was right to say that, as it moves forward, it will move forward in ECOFIN and operate on the basis of unanimity. It is worth acknowledging a benefit of this agreement being implemented via directive is that it must be consistently implemented across all the European Union. If we are in a situation where we want to have confidence that nobody is undercutting a rate we are faithfully implementing, then implementation via a directive has a benefit in managing that concern. However, I will be scrutinising that directive very carefully when it comes forward and I expect it to be published at the end of December.
It is fair to say this and the previous Government have been pulled kicking and screaming with great reluctance and resistance into reforming corporation tax in recent years. I remember talking to the Minister’s predecessor, Michael Noonan, about the BEPS process ten years ago and the reluctance the then Government had initially in regard to that. Ireland has suffered significant damage historically from the international reputation that exists around the tax haven status Ireland has had in the past. Bargain basement corporation taxes have a number of negative effects. Obviously, they are one of the key tools of tax injustice, which funnels money from the many to the very few. One of the biggest crisis in the world is the concentration of wealth in the hands of so few individuals in terms of the number of billionaires in the world, and tax injustice is one of those tools.
It is important we discuss the fact low corporation tax is considered in economic terms a strategy to allow for Third World countries, typically, to improve their economies in a short period of time. It is very seldom that low corporation tax is seen as an end strategy. Usually by the time foreign direct investment comes into a country and helps it develop, that country can develop more of an indigenous sector which is stronger. That is not to say foreign direct investment is not important, attractive and needs to come to this country and we need tools to attract it, but foreign direct investment, like any investments, is also based on issues such as goods, value, inputs, access to markets, good skills, good communications technology and good transportation infrastructure. Investment in those allow for Ireland to remain an attractive place to do business in future despite the increase in the corporation tax. There will be a need for Government to focus on making sure those other competitive advantages are worked on significantly in the next while.
I do not know how the €2 billion cost is quantified by the Department. How does the Department come to the understanding of a €2 billion cost? Is it because of taxes that would be paid in jurisdictions in which the income is earned rather than in the states in which the company is located? I know the Minister approached that question slightly in the last engagement.
I agree with the previous speaker that it is a significant break with the policy this country has had that it would be 100% sovereign when it comes taxation issues. Transposing a European directive on taxation is a significant break. There is no doubt, like any of these breaks, it is the start of a new process in which the European Union is likely to have or at least demand more influence on our taxation policy.
To return to the earlier exchange so as to inform the questions Deputy Tóibín will have, I shared the global figures earlier. From a national point of view, out of the 1,500 subsidiaries registered in Ireland, 56 have a headquartered presence here and they are the companies that would be in scope with regard to pillar 2.
To deal with Deputy Tóibín's question on how we are developing the revenue laws, the summary he has offered of it is pretty correct. What we are doing here is expecting the taxation incidence will change from where value is registered to some of it being generated where the consumption occurs. We will see a shift in taxable rights because a share of those taxable rights will now be determined by where the consumption of a service or good happens. As the Deputy said, I went over this with Deputy Doherty insofar as I can. When we are in a position to update the guidance we have given on what will be the overall revenue impact, we will do that.
On Deputy Tóibín's point on sovereignty, I take a different view from him on that. We are, through the European Union, sharing sovereignty generally. I do not believe that is always the same as losing sovereignty. Because this will be handled via a directive, it is being handled in an environment in which it will require the consent of all member states for this directive to move forward. I expect we will see a directive published by the Commission that will be in line with the expectations of the OECD agreement.
Would it be fair to say the BEPS process and this particular process regarding corporation tax have evolved out of a frustration by many countries across the globe with countries like Ireland which have been outliers in corporation tax? Many other countries have felt Ireland has unfairly used low corporation taxes to attract inward investment. Had Ireland been less focused on low corporation tax as its main competitive plank historically, we may not have come to this situation and we may not be talking about a €2 billion loss in the level of corporation tax the country, as the Minister said, is likely to experience.
No, I think we would have come to this point anyway. I do not believe it was due primarily to where we are with Ireland’s rate. The evidence for that belief is the fact the OECD process up to this point has not been focused on the rate. It has been focused on other elements of international tax plans, international tax co-ordination and co-operation. The entire BEPS process up to now has not been focused on the rate but has been making a set of other changes in tax policy across the world.
Some countries had a particular focus on Ireland and where we stood on a lower rate. However, I am not sure that provides a retrospective argument for Ireland having a lower rate in the past because that lower rate worked for our country and played a valuable part in attracting in foreign direct investment. I believe Ireland still having a low and certain rate will be very helpful and important for our competitiveness in the future.
I thank the Minister for coming to the meeting. Before I ask about the impact on Ireland arising from the OECD agreement, I want to ask about something that caught my eye. I see that extractive industries and regulated financial services are excluded from the scope of the agreement. Does the Minister understand why that is the case? Should it be the case? Does it not send a poor signal, particularly given we are in the middle of the COP26 negotiations at the moment, for extractive industries, in particular, to be excluded from this agreement?
I certainly know why it is the case. It is the case because some of the larger economies within the G7, which are trying to provide the framework for this to move ahead across the world, had interests in the extractive sector and the regulated financial services sector. Having been involved in this process for over four years, it is one of the catalysts of the process and one of the things it moves forward is countries stating their national positions and looking to have those national positions recognised in the agreement at the end. It is there because some of the larger economies involved wanted to see recognition of sectors they believed to be important.
