Aidan Davitt (Fianna Fail)
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We have apologies from Deputy Scanlon.

The purpose of today's meeting is to continue our discussions regarding the planning for Ireland's upcoming Presidency of the Council of the EU, with the focus on developments with the savings and investments union and related matters. We are joined by Mr. Pat Lardner, chief executive and Mr. Adrian Whelan, council member, Irish Funds. They are both welcome to the committee. The savings and investments union is a significant proposal of the European Commission, and one that may offer many opportunities for investors, businesses, start-ups and, most importantly, EU citizens. The Irish Presidency arrives at a crucial juncture in these proposals, which is why the committee is holding the meeting today.

Before we proceed, I must read out a note on privilege and some housekeeping matters. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity either by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that may be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members of the constitutional requirement that they must be physically present within the confines of the Leinster House complex in order to participate in public meetings. I will not permit a member to participate where they are not adhering to this constitutional requirement. Therefore, any member who attempts to participate from outside the precincts will be asked to leave the meeting. In this regard, I ask any member partaking via MS Teams that prior to making their contribution to the meeting, they confirm that they are on the grounds of the Leinster House campus.

I call Mr. Lardner to make his opening statement.

Mr. Pat Lardner:

A Chathaoirleach, a Theachtaí Dála agus a Sheanadóirí, go raibh maith agaibh as an gcuireadh a thabhairt dúinn inniu.

I am the chief executive of Irish Funds. I am joined by Adrian Whelan, a member of our governing council, who brings extensive knowledge of EU financial policy and regulation, which will be a key focus during Ireland’s Council Presidency. Irish Funds is the voice of the funds and asset management industry in Ireland, representing 150 firms operating across the country. Ireland is a global centre of excellence in funds and asset management, exporting investment expertise and solutions around the world. Connecting investors with the best expertise globally to meet their needs is a key ingredient of our success. In directly employing 20,000 people all over Ireland, our industry is a success story and something we should be proud of.

The savings and investments union, SIU, launched by the European Commission in March 2025, is the dominant strategic priority in EU financial policy and will be high on the agenda during Ireland’s Council Presidency. Its sweeping ambitions include moving retail savings at rest - cash or deposits - into investment at work, integrating EU capital markets and reducing financial fragmentation that makes cross-border investment more costly and complex than it should be. The SIU is the EU policy framework that validates Ireland’s role as a financial centre, and leading the SIU agenda during the Presidency is both an opportunity and a strategic imperative for Ireland.

The Presidency is a unique opportunity to speak proactively and positively about our funds and asset management sector to the many senior visitors to our shores and via the increased media focus on Ireland. The global leadership of our member firms and those companies that are considering where to locate their activity will pay close attention to our Presidency and how this reinforces or refreshes views of Ireland as a premier financial centre that has a compelling offering and operating environment. Ireland should position itself as a beneficiary of EU financial integration and a constructive, knowledgeable and trusted facilitator.

Our approach and planning around Ireland’s Presidency recognise the linked importance of contributing in a meaningful way, sharpening the competitiveness of Ireland’s export capability and highlighting how this is evolving in key areas, and taking the opportunity to kick-start participation in financial markets by Irish citizens. Within the SIU initiative, the market integration and supervision package, MISP, published by the Commission in December 2025, will shape the EU’s and Ireland’s funds and asset management industry for the next decade.

We have a number of priorities for Ireland’s Presidency. The first is the MISP. This is a comprehensive legislative package that proposes amendments across the entire regulatory framework, impacting investing, such as asset management, trading, what happens post trading, innovation and supervisory structures. The Commission argues that its proposals will address EU capital market fragmentation, remove barriers to investment and drive supervisory convergence. It is critical that we do not negatively impact those things that are working well. This includes undertakings for collective investment in transferable securities, UCITS. For those not familiar with UCITS, it is one of the EU's most successful exports, a trusted "kitemark" for investment funds recognised by investors in over 90 countries worldwide, and Ireland’s success is closely linked to it. The Irish Presidency is an opportunity to ensure the MISP strengthens that success rather than inadvertently undermining it.

The second priority is the EU securitisation framework review. Securitisation is a way of recycling money through the financial system so it can fund more of the real economy. There is broad agreement on the need to revitalize Europe’s securitisation market.

The third priority is the pensions package. The EU pensions package is trying to help more European citizens save adequately for retirement, and to channel those long-term savings into productive investment in the European economy and beyond.

The fourth priority is SFDR 2.0. This is the sustainable finance disclosure regulation, which is the EU's attempt to fix its own rules on sustainable investing, making it simpler for ordinary investors to understand what they are buying when they choose a sustainable or green fund solution.

