Joan Burton (Dublin West, Labour) | Oireachtas source

We have not seen any Ministers from the Department of Finance coming into the House to discuss their responsibility for the public service code of conduct and how somebody in the HSE can take a second appointment when they are charged with managing the HSE. That is what I wanted to say.

On this particular legislation and the European Union directive, there are many new financial products and changes in existing financial products coming constantly onto the markets. Much of the trading is now done by individuals, businesses and people in the financial markets through the cloud and the Internet. The speed of change, therefore, makes it very difficult, especially for smaller investors and individuals and small and medium sized businesses, to keep up with that. Any regulation in this area, therefore, is welcome. Algorithms are certainly changing the world, particularly the world of financial instruments.

It is important to remember in 2018, ten years after the catastrophic collapse in our banking system, the catastrophic role contracts for difference played in the collapse, in particular, of Anglo Irish Bank and where Mr. Seán Quinn of Quinn Insurance built up something like a 30% stake - I cannot remember the exact figure - in the bank through contracts for difference which were not apparent to the regulators in the Central Bank at the time in the way perhaps they should have been fully apparent so that the Central Bank could take action to protect and defend the integrity of the entire Irish banking system, which subsequently collapsed.

It is important that we remember that and not become blasé. These instruments can be used rapidly with tremendous effect, but they also have enormous capacity for destruction, as we saw clearly in the role they played in the downfall of Anglo Irish Bank which ultimately cost the taxpayer €30 billion which we will probably never see again and was the long lead-in to the troika coming and taking control of our affairs and Ireland losing control of its financial independence. Therefore, these issues are very important.

One should bear in mind also that in the subsequent ten years what has changed enormously is the insurance sector, in particular, provisions for pensions, many of which are inevitably linked with the insurance and financial investment sectors, whereby individual employees in the private sector who used to be in defined benefit schemes are now, because Ireland is part of a global financial system, in defined contribution schemes, which means that they are managing their own pension funds, perhaps from the age of 26 or 27 years to the moment they retire. There are only the odd few who are capable of playing the markets to ensure their pension will be there for them when they retire. Anything which beefs up financial regulation in favour of the individual consumer, the individual pension investor and small and medium-sized businesses in order that they can trade in a safer and more confident way is to be welcomed.

On the new developments in finance, the securitisation of investments through different structures has happened apace. The securitisation of mortgages and loans has been happening since the end of the last century and particularly at the beginning of this one. Most of the transactions are at one remove from the consumer - the individual whose house may end up in a securitisation bundle worth many billions of euro. The big question is: what protections are we building for such individuals against the might of financial companies and instruments which are coming to dominate the financial aspects of their lives over a long period. In that context and with reference to the European Union, this is one of the arguments in favour of a financial transactions tax, even if it was at a very low level. To have a tax of even half a point - in fact, as the officials will be aware, one can have a tax at a zero rate - one must have a proper record of transactions. One of the problems in that regard is that their descriptions are often limited because they simply fail to keep abreast of the sheer level of change in financial instruments and derivatives. At times, because of the way derivatives are used, they can be likened to the crack cocaine of the financial services sector. People are sitting in their rooms at 2 a.m. and playing on screens. I do not know whether the Minister of State, Deputy Michael D'Arcy, ever has time to look at some of the advertisements on his phone, but they are the most seductive in that they tell us there is no longer a risk with derivatives. Did the Minister of State know that? There are amazing packages which assure that someone will only win, win, win. In fact, they are more akin to gambling advertisements than to financial investment advertisements.

Notwithstanding all of the difficult reforms, I am not sure we have learned lessons from the risks from which the country suffered catastrophically. We have a Central Bank that is now regulated, but it is also responsible for consumer protection. Being perfectly honest, it's understandable priority is regulation, but the consequence is that consumer protection - of individuals and businesses which use banks and financial markets, particularly small and medium-sized businesses - is very low down its list of priorities. It is complex, but it is difficult to approach the regulator which is not sufficiently strong to take on bad behaviour in the financial services sector on behalf of the little guys and get justice for them in a timely and appropriate way. We just do not have this. In many ways, it may be because we are in awe of the money those involved the financial markets seem to have. That level of wealth carries with it perhaps an aura of benevolence and intelligence. The protection of consumers, both individuals and businesses, is weak in Irish financial structures. That is the only conclusion one can reach.

The role of the Financial Services Ombudsman needs to be empowered and enhanced. In particular, the relationship with the Central Bank and the Central Bank's understandable primary concern being regulation in meeting EU requirements and being part of the European Central Bank are problems that have not been solved in the Irish legal structure. We need to look at this. If, as mentioned, amendments are brought forward, I hope the Minister will consider them seriously.

We also need to look at the amendment in respect of the consumer credit register which is little understood by most. I am particularly concerned about the potential impact of a negative mark on the register against young people who, for instance, are seduced by the offer of easy car loan arrangements, fail to complete the loan repayments properly and will as a consequence have a negative mark registered against them. When they then come to buy a house or seek loans for other purposes, they may find that their credit rating has been impaired. We should look at this matter in the context of the amendment the Minister is moving in respect of the credit register. Specifically, I would like the Minister to update us on how many negative credit events have been registered. As the register is in its early days, I assume that there have not been many, but I wonder the level of monitoring in which the Minister is engaged of negative credit events noted in the register. Potentially they have enormous implications for people's lives, particularlyjof young people who are being flooded with advertisements offering cheap, fast credit.

The loan is now online. One sees ads with a smiling couple as one comes in from the airport or when one is on a bus. The smiling young couple are told they can now get quite a big loan in a couple of hours or a couple of days. I do not know how much caution accompanies those very rapid credit decisions. They are like the letters we used to all receive during the last boom saying we were good for a particular amount of credit. Older people are more credit-averse but younger people, understandably, when they see these incredibly seductive ads, may well be tempted. I would like the Minister of State to tell us, when he is going through the amendment, how the credit register is working out and what he is doing to protect young borrowers. Has the Department tightened up car loans because the terms and conditions on which they are based can be easily defaulted on resulting in a negative credit event for people?

The Government was very keen on strategic communications. Would it not be a good idea if the Department was to do a deal with provincial newspapers and radio stations and national broadcasters, including television and radio, to have more consumer information education? There was a very large strategic communications unit. There needs to be more education about consumer information and about some of these products.

Going back to the financial transactions tax, the Irish position has been we would do it if everybody else joined it. At the end of the day one of the few ways of really ensuring there is a legally enforceable requirement to describe all different types of instruments and properly record all different types of transactions is to have them affected by the tax code so they must be recorded and that there is a record which is available to the tax authorities. That is also important in regard to money laundering and to international financial crimes. Europe has been relatively slow to deal with this area. We have a bewildering situation where an awful lot of very elderly people are under siege from different banks to prove their identity even when they are in nursing homes. I am sure some people here will be familiar with this from constituents. They are asked to give all sorts of information but at the same time other people seem to be able to pop down to the IFSC from time to time and there seems to be an awful lot of illegal cash and laundered cash sloshing around. Perhaps the Minister might tell us about how in the context of financial instruments there are walls being built to restrict money laundering and criminal use arising from the generation of drug money and so on.

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