I thank the Minister. He might proffer his view as to whether those industries should have been excluded. I will move on to my next question because I know time is pressing. There is obviously uncertainty about the impact of decisions that will be made by US multinationals in light of the changes. We saw in 2015 very significant flows of intellectual property, IP, assets being booked in this country. I want to understand what risk assessment the Department of Finance has undertaken. We saw the massive swing of assets into Ireland in 2015 but there is the potential of a major swing out in future years. Much depends on US tax policy but some of it will also be coloured by the OECD agreement. What forecasting or assessment has the Department undertaken with regard to that threat or risk?
That is captured in the figure of €2 billion we have shared to date. The Senator suggested there is a possibility or risk of those assets moving from Ireland. I would not at this point consider that a large short-term risk but it is certainly a medium-term risk. A number of different things could trigger it. It depends on larger economies and their tax treatment of these issues. It will depend on the detail of how the OECD agreement is confirmed across next year. Movement of assets out of Ireland could also be driven by a loss of confidence among those who have registered IP in our regarding how it could be taxed in the future. That would be a result of domestic decisions in Ireland. The impact of IP on our national income is an issue. I do not mean national income as defined by tax revenue but in the overall definition we use to measure the size and scale of our economy. It is a risk of which we need to be aware. When we move to the detail of how the reallocation of taxing rights will be managed, my officials and I will be very aware of that concern.
I thank the Minister. I have two more brief questions. Is the digital services tax agenda now firmly off the table, particularly within the EU? I know that is referred to in the text of the agreement. The Minister spoke earlier about 100 companies. We know there are four or five mega companies that are media platforms or involved in information technology services. Is the digital services tax agenda firmly off the table?
What safeguards or provisions will be put in place in domestic legislation or may arise from the OECD agreement across countries to ensure that companies will not adapt to the rules? I am thinking in particular of the manner in which some companies' structures are organised with regard to parent companies and subsidiaries while other companies will organise themselves in the form of branches and are, therefore, treated differently for tax purposes, as I understand it. Are there plans to put in place safeguards so that the companies that are being targeted by this tax agreement will, ultimately, be the companies that will be taxed and will not be allowed to try to get under the thresholds that have been set out?
Digital service taxes are off the table at the moment within the EU because of the EU's expectation that the OECD agreement will be faithfully implemented by all those who have signed up to it. As long as there is evidence that is happening, I do not expect to see the issue of digital service taxes come back into credible consideration within the EU.
The second point the Senator raised is the reason we have done a lot of work in a number of Finance Bills on the whole issue of hybrids. A hybrid is a single entity that is taxed in different ways because the appearance of that entity in national tax codes varies. Because of one national tax code, a company could appear as a partnership but as something completely different in another tax jurisdiction because of how that country's tax code works. That is one of the reasons the whole issue of taxation with regard to hybrids received a lot of attention, for example, in last year's Finance Bill, if not the one before. These issues are best dealt with through the OECD because the best hope for consistency of treatment is through an organisation comprising as many countries as possible. That is why the OECD was successful with the base erosion and profit shifting, BEPS, process. Issues of definition and what is being taxed are dealt with through those kinds of processes. It is a risk that I still expect to be there in the future.
Gabhaim buíochas leis an Aire as teacht os comhair an choiste seo. I wish to ask about the corporate tax changes under the tax rules. I would be interested to know whether in an instance where the headquarters of a company is located in a jurisdiction with a lower effective tax rate than the jurisdiction in which the branch or subsidiary is located, the branch or subsidiary could then impose additional limited taxation. How will that work if a multinational has multiple branches and subsidiaries in multiple jurisdictions? I would be interested to know how that would work.
I welcome the Minister. I have two brief questions. Was any assessment done during the course of the discussions on this change to 15% minimum - I believe "at least" is gone from it - as to who might benefit most? The Minister said it will take time to assess what will happen, but some discussion must have taken place about who might benefit most from the change.
The next question relates to the concept of tax justice, which we have heard a great deal about over the last few years. How do the people promoting tax justice feel about the outcome? Are they satisfied? Also, are they likely to come back again to press for more?
Regarding the companies in this country with annual turnover of below €750 million, is any of them likely to be affected by competition from some of the countries benefiting from the changed tax regime?
My last question relates to aid for trade. Some of the countries pressing for the change have been noted to favour aid for trade and would see the changes as being a help to them in meeting their aid requirements and also in enhancing their trade against which their aid might be offset.
Some of the promoters of the need for the change from 12.5% have been heavily involved in aid for trade. They are providing aid to developing countries, but only on the basis of an agreed level of trade or an enhanced level of trade. How do the changes affect them?
I will deal with each of the questions in turn. What are the countries that will benefit from this? It would tend to be economies that have a low number of companies headquartered in them, that have large markets in which a lot of consumption would occur and that would have a rate that is higher than 15%. In those circumstances, they will benefit from the reallocation of taxing rights into their economies because one will see a movement of taxing rights into where the consumption happens as opposed to where the value is registered. The other countries that will benefit from this are developing economies. They will benefit from a combination of both the rate changing and the reallocation of taxing rights. Developing economies have been among the largest champions of this process so far.