Our approach will focus on advancing reforms that deepen capital markets, ensuring investors have access to the best investment expertise, driving regulatory simplification and burden reduction, while protecting trusted investment vehicles and approaches that help unlock funding for companies and improve the long-term financial well-being of citizens. Our planning for the Presidency, which commenced last year, has added new activities and rescheduled existing ones, both locally and overseas. Key activities include, first, a Presidency kick-off reception in Brussels in June. In conjunction with the Banking and Payments Federation Ireland, BPFI, and Insurance Ireland, we will hold an informal kick-off reception with invitations to officials from across the EU institutions and member state representations. This will show Ireland's commitment to seriously engage in the SIU and related financial services debates. Second, Eurofi takes place in Dublin in September. This policy and regulatory forum, which occurs during each Council Presidency, provides an opportunity for us to host events during the week of the conference. Our activities will focus on both senior public officials and C-suite executives, as well as member state financial attachés who will be travelling to Ireland. Third, our annual conference is in Dublin on 1 October. This is our flagship industry event, with over 500 senior industry professionals present, and with a significant proportion travelling from overseas. The agenda and engagements will showcase Ireland’s leadership in fund and asset management, support key EU and Irish policy priorities, such as the SIU, and offer multiple touch points between senior executives, policymakers and officials. The European Commissioner for Financial Services and the Savings and Investments Union has confirmed her participation. Fourth, given the strong regional footprint of the industry, we are also exploring a regional co-hosted event.

In conclusion, Ireland's funds and asset management industry does not simply operate in Europe. It helps Europe's capital markets function. It channels household savings into productive investment, finances businesses and supports long-term financial security for EU citizens. The Presidency is the moment to make that case explicitly and credibly at the highest European levels. We are happy to discuss these matters further with committee members during questions.

Aidan Davitt (Fianna Fail)
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I thank Mr. Lardner. We will take questions from the members.

Rónán Mullen (Independent)
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I welcome the witnesses and thank them for their presentation. I am sorry I will not be able to stay for the full duration of the meeting. A number of us met recently with representatives of the European Investment Bank in Luxembourg. One of the issues we discussed was the availability of capital for the critical infrastructure the country needs, and will continue to need as we go forward, with an emphasis, obviously, on housing. Ireland is in the fortunate situation of having a budget surplus for however long that lasts, and I hope it is for a long time. To what extent do the witnesses' work and agenda, specifically in the context of the Irish Presidency of the EU, intersect with that issue of funding for critical infrastructure, having regard to the development of a savings and investments union?

Aidan Davitt (Fianna Fail)
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Deputy O'Donoghue may ask his questions now and then I will ask the witnesses to respond to both him and Senator Mullen.

Robert O'Donoghue (Dublin Fingal West, Labour)
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I thank the witnesses for addressing the committee. This is one of the most important meetings of the committee since the start of the Dáil term. The proposals regarding the savings and investments union and the 28th regime are some of the most significant proposed consolidations of the Single Market that I have seen come through in many years. They are the two most important issues raised in the Draghi report. Unfortunately, I do not have to hand a copy of the regulations of 18 March from the Commission on the 28th regime, which means I will not be grilling the witnesses on those proposals. They will provide lighter reading after the by-elections. However, if they can, they might comment on the 28th regime.

On the savings and investments union, do the witnesses have figures for what kind of capital flows out of the EU and into Wall Street on a yearly basis? Once the initiative is implemented in full, what percentage of those moneys, which amount to billions of euro, do they expect will stay within the EU capital market ecosystem? Are they aware of issues with particular member states regarding cross-border investment? Is there push-back, for example, from states with larger stock exchanges?

With the 28th regime, we are looking at harmonisation of corporate law. I am unclear about the mechanism for how that is to operate in practice. I have not yet gone through it. There are three or four mentions in the proposal document of workers' rights. The usual concerns arise about a race to the bottom and cherry-picking of workers' rights across member states, particularly those with lower levels of worker protections. The worry is that they would be chosen over countries with higher protections. France, for instance, has 30 days of holidays while Ireland has 20 days. How do we ensure the lower standard is not the one chosen for the 28th regime? Will the regime have implications for the levying of corporate tax rates within the EU?

Mr. Pat Lardner:

I thank Senator Mullen and Deputy O'Donoghue for their questions. I will start with a response that covers both by explaining what our industry does. We look after other people's money. We have always believed it is for individuals to decide where they allocate their money. What we and our members do, as an industry, is bring together people who want to deploy their savings for investment with the expertise to do so. Where they choose to do that is a function of their own needs and decisions. It is not a role of industry to direct savings and investments. Indeed, one of the core reasons we have such a successful industry around this in Europe and in Ireland is to do with how things have operated right from when a lot of the directives and rules were introduced. This is particularly so in the case of undertakings for collective investment in transferable securities, UCITS, which is a readily available product that can be distributed both in the European Union and outside it. One of its key tenets is that it looks to connect the best investment expertise with a full range of investment opportunities, with the individual deciding.

