Fergus O'Dowd (Louth, Fine Gael)

I thank Deputies O'Dea, Tóibín and Lawlor for their comments thus far in the debate.

The purpose of the amendment tabled by Deputy O'Dea is to provide for the removal of the prohibition contained in the Companies (Amendment) (No. 2) Act 1999 on insurance intermediaries incorporated as limited companies availing of the exemption provided for at section 32 of that Act from the requirement to have their accounts audited. Insurance intermediaries are regulated by the Central Bank under the Investment Intermediaries Act 1995, as amended. This is because of the nature of the activities in question. The prohibition on availing of the audit exemption in the company law measure to which I have just referred is on prudential grounds and at the behest of the Central Bank and the Department of Finance. It would not be appropriate for the Minister for Jobs, Enterprise and Innovation to vary or remove this prohibition in company law unless expressly requested to do so by the Central Bank and Department of Finance, or with their agreement. No such request or agreement has been made or given by either regarding the making of a proposed audit exemption at this time.

The cohort of insurance intermediaries prohibited from availing of the audit exemption under company law represent not the totality of insurance intermediaries but those incorporated as limited liability private companies. All entities outside that category are and will continue to be subject to the obligation to have an audit under the Investment Intermediaries Act 1995, as amended. The Department of Jobs, Enterprise and Innovation has consulted with the Department of Finance and Central Bank on the amendments proposed by Deputy O'Dea. The Central Bank responded to the Professional Insurance Brokers Association, PIBA, stating that the financial regulator had noted its proposal, to which it was sympathetic, but cannot exempt its members from a statutory requirement. There is a legal obligation on investment business firms, including insurance intermediaries, to submit audited annual accounts as provided for in the statutory provisions contained in the Investment Intermediaries Act 1995, IIA. Those provisions apply to all investment business firms, subject to the IIA and are not applied on a case by case basis. Insurance intermediaries will fall for regulation under the supervisory framework set out in the Insurance Mediation Regulations, IMR, 2005, which transpose the insurance mediation directive into Irish law only when the IMRs have been revised to ensure proper transposition of that directive. One fully transposed, insurance intermediaries that do not provide investment services would no longer be subject to the legislative and supervisory requirements applying under the IIA.

The Central Bank would not object to insurance intermediaries being removed from the IIA in circumstances where they are covered by final insurance mediation regulations which have been transposed into law. Removing the requirement for insurance intermediaries to be audited under the Companies Act would conflict with the requirements set out under the IIA. Likewise, removal of insurance intermediaries from the IIA without suitable supporting regulations or legislation would result in these entities falling outside the scope of regulation, which is not a situation with which the Central Bank would be comfortable.

The Department of Finance states that further necessary detailed work on this matter requires to be undertaken by it. Consequently, it is unable to give its approval to the proposed amendment. Given the position of the Central Bank and the Department of Finance, based on prudential considerations, I cannot accept these amendments, which have no connection with the Companies (Amendment) Bill 2012. The proposed amendments relate to audit exemptions while the Bill specifically focuses on US generally accepted accounting principles. The Companies (Amendment) Bill 2012 is an urgent measure, which needs to be enacted with delay.

On the specific points raised, the following information may be helpful to the Deputies concerned. The companies in question are subject to requirements and supervision which are outside the company law policy remit of the Department of Jobs, Enterprise and Innovation. Obligations and requirements of a prudential supervisor, such as a Central Bank, are in place to provide the protections to safeguard the integrity of the systems in question and to protect the public. The Department of Jobs, Enterprise and Innovation has a public duty, in so far as the legislation for which it has responsibility is concerned, to uphold and maintain safeguards of which it is the custodian, in this case, the restriction applying to audit exemptions. Only when clearance to change the eligibility criteria has been received from the Department of Finance and the Central Bank can the Department of Jobs, Enterprise and Innovation consider amending this legislation. In the event that the position of the Department of Finance and the Central Bank in regard to audit exemptions for insurance intermediaries changes, the Department of Jobs, Enterprise and Innovation would be prepared to consider making amendment to those provisions in a manner acceptable to the prudential supervisors. Such amendments will be considered in the context of an appropriate company law Bill. I hope that information is helpful to the Deputies concerned.

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