With regard to those who are associated with tax justice and making the case for that agenda, the reaction has split into two different camps. One camp is willing to recognise that an agreement that covers so much of the world's economy and that gains agreement to a minimum effective tax rate is very significant. Even if they are disappointed with some elements of the agreement, some of those who have been calling for progress in tax justice have recognised the fact that a global agreement has been reached. There are others, however, and I will not name them, who have been disappointed by this outcome. They believe that this process should have yielded a higher minimum effective tax rate for the world.
Regarding companies that are below €750 million annual turnover, as long as they are below that threshold here in Ireland they will continue to pay the 12.5% and will not be subject to those parts of this agreement. As to whether people will be pressing for more, I expect they will. There will be those who, because they are disappointed with the outcome of this process, will be championing another process to take its place. However, I expect that we will spend so long actually implementing the agreement we have and then allowing it to be consistently implemented across the world that I believe there is a low possibility of another global process on corporate tax happening at present. We have a generation of work ahead of us to implement this agreement. Efforts in respect of international tax co-operation are more likely to happen elsewhere, particularly with regard to climate.
As regards those who are pressing the case of aid for trade, I expect that many of them are reasonably satisfied with this agreement because they will expect that their countries will be able to benefit in revenue from it.
I will now speak about the general scheme of the Central Bank (Individual Accountability Framework) Bill 2021, which was published in July and is currently being drafted. This Bill seeks to ensure greater levels of accountability, leading to better outcomes across the financial sector, and to provide financial institutions with the tools to address meaningful cultural change. The Bill provides for four main aspects along with the necessary technical changes to the existing legal process. All of these make up the individual accountability framework.
First, a key element of the legislation is the senior executive accountability regime, SEAR. SEAR will place obligations on firms and senior individuals within them to set out clearly where responsibility in decision-making lies, prescribe mandatory responsibility for firms which must be allocated to individuals carrying out senior roles to ensure accountability for all key conduct and prudential risk, and impose a duty of responsibility on each person in a senior role to take reasonable steps to avoid the firm committing or continuing to commit a prescribed contravention in respect of the area of the business for which he or she is individually responsible. Absolute clarity about who is responsible for what should foster a greater culture of personal responsibility. The Bill will set three sets of conduct standards: common conduct standards to apply to all staff in controlled function roles, junior and senior; additional conduct standards to apply to those in senior roles; and standards for businesses to apply to all firms.
These standards will require those to whom they apply to act with honesty, integrity and due skill, co-operate with the Central Bank, and pay due regard to the interests of customers and treat them fairly.
The legislation will also provide enhancements to the fitness and probity regime to improve the processes by which individuals are assessed for their suitability for financial services roles and investigated where there are reasons to doubt their suitability. The provisions in the Bill for breaking of the participation link will ensure an individual can be held accountable for his or her actions without the need to prove a contravention by a firm in which that individual participated. The introduction of individual accountability does not mean firms will no longer be held accountable for their actions with all responsibility shifted onto individuals. Instead, the responsibilities of firms and of individuals will operate side by side and complement each other. This is to avoid the danger of scapegoating individuals and to ensure that responsibility and accountability are properly and fairly apportioned.
The conduct standards for business underline the expectation that firms operate honestly and ethically in the best interests of their customers. However, participation in wrongdoing by a firm will continue to be a prescribed contravention. For example, where a firm engages in wrongdoing, the firm will be held accountable and the individuals who participate in that wrongdoing by the firm will also be held accountable. The duty of responsibility that will apply to senior executives under SEAR is a duty to ensure that in those areas of the business for which they are responsible, their firm complies with financial services legislation. Failure to keep their firm honest will be something for which senior executives can be held accountable alongside any wrongdoing for which they are personally responsible.
The harm done by reckless and dishonest behaviour in the financial services industry earlier this century has been enormous. Many people suffered terribly as a result and still live with the consequences. I am mindful, in particular, of those who lost their homes in the tracker mortgage scandal. Against that background, it is understandable that people would be angry and focused on the need to punish those responsible. This legislation will ensure that should similar wrongdoing occur in the future, it can and will be punished appropriately.
The objective of this legislation, however, goes far beyond this. This legislation is intended to underpin a thorough transformation of the culture in the financial services industry. With individual accountability, those working in the financial sector are likely to consider the implications of taking actions for which they can be found personally responsible with all the consequences that this involves. This should engender a shift to more responsible practices. Clearly, if a matter such as the tracker mortgage scandal were to occur in the future, it would be essential to ensure that those responsible could be held accountable but it would be far better to ensure that it does not happen again.
In conclusion, this legislation seeks to engender individual accountability to improve practices and culture within financial institutions while at the same time extending the sanctioning process.
I thank the Minister. We are finally scrutinising legislation that we have been calling on the Government and its predecessor to bring forward for years. In July 2018, the Central Bank asked for individual accountability for those in the financial sector and here we are at the end of 2021 with the heads of Bill. It is not even the full legislation, and the Minister tells us that will not be operational until January 2023. Those dates sum up the lack of urgency in the Government's response to the matter. Why has it taken so long for it to act on this matter? Why has it not been a priority for the Government? I am sure the Minister will tell us it has been a priority but the dates do not lie. It is not as if this has happened in a vacuum as the biggest ever swindle by a bank was uncovered in the past number of years. Hundreds of millions of euro have been wrongfully taken from people's accounts in the tracker mortgage scandal. It is more than the euro. There are the houses and homes that were lost. Young people were robbed of their opportunity to have a normal family life because people were put under serious financial restrictions. In all that time, there has been a delay in bringing forward this legislation.