How does that potentially have an impact on funding of housing and infrastructure? If individuals or institutions decide to allocate money for that purpose, that becomes a funding source. There is an export nature to what we do as an industry and what we are about is connecting people. We are exporting solutions such that an investor in Germany, France or Spain who wants to put his or her money to work can come together with like-minded people in an expert and regulated way to deploy that money. What we have seen is that the more people utilise that muscle of investing, their willingness and ability to deploy their money more broadly increases.

From our point of view as an industry, we will just encourage maximum access. On Senator Mullen's question, as people and institutions become more comfortable with investing, we should see that deploy itself right around the economy and in different types of investments. There is the ability to invest in two broad types of investments. The first are those investments that are publicly traded or publicly available on a stock market or exchange. The other type is harder to access because it involves private investments. That just means they are private businesses that are not publicly traded. As investment increases, and one of the things the savings and investments union will do is unlock that investment, we should see more money being deployed into infrastructure, housing and renewable energy. However, I cannot say to the committee that it is our intense purpose to direct that.

Deputy O'Donoghue asked about the amount of money that gets deployed in various parts of the world. There is a huge investment universe of investment opportunities. We last did some work on this back in 2021. At that point, we estimated that approximately €1.1 trillion of the money invested through funds domiciled here - not necessarily from people in Ireland, but from all over the world - was going back into the EU economies. I have not calculated all the numbers but I estimate that given the growth in the funds we have seen here, which creates employment and activity around the country, we are probably looking at a number in the region of €1.3 trillion to €1.4 trillion of that total. The net point is that if the savings and investments union works, and the amount of capital that is deployed increases, that is more likely to provide more funding sources for all types of investment opportunities, including those that reside within the European Union.

I am not an expert on the 28th regime but I can say that we are seeing mechanisms to do a couple of things more broadly. One is to try to ensure we simplify rules to make the European Union more competitive. Fortunately, we have a very well regulated and competitive industry here. Therefore, we are less concerned about what the 28th regime might mean in that regard because everything we do is regulated. The way we and our firms operate is to make sure - and this is where the Presidency is really important - that if we are providing in Ireland solutions that meet investors' needs and provide a really good operating environment, then people will locate activity here, which means there will be employment here. The best way to ensure people have rights is, first, to ensure they have a job, and our focus is very much on making sure we maintain a really competitive environment.

Going back to the original question about the savings and investments union and how it works, we see a very clear link between how we make Ireland's export capability really strong and an opportunity to create and activate an investing culture and investment environment here. We see both of those things as being important. The relevance from a Presidency point of view is that it will allow Ireland, which is already playing a significant role in helping to fund economic activity across Europe and globally, to position itself very strongly.

I will let my colleague add to those points.

Mr. Adrian Whelan:

There is a lot to address. On the outflow to the US, this is not just a European issue. Most global portfolios are heavily benchmarked towards global; that is the starting point. The mega-cap US stocks have skewed those benchmarks, so the natural standard or default position of investing has gone to the US. That is largely because of the very big technology firms. That is one aspect.

The other point is the difference between private and public investments.

If you look at private activity in Europe recently, both private credit and equity, a lot of it has been in European infrastructure, particularly to aid Europe's defence against Russia and so on, where the natural best investment is not just in returns but there is a local preference. What is interesting in the dialogue in Europe and in Ireland is we need to get people invested in the first instance without putting additional parameters or pressure on them to put it somewhere. If we get them into the best investment, there is a lot of behavioural science which shows that there will be a national preference. There are also concepts like environmental, social and governance, ESG, and sustainable investing, which happens. However, I would worry about conflating too many things for new investors. If we have to, in the short term, accept that having more investors in Europe means a proportion of that money goes to US companies, that is a good trade-off in the longer term. It is between tactical and strategic. The other issue is that a lot of US multinationals operate in Europe and in Ireland, so we indirectly benefit.

I am not an expert on the 28th regime either but I do a lot of work in that space. It is an interesting theoretical or academic exercise that is coming out of the European Commission. It is actually going to be very difficult. The 28th regime is supposed to enable firms to lower boundaries but the biggest entities, not just in financial services but in every industry, would have to have the capability themselves. There is a lot of road to go on 28th regime before that becomes effective. If you were to ask me the blunt question of whether it will make Europe more competitive, in the hierarchy of needs it would be at the mid to lower end. It is a really interesting concept because one of the fragmentations that financial services and regulation cannot deal with is property rights, taxation and insolvency laws. They are not even dealt with in MISP. Not to be negative, but there are things that happen in countries that are localised across sectorally that MISP itself cannot resolve.

Ruairí Ó Murchú (Louth, Sinn Fein)
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To be clear, do the witnesses represent funds that are domiciled here?

