John Perry (Sligo-North Leitrim, Fine Gael) | Oireachtas source

I will some clarify some matters. The Central Bank has been in discussions with the MFSA about Setanta since November 2013 when it identified issues during a consumer protection-themed inspection and immediately referred the matter to the MFSA for further investigation. There was regular contact in the following months. Issues led to the announcement in January that the firm would cease writing new business and issuing further renewals. On 21 January the Central Bank wrote to advise my Department of its concerns about Setanta Insurance's solvency and I was subsequently informed of this correspondence. Contact continued between the Central Bank and the MFSA and on 11 April the MFSA advised the Central Bank that the directors of Setanta Insurance were considering the potential liquidation of the company. There was ongoing contact in the following days and Setanta Insurance announced that the shareholders had recommended the appointment of a liquidator subject to the approval of the MFSA. On 16 April I was advised that the stakeholders of Setanta Insurance had resolved to wind up the company. As the Central Bank continues to have ongoing contact with the MFSA, I would not say it was asleep at the wheel. It was very active in dealing with the liquidator, as well as the various industrial representative bodies. It has also engaged with the brokers who sold the policies to ensure they assist policyholders and keep them informed. In addition, it contacted all brokers to instruct them to write to policyholders who held a current Setanta motor insurance policy informing them of the urgent need to make alternative arrangements.

On 16 April the MFSA determined that the company was insolvent. This means that it does not have sufficient funds to allow it to honour its full obligations towards claimants and policyholders. Setanta was formally placed into liquidation on 30 April and Mr. Paul Mercieca was appointed as liquidator. Together with officials of the Central Bank, we met the liquidator and his representatives in Ireland on 7 May. The Central Bank is in ongoing contact with him regarding the position of Setanta policyholders and he has confirmed that all policyholders who have not already done so should arrange alternative cover without delay as claims are unlikely to be paid in full. He has issued letters to policyholders informing them that their insurance cover will be cancelled within seven days. This process has commenced and there are less than 20,000 policies in place. If one looks at the clear evidence available going back months, one can see that the Central Bank was on the case. It was put on notice last November.

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