Today is a big day because for the first time an individual - a senior executive in Permanent TSB - is under investigation with regard to the tracker mortgage scandal. That is to be welcomed. Nevertheless we need the proper legislation that the Central Bank has been seeking. Why has this taken so long and why has it not been a priority for the Government? If it has been a priority, why will it take from July 2018, when the Central Bank called for this, up to its proposed commencement in January 2023? In reality, it is a mirror image of legislation that has been operational in Britain for many years.
In speaking about it being operational in the early part of 2023, it is because I anticipate it will take time to get the legislation through the Oireachtas effectively and deal with the matters I am sure the Deputy and others will raise with me. In truth, the process of bringing this through the Oireachtas is only a small share of how long it has taken to develop this legislation overall.
The legislation has been a priority of mine and continues to be a priority but it required much engagement with the Attorney General and Central Bank to come up with a framework for dealing with the appropriate level of sanctions that the Attorney General is confident can be implemented and gets the balance right between the rights of an individual and the needs of us as a society to tackle this matter to put in place a more effective sanctions regime. We have had extensive engagement inside the Government with the Central Bank and the Attorney General on this matter. That has taken some time.
"Some time" has been four and a half years. It is four and a half years since the Central Bank stated it needed these powers. It has taken four and a half years for the Minister to produce not even the legislation but the heads of the Bill. It has taken four and a half years of engagement with the Central Bank and legal counsel. I simply do not believe that. If it takes four and a half years to produce this legislation, there is something seriously wrong. Banks were nationalised overnight. If the Minister gave this Bill the priority he speaks of, it would not have taken four and a half years.
I can keep on speaking when the Deputy speaks; I am well capable of doing it. It continues to be a source of interest to me that the Deputy makes the briefest of points to me and when I deal with it, the only reaction he can have is to try to shout down my response.
The point I made, and continued to make it despite the Deputy shouting at me, is that I am unsure why he should offer the nationalisation of a bank overnight as being the right way to handle an important matter. It is not the right way of handling it. I accept it has taken time to get to this point. The Deputy stated he does not believe the reason I offer for why it has taken this long but perhaps he can outline why he believes it has taken so long to do this if he does not accept my explanation. All I can outline to the committee is the truth, which is that I have been very committed to bringing forward this legislation. It has taken longer than I anticipated to try to resolve the different matters raised with me and my Department from a legal perspective. It has taken time to do that. I am nevertheless here with the legislation and I look forward to co-operating with the Deputy and this committee to try to make progress in bringing it forward. I accept it has taken time to get to this point.
I am not trying to shout down the Minister. I was trying to offer him the rationale behind my point. He said he did not understand why I mention the nationalisation of a bank overnight and I was trying to explain the reason. I will take a minute to further explain why I used that example.
When it comes to trying to rescue banks or bail out bankers, it can happen overnight. It has happened that way. I am not saying it was right or wrong but that the system can do that.
However, consider those same individuals, namely, the bankers, people who stole family homes from people, people who took hundreds of millions of euro out of bank accounts and people in financial institutions that have been involved in rogue deals and insider trading. When it comes to holding them to account, it is not done overnight, in a month, in a year or in two, three or four years. It took the Minister four and a half years after the Central Bank publicly requested these powers to bring forward heads of a Bill. He asked me to explain why I do not believe it is because of the legal difficulties. What is the reason? I believe it is that the Minister did not give this enough priority. This was not top of his agenda. Holding these individuals to account is not top of his agenda. That is the problem. If he, as Minister for Finance, said this must happen then it would not have taken four and a half years to get whatever legal clarity was required on this legislation which, in the main, is a mirror image of what is already in place in Britain. That is the problem here. That is my view. That is my consideration in relation to it.
I welcome this. We have been calling for years for this type of legislation. I wish to make a point on holding individuals to account. We see it in the inquiry under way by the Central Bank in relation to the former senior executive, I understand, in Permanent TSB. The issue here is if a person is found to be in breach then the maximum penalty is a €1 million. That is the current legislation. This Bill does not do anything to increase that sanction. Under the heads of this Bill, it might be head 5, it deals with that issue again. Does the Minister believe that is an appropriate monetary sanction for an individual? Let me give him an example. I mentioned insider trading and the finding made against Davy by the Central Bank. A number of those who were found against in Davy were shareholders of the company itself; indeed the 16 owned 33%. The sale of Davy benefited five individuals, a number of whom were involved in this transaction, to the tune of €185 million. What detriment is there if you are playing for those type of stakes and that type of reward? How is a sanction of €1 million sufficient? The question my colleague asked last week was: what provisions are in this Bill to ensure this will be personally sanctioned against the individual, as opposed to the company paying the bill for the individual or individuals concerned? We ask this because the individual who could be found against could be a senior shareholder or indeed the CEO.