Mr. Pat Lardner:

We represent the organisations that allow investment funds to be created under European law, authorised and supervised by the Central Bank of Ireland. Those solutions, because of passporting and freedom of services under the EU, can then be utilised not only in the EU, which is their predominant use, but also outside the EU. In EU financial services policy terms, it has actually created some Kitemarks and product designations - we refer to as UCITS - which are globally successful, and because of that success and the export nature of what we do it has allowed economic activity, employment and tax revenue to flow into the Irish Exchequer. I hope that is helpful.

Ruairí Ó Murchú (Louth, Sinn Fein)
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That is 100%. Anyone who is operating here, including investment funds, asset managers and so on, are represented by the witnesses. They represent all of the heavy hitters that are operating here.

Mr. Pat Lardner:

Yes, firms that are regulated to provide regulated services internationally.

Ruairí Ó Murchú (Louth, Sinn Fein)
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I get the point made earlier that the witnesses do not direct where investment goes. We all know about the infrastructural deficits here. In a perfect world, any government would want to be able to direct where finance goes.

A lot of the deficits in infrastructure are not just impacting industry. I refer here to water, wastewater and the electricity grid, but usually where the conversation in this campus starts is with the impacts on housing. I am thinking of 502 houses just outside Dundalk, in Blackrock, that were refused planning permission. One of the reasons was a lack of wastewater capacity to deliver them. If we are talking about housing and investment funds, we get into a very different conversation. I understand that the witnesses are representing these organisations, they are in business and they want funds to be able to flow as freely as they can within Europe. However, the fact is that a huge number of regular people are being priced out of the housing market by investment funds. In some cases, the only funding that builders and developers can get, and this is down to Government policy, is from some of the witnesses' members. In fairness, they are operating on the basis of what is there.

I get that with investment funds, if we are talking about Germany, we could be talking about a pension fund or whatever. An awful lot of regular people's housing is owned and maintained by them but they work on the basis of a 5% return, for example. Unfortunately, at the minute we have a dysfunctional set-up. For investment funds, it is all about money making money and one of the ways to do that in this State is to buy property. Funds outbid everyone else and then flip the properties. That is not-----

Aidan Davitt (Fianna Fail)
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I am just going to let Senator Lynch in now as she has a query for the witnesses.

Eileen Lynch (Fine Gael)
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I thank both witnesses for being here with us today. The implementation of the savings and investment union produces an absolutely massive opportunity for Ireland, particularly in putting citizens' money that is currently lying dormant and not earning very much into action. In terms of investing this capital, are there specific tax or regulatory changes the witnesses would like to see Ireland introduce or promote during its Presidency that would make investing more attractive? We have not had something like this for a very long time and the public reaction will, undoubtedly, be a bit cautious in that regard, in terms of changes they would like to see implemented.

In relation to MISP, the witnesses mentioned that it could inadvertently harm successful exports, such as UCITS. What measures can Ireland take or promote to prevent over-regulation? More generally, how do the witnesses view the various elements of MISP that will come up during the Presidency and how can we work to resolve that? The witnesses have outlined some of their presidential planning but are there things that can done in Ireland during the Presidency that will support the long-term objectives when it comes to saving and investment for the State and industry more generally?

Mr. Pat Lardner:

I thank both members for their questions. Behind every investment fund are investors. As Deputy Ó Murchú said, it can be a pension fund or individuals and they are, obviously, seeking a return. One of the reasons we are so encouraging of trying to broaden out investment is the fact that it would mean the wherewithal of individuals to build an amount of investment or wealth, whether that be to invest in a house or to do whatever they want, would be better than what we have. This links in to Senator Lynch's question around money that is lying idle, without any return on deposit.

Unfortunately, I cannot speak to all of the things that might need to change in order to make housing available. I know that for our role and purpose, when we look at where money is deployed around the world, it is to do a broad good and to help citizens become more financially resilient. It is also providing a good in that it is putting money into the economies. We know that globally, and I know from having been in the UK and Washington recently, there is no country in the world that does not have some need for private capital to fund the activity of its economy. We are one part in that and I would like to think that through our activity, which is regulated and has been going on here for almost 40 years, we are responsible participants in that activity.

I will turn to Senator Lynch's question, which has a couple of parts to it. The first part was whether there were tax changes that we might be able to make. As I said, we would very much connect our export capability with how we activate local investment.

We were in with colleagues in the joint committee on finance, public expenditure reform and the Taoiseach last week, where we talked about needing to do a couple of things for that. One, for domestic investors, is breaking down some of the existing disincentives there. We have a deemed disposal rule, which taxes gains on investment before they are actually made. There are equalising rules that apply to different types of investment, which include investment undertakings, tax and CGT. Clearly, there are proposals coming out around savings and investment accounts that are very helpful. However, again, it is this idea of encouraging people to invest.

