Jan O'Sullivan (Limerick City, Labour) | Oireachtas source

On behalf of the Minister for Finance, I would like to thank the House for agreeing to discuss the Central Bank Bill 2014 at such short notice. As the Members know, the enactment of this Bill is needed urgently for two reasons. The first is the need to extend Part III of the Central Bank Act 1971 in order that it will apply to building societies as well as to banks.

Specifically, this will make provision for the effective and expeditious transfer of the business and other assets and liabilities of building societies. For these and other purposes, the Bill will amend the Central Bank Act 1971. This legislation must be in place by the end of this month to allow the Bank of Ireland to meet its 30 June 2014 deadline under its revised restructuring plan for the disposal of certain assets of the ICS Building Society. There is also a need for legislative provision for Ireland's contribution to the securities market programme, SMP, income measure for Greece before our first payment is due to be made on 1 July 2014.

I thank Deputies on all sides of the House for their constructive and considered contributions to this discussion. All Deputies who contributed have the best interests of Europe, the euro area, Ireland and Greece at heart. There has been a healthy and constructive discussion on the Bill, as well as on the draft heads of the Bill, which were discussed at the Joint Committee on Finance, Public Expenditure and Reform on 26 March under the Government's new pre-legislative scrutiny process.

Concern was expressed today that mortgages with ICS Building Society are likely to be sold to an unregulated financial services provider. It is important that such concerns are not overdone and that we avoid generating unnecessary concern on the part of mortgage holders. The core of what is required to be sold under the amended restructuring plan agreed between Bank of Ireland and the European Commission is the ICS platform. The purchaser has the option to acquire up to €1 billion par value of mortgages out of the €6 billion mortgage book held by ICS Building Society. It is not clear yet whether any of the mortgages will be sold, still less whether any of the mortgages will be sold to a purchaser that is not a regulated financial service provider.

It is also important to remember what the legislation that we are debating will permit. The Bill, if enacted, will permit the transfer of assets and liabilities from ICS Building Society to a bank. All banks are regulated financial service providers and all banks are required to comply with the Central Bank's code of conduct on mortgage arrears. It is clear that for most people who hold mortgages with ICS Building Society, nothing significant will change. They will transfer from ICS Building Society to Bank of Ireland. The Department of Finance has confirmed that mortgagors in Bank of Ireland are treated in the same way as mortgagors in ICS Building Society, so mortgagors will not be treated any differently as a consequence of the transfer.

The sale of the ICS platform will enhance competition in the mortgage market and will facilitate either a new entrant to the market or the expansion of the presence of an existing market participant. This will benefit consumers and borrowers throughout the market as a whole. Competition is necessary to ensure lenders do not have a free hand when dealing with their customers, and they must be conscious that alternative lenders are available to consumers in their dealings with them. Along with an appropriate regulatory framework, competition is also therefore an important element of proper consumer protection. It is important that the provision of mortgage credit be facilitated and that robust competition be encouraged in this sector for the benefit of consumers generally.

As has been outlined, it is anticipated that an application will be made to the Minister for Finance to transfer the bulk of the assets of ICS Building Society to Bank of Ireland. It is further anticipated, though not certain, that an onward sale of some mortgage assets might subsequently occur. Such an onward sale would likely take place under the normal contractual rules rather than any statutory mechanism. However, the legislation itself will facilitate a transfer of the mortgages only to a bank; in this case, it is expected to be Bank of Ireland. Even if there were a subsequent transfer of mortgages to an unregulated financial service provider, the House is aware that the sale of loan books to unregulated third parties Bill, which is listed in the Government's legislative programme, is intended to address concerns surrounding the continued applicability of the code after the sale of loan books to unregulated entities. As has already been indicated, the Government is committed to bringing forward legislation to protect mortgage holders and will work with other interested parties to achieve the best solution for consumers. Officials in the Department of Finance are actively examining this in consultation with the Central Bank and the Office of the Attorney General with a view to bringing forward legislation to address this issue. It is intended this legislation will apply to all loans which were issued by a regulated financial service provider and subsequently transferred to a unregulated purchaser.

The SMP measure arises as a result of our successful exit at the end of last year from our programme. It is, in any event, appropriate and important that we should participate in this measure. It is designed to offer further assistance to Greece, a country in far greater need than ourselves. As has been outlined, the SMP income measure forms part of a larger package of measures designed to put Greece back on track to financial stability.

I note that some Deputies raised the issue of whether Ireland should also seek this concession. In this context I will repeat what has been stated before. This SMP measure formed part of a series of measures designed specifically for Greece. The measures were in the context of statements by the euro area Heads of State and Government that Greece's problems were of a scale which required special attention. This was agreed in November 2012, and our need at that time was different from that of Greece. We were preparing for our exit. We have exited our programme successfully and we are firmly back in the markets. While we still face big challenges, our needs are different from those of Greece, and we should remember this. Although there are some signs of recovery in Greece, it is important to remember that Ireland is not Greece.

Over the period 2014 to 2025, under this measure, Ireland is expected to provide just under €126 million by way of the intermediate account for the benefit of Greece. The amounts will be provided to Greece subject to satisfaction of programme conditionality and the continuation of reforms under post-programme surveillance. Overall, the euro area member states will provide just over €10 billion to the account. In 2013, when Ireland was not required to participate in this process, just over €2 billion was provided under this measure. I emphasise that our participation in the SMP measure is a consequence of our success - that is to say, our exit from our programme last year. As the House is aware, there is an urgency to both measures in the Bill. I thank the House for its time and Members for their contributions, and I commend the Bill to the House.

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