I thank the Deputy. This has absolutely been a priority of mine. I have spared no effort or language in being clear in my views regarding the scandal of the tracker mortgage issue. Banks have been fined as result of it. Further action has been indicated today. To create the inference that nothing has happened during that period would be wrong.
No. From the question the Deputy put to me earlier on, an outside viewer looking in could easily form the view no sanction has happened since the tracker mortgage scandal was detected. It has happened.
The Deputy was making the point earlier on about tracker mortgages. It is relevant to this debate to acknowledge that under existing legislation action has been taken. That is relevant. It is also relevant to acknowledge, which the Deputy will not so I will make the case myself, that when, in part due to the work of this committee that I acknowledge, I was explicit in condemning the behaviour of the banks and the behaviour and the culture that led to the tracker mortgage scandal happening and how it was dealt with. I reiterate that today but acknowledge legislation and powers which have been used in dealing with the tracker mortgage issue.
On whether €1 million is of sufficient magnitude for sanctioning of individual behaviour, I believe that for the vast majority of people €1 million is an exceptionally large fine. However, as we take this legislation through the Houses I am willing to listen to and consider the views of Members on this. It is also something the Central Bank could consider but for the vast majority of people €1 million is a gigantic amount of money. As to whether this legislation deals with whether that individual can have the fine paid for by his or her company, as far as I am aware at the moment it is not possible to legislate with regard to that issue. However, again I am happy to hear the views of colleagues on that point too, as we take this Bill through the Houses. My preference is to have an individual sanction regime paid for by an individual.
That is exactly what this needs to be. Everybody knows there were fines levied against the banks for the tracker mortgages scandal. That is not the point but it is a good diversion from the Minister. The point is the Central Bank publicly told us all, but more importantly it told the Minister, and he is not a commentator but the Minister for Finance. He is the only person who can bring forward this type of legislation. He is the only person who can do it and the bank asked him for these powers to hold individuals to account and it has taken four and a half years. The Minister must account for that and he will say there are legal issues and whatnot. I just do not buy that. That is the reality of it. The Minister has form in stalling legislation, putting back legislation, nine months' delay in this and a year's delay in that, whether it is to do with insurance or other areas. We have another piece of legislation, which is incorporated into this, about providing misinformation to the Central Bank and making that an offence.
To get into the bowels of this, the issue of a company actually paying this fine needs to be dealt with in this legislation because the Minister is 100% right that €1 million is beyond the wildest dreams of most people. However, in the case of the people who are, in the main, carrying out these types of activities or sanctions, €1 million is what some of them got as bonuses in financial institutions. Some of them own a large amount of the financial institutions because of shares and so on they get as part of their annual bonus or otherwise so it needs to be dealt with.
Let us say a senior employee takes all reasonable steps to avoid his or her firm committing or continuing to commit a prescribed contravention and that contravention continues but he or she reports that issue further up the chain of command. Would the framework hold those further up the reporting chain accountable and what defines "reasonable steps"? I am referring to somebody more junior who, under the mapping structure, has responsibility for a certain area in the financial institution and reports it to the CEO. If the person more junior has taken reasonable steps to stop it can the CEO be held accountable even though the former is the person responsible for it?
The charges he made against me are all designed to create an illusion nothing has happened since the tracker mortgage issue was identified. It is relevant to the deliberations of this committee that fines have been levied, the Central Bank has used the powers available to it and today there has been a development with regard to that investigation. What the Deputy is looking to do, and I want to call it out, is to create the inference my motives here are about trying to protect some elite or trying to protect those who are already powerful or wealthy. That is what the Deputy is doing and he is wrong. The inference and the suggestion he created by the accusations he laid at my feet earlier on that little or nothing has happened since the tracker mortgage scandal first emerged is wrong and he knows it is wrong. Companies have been fined. The Central Bank has taken action.
There has been a development in that today and that has happened due to powers the Central Bank has. That is a matter of fact.
The Deputy put a question to me about whether a senior executive would be accountable if he or she became aware of information. The answer to that question is "Yes". As to how that responsibility would then be defined, it would be done with regard to the competencies and responsibility that person is meant to hold and whether they have been infringed by him or her having information that informs him or her of practices that the company should not have been involved in and that he or she did not take action about. The short answer to that question is "Yes".
I welcome that but I want to make the following point. I was one of the first people to raise the issue of tracker mortgages in this committee many years ago and to call it out. The reason I became aware of the issue is an extended family member of mine was one of the first people to take a case to the ombudsman against Permanent TSB, a bank in which the State owns the majority. I sat in this person's kitchen and I know what that person went through. Unfortunately 40,000 other people have gone through the same situation. To call out my motivations about holding individual bankers or those in the financial sector to account is wrong of the Minister and it is beneath him.
The Minister answered a question that I never asked. I have repeatedly made the point that four and a half years ago the Central Bank looked for these powers to hold individuals to account. They cannot be used retrospectively for tracker mortgages. We are not that stupid. This is about diverting and making sure a second tracker mortgage scandal does not happen or that the Davy stockbroker sale of a bond to itself does not happen again. In cases like the insurance companies lying to the Central Bank, as the former Governor of the Central Bank told the former Minister, Michael Noonan, many years ago or of many other scandals, this would not happen without recourse.