The other piece I would link to that, and it goes back to something that was in our opening statement, is how our offering is compelling. We also suggest the delivery mechanisms for much of what people will use in saving and investing in the future will be in some way digitally enabled. The Deputy made reference to some of the rules that all this is based on. Many of these rules were put together at a time when communications and database technologies were not as they are now. There is, generally and broadly, an upgrade happening to the plumbing of the financial system.

In Ireland, specifically to the Deputy's question, one of the changes we would like to see is that our laws and rules do not equally recognise an investment or holdings in a fund in a digital way in the same way they do traditionally. We refer to this as tokenisation, and when I say that, people always ask what that means. For example, if you use ChatGPT and put in a prompt, you are using tokens. It is taking something complex and breaking it down into small pieces. When you pay for something electronically, your credit card details are not going to the vendor; it is creating tokens. Equally, when we apply that same principle of taking something complex and trying to break it down to simplify it, there are practical steps, particularly relating to the Irish Collective Asset-Management Vehicles Act, which would allow the recognition of tokenised activity in the same way as primary activity.

The next piece is things we can do here in Ireland. This speaks to the Deputy's earlier point on what happens internationally. At present, we have somewhere in the region of about 5,900 investment funds investing broadly in many different things that are authorised and exported to other parts of the country. However, because of those very points I mentioned about deemed disposal, etc., they do not tend to get used here, because of some of those disincentives.

There is a really good opportunity for Ireland to say during its presidency that, one, we are a serious contributor to the savings and investment union and we want to play our part. Two, we want to make sure the cooking we are creating here being used and eaten around the world can also be used by our citizens and will again show solidarity in terms of the broader EU policy. In doing all this, it will provide an ancillary, but we think important, benefit to demonstrate how a knowledge-based services economy and industry like we provide is a very important part of Ireland's broader industrial strategy.

I will let my colleague come in and augment what I have said.

Mr. Adrian Whelan:

There are a lot of multi-part questions, so I might come back to the Deputy, but he makes a very relevant and pertinent point.

I would say that one of the things, and I welcome this invitation here today, is that financial literacy and understanding money flows and investment is lacking across Europe. One of the things we can do during the presidency is the national financial literacy strategy to will let normal, regular people understand investments. If we can get through the savings and investment union and personal investment accounts here and people invested in the market, we could then have a better discourse about the social utility of asset management and investment funds, which we have not had to date.

The other thing is, if you look at some countries where it has been successful, and Germany and the Nordic countries are mentioned sometimes, they are a little more mature on that literacy journey. They have people with local preference who are now trying to diversify their investments, and they are helping with their own housing stock. We are a ways away from that, but this is a huge opportunity with the presidency-----

Ruairí Ó Murchú (Louth, Sinn Fein)
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Some of it is that we have an unstable market. It is dysfunctional, whereas theirs is not. I get there are always people who will want to make money, but here, it is up to Government to regulate and sort that issue out.

Mr. Adrian Whelan:

It is a wider issue. The point is that investment funds can actually be a positive and beneficial social utility to that. It is one of many things; there is no silver bullet to it.

Going back to my main point, financial literacy has to increase across the board, from the House here to my own kitchen table. People just have not engaged positively on education on investing, and we have a huge opportunity ahead of us. That is why we are so welcoming of this invitation afforded to us.

Aidan Davitt (Fianna Fail)
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I thank the witnesses for that. Deputy Lahart has just joined us. Does he have anything he would like to ask?

John Lahart (Dublin South West, Fianna Fail)
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I thought I would get a chance to warm the seat.

Aidan Davitt (Fianna Fail)
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Before the Deputy continues, unfortunately, my expert skills are needed in the Seanad on public expenditure, so we are looking for a temporary Chair. Can someone be proposed? Deputy O'Donoghue has been nominated, seconded by Deputy Lahart. Is that agreed? Agreed.

John Lahart (Dublin South West, Fianna Fail)
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I am grateful to the witnesses for coming in today. I read the opening statement. The key question that I want to probe with them, and someone may have broached this already, is the enormous sum of savings we have on deposit. It is very significant. The witnesses might be in a good position to comment on whether other people are actually making any money out of it. The return on it seems to be very low. Is it an asset to the State, or how can it be mobilised as a major asset to the State? If I am correct, it is something in the region of €150 billion in savings on deposit.

Mr. Pat Lardner:

Factually, money that sits on deposit is eroding in real value by virtue of inflation. That is interesting, to the point Mr. Whelan made earlier, in that we have almost encouraged people to do nothing rather than do something. How we actually encourage positive action is important. The quantum the Deputy has identified is broadly right; people have different figures.

As regards it being an asset, it is primarily an asset of the individuals. It is about how we encourage them, through literacy, removing disincentives and creating the right incentives, to deploy it and take money at rest to investment at work. On it being an asset to the State, and we had a long discussion about this last week at one of the other joint committees, one of the benefits of this to the State in the longer term is that it is not our money, so we do not direct it; it is for the individual to decide, but to the extent that people are deploying money and actively investing, participating in the economy, using the benefit of compounding and making sure it is done over reasonable periods, because they are all the things we know really help longer term investment outcomes, and if this happens over the long term, the ability for people to be more resilient is important. We have changing demographics in this country, which will become more apparent in the next 20 to 30 years, whether that is retirement provision or something else - we have got a good step up on auto-enrolment - but clearly there is more work needed in terms of adequacy. It is also about people providing for their own age care. The fact that household balance sheets - if you want to call them that - in many, but not all, cases have a significant dependence on the home, to the extent that the economy hits a shock and the majority of wealth is held in that one store, this can have a more significant, debilitating impact on the economy than if the exposure of individuals, and therefore the country as a whole, was broadened.

At an individual level, the benefit for the State is the extent to which an individual has a bit more flexibility by virtue of the fact that they have put some money away, and that might mean they need to retrain or that, during the course of their life, they may want to start an enterprise or business. All of those we think are, again, not immediate but medium to long-term benefits. For us, it is around how we create the environment where we have both the type of society and the type of independence and resilience that people want at an individual level and what that translates up to at an economy-wide level, if that makes sense.

John Lahart (Dublin South West, Fianna Fail)
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I am more interested in how the State can get its hand on that money in a way that benefits the depositor and holder of the account and how they can make it work for the economy.

Mr. Adrian Whelan:

I go back to financial literacy. The narrative has to change around investing. There is a lot of scepticism among the general public about what it means. Is it elitist? Is it for me? One of the biggest lies told and which we need a counter-narrative on is cash is king. Most of my friends do not wear suits and work in banks. They are trades or whatever and you hear it all the time and I never say anything. What I should say is that cash is not king, it is eroding and you should put it into the investment market. One of the biggest things about US exceptionalism is that most of the regular citizens are invested in their stock market and become self-perpetuating. We need to educate and be a little bit more positive in our general and political narratives around these personal investment accounts.

John Lahart (Dublin South West, Fianna Fail)
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Do the witnesses think things like Telecom and that burnt a generation?

Mr. Pat Lardner:

When we talk about literacy, if the lived experience has been exposure to an individual entity or company, that is why we talk about funds and the construct of funds, because they are naturally diversified. Therefore, from a risk management point of view, it is more likely they can weather shocks. It does not mean that there is no risk. Clearly there is risk but it is better risk management.

To the core of the Deputy's question, and we have been very consistent in our advocacy both here and in Europe on this, we think the idea that governments want to get their hands on the money and you should mandate where people put the money is a very dangerous idea.

John Lahart (Dublin South West, Fianna Fail)
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I am saying incentivise.

Mr. Pat Lardner:

If we want to incentivise people to invest, at the moment, we are disincentivising people through deemed disposal on the basis that you cannot make a gain. If we took away those disincentives, you are more likely to see people invest. There is no guarantee, but as we talked about earlier, to the extent that we exercise this muscle around people investing regularly over a period, the potential for those moneys and assets to spread more broadly across this economy and other economies is greater. It is all about creating the right habits in a responsible way. We have a good system of regulation around these funds to ensure there is investor protection.

There was a question the Senator asked that I did not fully answer, and I will briefly say how we are assessing the various parts of some of the packages that will come up under the Presidency. Very simply, in any of the specific proposals, we ask whether they increase the efficiency or speed with which an investment solution gets to the investor. That is one way to look at them. The second way is to ask whether they increase or inhibit the investor's access to the right expertise and their ability to invest widely. As we said earlier, we would be all for that. Third, are the proposals likely to incur more costs for end investors, and if they are, where is that borne? Finally, does the proposal have an adverse impact or add anything significantly additional in terms of investor protection? They are non-technical lenses through which we would look at any of the proposals. In the main, a number of the proposals under the market integration and supervision package pass many of those tests. With some of them there is a question whether they actually solve something and, if they are solving it and, in doing so, they add more costs or complication, whether that is undermining something which has already been proven to be quite successful, and we have 35 years of proof of this. That is the balance in terms of how we assess the various elements of the technical part of the market integration and supervision package.

Robert O'Donoghue (Dublin Fingal West, Labour)
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The education piece sounds so simple and makes complete sense and I never considered it. The digital euro is expected to be introduced in 2029. Do the witnesses see the digital euro as a tool that could improve digital investing literacy? Can they see any advantages coming from it in terms of simplifying and speeding things up?