It has taken the Minister four and a half years to bring forward this legislation. If that is the Minister giving priority to something, I would hate to see something he has not prioritised because that is ridiculous and scandalous. When the Central Bank publicly calls for additional powers to hold individuals to account, the Minister should be moving heaven and earth to do that. He has not done that; he has taken four and a half years to do it and that is my problem. I welcome that the Minister has belatedly done it and I will engage with this on Committee Stage as we want to strengthen parts of the Bill. When the Central Bank is looking for more powers to hold individuals to account those powers should be given. The only conclusion I can draw from the Minister's laissez-faireattitude and the delay in bringing this forward is that it is about protecting the elites. The Minister would have prioritised it if he genuinely wanted to hold them to account. If I was in the Minister's position, I can guarantee that it would not take me four and a half years to mirror legislation that has been in operation in Britain for years and to bring it before the Houses of the Oireachtas.
The Central Bank called on me to bring in this Bill in May 2018. I have acted as quickly as I could on that. That is not four and a half years ago but I accept it is still a long time ago. I have used that time to bring forward legislation that is robust and that will be effective. That is what I have done but it has taken time to get to that point. The Deputy is not too bad at diversionary tactics himself. I never created any inference on his motivations.
I am more commenting on those working in the troll farms than the Deputy. I have met families who have been affected by this as well. I have sat with them and I have heard of the anguish and suffering inflicted on them. I understand why they are so eager to see action taken, which has happened. In the legislation I am bringing forward, after some time which I have used to try to get this right, I am trying to put in place measures that can change our culture and play a strong role in preventing this happening again.
I thank the Chair for allowing me to interrupt Deputy Doherty and the Minister. I want to ask the Minister a couple of questions about the provisions contained within the heads of Bill. The Minister will be aware that the additional conduct standards dealing with people occupying senior positions have been provided for in the legislation and that is appropriate. Does the Minister believe the legislation is sufficiently robust to ensure that people who are not designated as occupying senior positions but who in fact are the controlling minds within the financial services firm, will also be covered by the legislation?
I do because this legislation covers not only those who would be subject to additional conduct standards, which would be the most senior roles, but it will also cover a large number of employees who will be subject to conduct standards and a more normal base level of expectation. Maybe what is guiding the Deputy's question and thinking on this is our expectation that this will mainly be implemented through company policy, rather than through the sanctions that will form part of the additional conduct standards. Overall, I believe it will have the effect we are looking for.
I want to ask the Minister about the participation link. It is important and beneficial that this link will be broken underneath these heads of Bill. Am I correct in thinking the participation link remains under head 5 of the general scheme, which deals with the duty of responsibility of persons performing senior executive functions?
The Minister spoke about the importance of ensuring that individual responsibility was effected through these additional conduct standards. If a sanction was to be imposed on an individual under this new legislation, it appears to me that there is nothing to prevent the employing company from paying that sanction. Is that consistent with the Minister's desire to ensure that it is an individual sanction for which the individual is responsible?
As I said earlier on, it would be my strong preference that we be clear that it would be the individual who would pay the fine. Up to this point and as far as I am aware, it is not possible to legislate for circumstances in which an employer may pay a fine on behalf of an individual. Again, as we take this legislation through the House this is something we can debate further and I am happy to listen to the suggestions of colleagues on this.
That is something that could be made in part of a licence or any of the forms of regulation that apply to the financial services firms. When will this legislation be introduced into the Dáil and ultimately enacted?
We will publish it early next year but I would anticipate, given the scale of the legislation and its complexity, that it could easily take us up to the recess of next summer to get it done. This will be a-----
Of course it is and I will spare no effort in bringing it forward but I anticipate that there will be a fair amount of consideration and debate on it. Any delay in it being implemented once it is published, however, will not be due to lack of time from me in the Oireachtas.
I will move to a slightly different angle on this. I raise the question of the Central Bank's control under the Bill and the general role of the Central Bank, which licenses the activities of all financial entities in this country, in particular in respect of the investment companies that have bought many of the impaired loans. All of the banks leaving this jurisdiction are either in the course of selling off or have sold off their loans already. That brings me to the point I have made numerous times over the last ten years.
Some of the new lending institutions are dealing for the first time with the account holders that were impaired, for want of a better description. Some are thoughtful, helpful and sympathetic, and try to help out in every way possible. Some are not, however, and they go out of their way to attempt to dismiss third party representatives. Many Deputies, as public representatives, have interposed ourselves into that position in order to protect, insofar as we can, people who became heavily indebted in recent years and whose problems have not yet been resolved. Can we be assured that the lending institutions coming into the marketplace and their agents will have due regard for the personal circumstances of the individual account holders with whom they are dealing?
We have such extensive legislation in place to try to protect individuals if they end up in a vulnerable position, particularly if their mortgage is part of a loan book that is sold, so they receive a very high level of protection from our laws. I believe we have done that. I am aware that Deputy Durkan is frequently contacted by people in his constituency and beyond who are in difficulty. The figures I have show that, in the majority of cases, the legal framework in place leads to a resolution of many of the difficult matters that bank customers may face. I believe we have the balance right and that those involved in delivering financial services in Ireland are aware of their obligations. We will always become aware of cases where this does not happen in the way we want. That is the reason the Central Bank is important. Deputy Durkan, as a public representative, also plays a vital role.