Mr. Pat Lardner:

We will answer the financial literacy piece first. In the course of the last week we completed working our 30th school around the country this academic year doing financial literacy for transition year students. That is not only about technical financial literacy. It is as much about critical thinking skills. If you are getting information about something, who are you getting it from? What are their incentives? How are you validating what you are getting? What that exercise teaches us, and we are learning as much in this process, is that, to Mr. Whelan's point, it is essential. There is a national financial literacy strategy. We definitely think that, during the Presidency, there is an opportunity for Ireland with a younger population, relatively speaking, than many other parts of Europe to show some leadership on this. When we are out talking to the younger people, they are quite familiar with all the digital tools.

As to the digital euro, in our world there is an exchange of value or an asset for money and how you do that. A digital euro will be part of it. One of the reasons we focused on tokenisation is that the replumbing of the financial system for the digital world, including the digital euro, will occur over a period, but we know there are certain things that are happening now. We know that fund managers are creating solutions which include elements of tokenisation. They have activity here. They will want to be able to do that activity here and have clarity and certainty from a legal point of view. Going back to the competitiveness of our offering, if we provide that legal clarity, then there is an opportunity for that activity to happen here. If it does not, it will go elsewhere.

I will make one last point. The nature of our industry is slightly different from some other industries that form part of industrial policy. What I mean by that is that the decision around where somebody locates an investment fund happens every day. It is not like there is a single decision which means there is going to be a plant or a factory. All of these are small decisions, which means there is a constant appraisal and reappraisal of whether our offering and environment are compelling. That is why we think that taking the steps during the course of the Presidency that we know can be taken here within our control around things like tokenisation will actually aid the fact that we will get the digital euro and it will be part of the solution.

Mr. Adrian Whelan:

It is a good question. The digital euro helps to a degree in that are digital natives who like to do all of their financial trading on DLT blockchains, as they are called. The digital euro itself will help wholesaler institutions remove operational frictions, if that makes sense, but it is not any one thing. Europe needs to modernise, and it is trying to do so, through SIU. Draghi and Letta say that. It is a good innovation in terms of use of DLT across the broad expanse of financial architecture. The US and Asia are already ahead.

Again, it is a competitiveness point at the core. In terms of participation, everything helps, it is not one single thing, but we need to begin with financial literacy to increase participation. There is a mistrust of the system among the general population around Europe and this is a huge opportunity to address that, and see it as a social utility and a positive benefit to everyone, not to the select few.

Ruairí Ó Murchú (Louth, Sinn Fein)
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As I said earlier about the circumstances that are down to the dysfunctional housing market, there is a huge amount of money to be made and it will be. That is a fact. As I said previously, that is Government policy and regulation determines what people decide to invest in. I think we all realise that you cannot operate a modern economy without making the best use of existing assets.

I get the point that as much as there are a huge number of people under severe economic pressure, there are people who have moneys. If they are not doing anything with them investment wise, they are losing value. Digital literacy and critical analysis are important. We deal with that in half of the meetings we do across every committee, particularly with regard to social media. Unfortunately, it is a skill set that is lacking. Every kid who has ever been in here has said it is not them we need to start with, it is adults. I agree with them.

From the point of view of the investor there are diversified investments, mitigated risk and all the rest of it. I understand that the witnesses want to make this as seamless as possible an operation. For them and the people they represent that makes complete sense. We all have issues with regard to the European Union and the need for streamlining. Nobody is against that, but with all the investment opportunities and operations engaged there is still a need for regulation and protection. I have one example from The Sunday Times,and I would like the witnesses' general view on it. KPMG is the liquidator of Arena Capital Partners. KPMG sold Arena's wind farm operations and investors in Arena Capital Partners are to get 6 cent on the euro after the sale of its two most valuable asset portfolios. I will be truthful and say that this came to my attention because I met somebody who had been involved with Team Aer Lingus, which was previously Aer Lingus, and had an Aer Lingus pension-----

Robert O'Donoghue (Dublin Fingal West, Labour)
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I remind the Deputy about naming people outside the House.

Ruairí Ó Murchú (Louth, Sinn Fein)
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I am not naming anyone or anything. I am looking for an general answer in relation to it and significant risk transfer, SRT. At some point, this person had an issue with the pension and took the money out and invested it. It was a wind farm investment so people would have said, "Happy days." There are particular issues with Arena. If the witnesses are aware of them, I do not expect them to get into them. Somebody invested while thinking this was a worthwhile investment in a secure industry, with an awful lot of it in Britain. Now they are in a precarious scenario. I will be engaging with Ministers on that. Stories like this do not help the investment industry either. How do we get that streamlined system and the necessary protection and regulation, so another person does not end up in the same situation as my constituent?

Mr. Pat Lardner:

I obviously cannot comment. It goes back to something we talked about. First, people are starting this from different levels of knowledge and expertise. In our industry, which is regulated, there are two primary mechanisms through which people invest in funds. One is called UCITS. They are a creation of the European Union and are undertakings for collective investments in transferable securities. We did not create the name, but we live with it. The important thing about that type of fund is that there are rules about diversification and liquidity. It is for retail investors and institutional investors. We have another type of fund, which is an alternative investment fund. That is for investments and assets that may be less liquid. They are not publicly traded. The nature of the risk and the potential return, which usually go together, are slightly different. They are therefore distributed in a different way. To the Deputy's point on regulation, when we look at it from an industry point of view we have a well-regulated and attentively regulated sector in this country. I know that from the experience of our members. If we work properly within these EU laws, which we do, that does the best job we can in making sure the solutions are diversified and fit for purpose. How those are consumed and the triggers it takes for people to make decisions comes back to financial literacy and the advice they take.

I will make another point before handing over to Mr. Whelan. It links into a broader point that was covered in earlier questions about the opportunity of the present. It is in the interests of everyone in Ireland, be they Members of these Houses, the Government, citizens or businesses, that Ireland does a really good job of the Presidency. We are here to assist through using our networks and what we do to promote Ireland. We have been doing events in the UK, Milan and Frankfurt. We have been in Switzerland and the United States. We will be in the Far East. We are doing our level best on behalf not only of our members but the communities we operate in to make sure we are creating, sustaining and growing employment. That will hopefully have other benefits in what we are doing.

Mr. Adrian Whelan:

I will turn briefly to the Deputy's example. I do not know the ins and outs of it so I cannot comment on the example. However, it shows that if we had an investment culture and were appropriately invested, the person impacted there would have been in a better investment. It is as simple as that. We need to create access points for everybody into the best investments. Tomorrow I will be on a plane to London for an exchange-traded funds, ETF, event. Germany has launched saving plans and they are the building blocks because they are highly liquid and highly diversified with optionality into all kinds of industries, whatever your preference. Irish people cannot avail of the same investment even though, outside of the US, we are the leading ETF domicile in the world. It is an amazing success story that Irish citizens cannot currently avail of. I am not saying it is the case in this specific instance, but they would conceivably have put that money into better investments. That is why it is on all of us to use the opportunity of SIU, the Presidency and personal investment accounts to really help society and citizens so they do not have to go into bad investments like that with no diversification.

Ruairí Ó Murchú (Louth, Sinn Fein)
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I get that. I also get that there are no risk-free investments. There are diversification and mitigation, but you cannot guess what is going to happen in the world at the moment. There is the involvement of the Central Bank and specific issues I will not get into. It is about ensuring the protections that should be there for people are there. A considerable number of people would have gone down the line my constituent went down.

Mr. Pat Lardner:

I can say with confidence that the way in which the investment funds industry is set up is that there are separations of responsibility. We have responsibilities that exist at firm level and individual level. We also have organisations that take their reputations seriously.

Ruairí Ó Murchú (Louth, Sinn Fein)
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And some who do not.

Mr. Pat Lardner:

I speak for firms that work hard to make sure we continue to earn that trust. As an industry we want to see Ireland do well. Ireland doing well does not just mean we do well in terms of our exporting activity. It means that we have an environment where people feel empowered and incentivised to invest and that the benefits of that flow through households, communities, the economy and more broadly.

Ruairí Ó Murchú (Louth, Sinn Fein)
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I have a slightly related point. Mr. Lardner is saying we want a system that works across the board. One of the things on their list of to-dos is Insurance Ireland. We know the issue with the costs of insurance and financial services. On some level people would have thought there would be an easier way, in a European context, to make sure you could access those other services in a way that would be more cost-effective for businesses. In insurance we have all seen businesses some of which were detrimentally impacted and some that thought they were going to go out of business because of the huge issue we have had in recent years as regards not being able to get public liability insurance.

Mr. Pat Lardner:

The context of our comments was how to best promote Ireland and all of its financial services offerings and how to engage with member state representation and MEPs.

It makes sense for Ireland Inc. to show a very engaged, open and professional face. I am glad to say that in working with those organisations in Brussels, that is exactly what we are trying to do, namely, create the maximum opportunities here in Ireland.

Robert O'Donoghue (Dublin Fingal West, Labour)
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I thank the witnesses very much for coming in today. My takeaway from the meeting is the need for financial literacy and the democratisation of investment. I came in looking for higher end things but it is a very good point that the fundamental building blocks are not in place. I thank everyone for their engagement with the committee today, and for the full and frank discussion. This gives us plenty of food for thought as we consider the ongoing Presidency preparations and, later in the year, the Presidency itself.

I propose that we go into private session and then adjourn until 27 May 2026 when we will consider EU-Africa relations and EU humanitarian and development policy in the Irish EU Presidency. Is that agreed? Agreed. I propose that we suspend for five minutes to allow the witnesses to leave. Is that agreed? Agreed.

Mr. Pat Lardner:

I thank the committee for the invitation. We are very happy to come back at any stage and discuss matters with it. We appreciate members' time.