I accept the Minister's point that it generally works out but there are exceptions to that. I am not certain whether we can adequately deal with those exceptions. There are numerous cases involving properties that were repossessed by the lending institution up to ten years ago and then left idle. They have now been sold on to an investor which will move into top gear to dispose of the property regardless of what might be the consequences for the original borrower, who is considerably out of pocket, obviously, because the debt has accumulated over the period. The borrower may not be well treated by the agents of the financial institution who are now dealing with him or her. This applies to ordinary home borrowers and business people who find themselves in the position.
As elected public representatives, we are not shrinking violets and we will certainly take on the institutions. However, there is a little whiff of arrogance developing in that the institutions believe they have the right to do what they have the right to do. In other words, we should realise that they are in business and this is what they do for a living. That is fair enough but I have concerns about how they do that particular part of their job. Would it be possible to encourage them to have regard for the personal circumstances of the people concerned and the extent to which their lives have been affected by the failure of the banking system to look after their interests when this began ten or 12 years ago and the whole thing fell off the screen? I am not blaming anybody for allowing that to happen. However, it should not follow that somebody makes a killing from buying somebody else's difficulties. It should not automatically follow that these institutions can make a major coup out of somebody's distress.
There are certainly no shrinking violets in this committee. Deputy Durkan and all the other members face these issues regularly on behalf of their constituents. Given the legal framework we now have in place and the change that has happened in our banking sector, I believe that sensitive and vulnerable issues are dealt with in a fair way in many cases. I acknowledge that there are also a number of cases where people in difficulty, on many occasions not due to anything they have done, are not happy with the way they are treated or the response to the situation. That is why the Central Bank, Ombudsman and Oireachtas can all play a role in those situations.
During Covid, we have seen many individuals and small businesses come under huge strain as a result of something that was wildly beyond their control and in which they played no part. I believe that in the majority of cases our banks dealt with that in a fair and responsible way. That was aided and abetted by changes made by the regulator during the Covid period and measures taken by the Government. I believe the crisis was dealt with fairly and well in many case.
The Deputy may do so provided her questions are on the topic. We are finishing at 3.15 p.m. and I want to ask the Minister a question or two. I can bring the Deputy in first in the private session.
In that case, I will ask my questions together. I thank the Minister for the discussion thus far. Head 4 of the general scheme states that the "legislation will not define the sectors to be included in SEAR, as this will be provided for by the Central Bank Regulations" and that other sectors "may be brought within the scope of SEAR in the future, after the legislation is enacted." Will the Minister clarify what sectors are not envisaged to fall under SEAR in the medium term, once the legislation has been enacted? Will these be, for example, the payment gateways such as Revolut, Stripe and the buy-now-pay-later company, Klarna, which is to enter the market in the South?
My next question relates to how the rules would apply to persons such as in-house lawyers. I do not see a specific provision relating to such persons but I am aware that this matter was debated in Britain when its regime was being introduced.
At our meeting last week, I raised with the Central Bank the issue of directors holding multiple directorships simultaneously. This practice, whereby individuals can hold multiple directorships of companies, continues. The number of directorships individuals hold at the same time can run into the hundreds, which would cause concerns about their ability to perform their fiduciary duties and about wider accountability issues in relation to that. I am aware there can be limitations on the number of directorships that can be held for public companies but not for private companies. Should this matter be addressed in the Bill?
In the initial phase of the application of SEAR, it will be credit institutions; insurance undertakings; investment firms which underwrite on a firm commitment basis and-or deal on their own account and-or are authorised to hold client moneys and assets; and third country branches of the aforementioned entities. On the entities that could be brought into SEAR in the future, the main ones are the types of companies that are currently excluded, namely, credit unions and parts of the payments sector, as referred to by the Deputy. These will be excluded in the first and probably lengthy phase of the application of this legislation. It will be open to the Central Bank to decide what sectors it wants to include in the future.
The Deputy's second question was about in-house lawyers and whether they will be subject to SEAR. If an in-house lawyer holds a senior executive function, and we have given examples of what they could be - for example, an executive director - then he or she will be subject to this legislation. If, however, such people are outside of the pre-approved control function roles, they will be subject to the conduct standards within the legislation. Again, as we take this legislation through, I am happy to hear the views of colleagues in that regard, but I think the balance as we have it at the moment is right.
As for the issue of people holding multiple directorships, given the level of responsibility they have to hold as non-executive directors in financial institutions, I think the day when people held multiple directorships is now gone. I would certainly be surprised to find somebody who is a non-executive director of multiple companies that could be subject to this legislation because the responsibilities on them now are so great. The Deputy is right that there is a limit on the number of directorships of public companies one person can hold. Would it be possible to put one in place for the private sector? Probably not, I imagine, because of the balance that is there about recognising the rights of individuals. Equally, however, I would be surprised if any director coming within the purview of this legislation were to hold multiple directorships.
We will finish, I hope, at 3.15 p.m. I want to ask some short questions of the Minister. Some time ago we held a hearing and listened to the case made by EBS, its tied agents and AIB. The Gallery was full of those tied agents. A number of them have passed away since then, but the issue trundles on. Is there any way the likes of AIB and the issue relating to tied agents, if it were to arise again, including retrospectively in the case of EBS, could be dealt with within this legislation? There is no doubt in my mind, having listened to them and having read the various papers on the issue, that the bank is just not willing to move one way or the other and has the matter tied up in court.
I am not sufficiently informed on that issue to give the kind of answer to it that you deserve. After the meeting, I will consult with my officials on the issue and give you a response in writing on it by the end of the week.
Thank you. I am not bothering you with a mundane issue. It is not a mundane issue. It is a really serious one and a terrible reflection on AIB.
May I ask you your opinion on a banking forum, Minister? I have mentioned this to you in the Dáil. In line with the legislation and what is going on generally in banks now and the change of landscape, do you see a banking forum as something worthwhile that could be established through your Department for a short period or a medium period and that would report back to you on how the stakeholders of all kinds see the landscape for the future?
Very shortly, I will bring to the Government a recommendation for a review and reassessment of banking policy for our country, given the many different issues you have just touched on, Chairman. As part of that process, I will invite submissions from different stakeholders to hear their views on the future of Irish banking. To be explicit, will I create a forum to lead to the development of policy? I am not planning to do that because I think the setting of policy should sit purely with the Government and the Minister for Finance. However, I will announce a review and, as part of that review, I will invite submissions from stakeholders on the issues they have raised and consider them carefully.
I will push you a little on the banking forum. I am not talking about a permanent banking forum that would continue to roll on; I am talking about a banking forum made up of all stakeholders that would make a contribution verbally and perhaps make a statement together afterwards relative to and feeding into the legislation. You may say written submissions are just as good. I just thought there are such changes going on right from the bottom up, from the moneylender right to the commercial banking sector, that it would be helpful, and I am just putting the proposal before you again.
My next question is about the report this week, which may have been framed differently from what is actually happening. I refer to cuckoo funds and the funds generally and the Minister going on tour to attract them to the country. What did you make of that?
I am not going on any tour, Chairman. In Housing for All there is an action step against that to look at what kind of engagement can happen that might lead to more homes being built in Ireland. The reason funds can play a role in the delivery of more homes here in Ireland is that it is a way of channelling savings in other countries into more homes in Ireland, and that is it. As part of Housing for All, it has been suggested that I engage with how that can happen. I have no such engagements planned, but that is an action step in Housing for All.
I alert you, Minister, although I am sure you are well aware of it, to the public disquiet around vulture funds and how they acted and continue to act against individuals who are caught in bad mortgage or bad loan situations. Something like attracting them into Ireland has to be treated exceptionally carefully.
We do not want any more of the carry-on we saw with the vulture funds during the course of the crisis.
The last thing I will say to you, Minister, since you mentioned the tracker mortgage issue, is that for the vast majority of those involved in that issue, their individual cases have been dealt with. However, we heard recently from Tony Lawlor, who is an individual with a difficulty with Bank of Ireland. He was before the committee, so the name is public and he made his case and so on. There are cases like his that still linger on in the banks with little or no outcome, with the bank just taking a position to beat down the client and not to give him or her a fair hearing. If a hearing is given, it is given within the bank itself so it is not a totally independent one. I am talking about legitimate, proper problems that individuals are having. I am not talking about people who are deliberately trying to avoid repayments. Mr. Lawlor is not trying to avoid repayments and we have done everything here to highlight the case and other cases with AIB and Bank of Ireland with little or no traction, or maybe a little traction and no outcome. In your meetings with the bank, do you ever tell them to prioritise those cases that are on the long finger and try to get them dealt with in the most humane manner possible?
Yes. He has been exercised by all of this. I respect the fact that you do not deal with individual cases. I am not asking you to do so. I am just asking that you emphasise with the banks that it is high time those cases that are lingering on were dealt with. What you get from the bank is an acknowledgement of the case being before it and it could be another five years before you get a letter from the bank saying, "I am sorry about the delay. It is taking some time but we are still examining your query or your complaint." It goes on and on and on. The individual on the other end is not only getting older but is having to carry with them in their lives the stress and the trauma and everything that means.
There cannot be a significant number of cases. Similar to the situation in respect of the Educational Building Society, EBS, it is time for these banks to draw a line under the cases and use their common sense and decency, if they have any decency left, to approach the cases and sort them out. I ask the Minister to tell the banks to deal with these cases in a sympathetic manner.
I will get briefed on the circumstances of the individual who appeared before the committee. Of course, I will see what the status of this issue is with the banks, but I have to recognise the fact that the Central Bank has been through this issue and the ombudsman has played a very active role in it and I cannot second-guess or undermine the judgment or views they have reached in respect of the matter.
As the Chairman was introducing his question, he referred to funds and the role they have played in Ireland in the acquisition of loan books and distressed loans in the recent past. To frame this clearly, this is a different matter. The issue referred to in Housing for All relates to how new homes can be built; it is not about the issue that is of great concern to the Chairman, as it is to me, in respect of how we can support and protect those whose loans have been purchased. Those are two different matters. I am aware of the concern that many people have with regard to the operation of funds and larger investors. Any role they play must also be seen in the light of the Government commitment to housing that, for the budget this year, was €6 billion. That is to fund building homes directly, homes being built through approved housing bodies and many initiatives that the Minister, Deputy O'Brien, is implementing.