Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

I thank all the Deputies for their contributions. I will respond in as much detail as I can.

This legislation, the Markets in Financial Instruments Bill 2018, is very important. Ireland has developed a large financial services sector that is twice the size of the European average and employs more than 90,000 people in domestic and international financial services. I will put this into context; it is broken down into 43,000 people who work on the international side and 47,000 people who work on the domestic side. This is the size of the sector. The sector provides two and half times the value of the agriculture and food sectors. There is €33 billion worth of exports from the international financial services sector and Ireland is the fourth largest exporter of these services in the European Union. Soon, when the British leave the EU, Ireland will be the third largest exporter. In this context, the legislation is very important.

The process of reform has turned from crisis management into how financial markets can serve the broad policy objectives of jobs and growth. We believe that putting in place criminal sanctions for serious infringement of the Markets in Financial Instruments Directive, MiFID, rules will provide a deterrent effect against any blatant misbehaviour and thus promote orderly markets, market integrity and investor protection.

Similarly the essential technical amendments to both the Credit Reporting Act 2013 and the Financial Services and Pensions Ombudsman Act 2017 are required to ensure that the central credit register and Financial Services and Pensions Ombudsman cover the products envisaged by the Government when initially enacted.

I am aware - and it has been mentioned by Deputies - of an issue around whole-of-life policies and another issue relating to part of the definition where a product is clearly intended to be a long-term product but its term is not fixed. My officials are in contact with the Office of the Attorney General and will continue to examine these issues;it may be that a Committee Stage amendment would be appropriate. I want to assure Members who raised the issue of the whole-of-life policies that officials from the Department of Finance will be available to try to ensure the spirit of co-operation that we all took on, between the Fianna Fáil Bill, the Sinn Féin Bill and subsequently the Government Bill, to try to put in place the best legislation. It was brought to my attention, almost immediately, that the whole-of-life products were not covered. I believe it came up in the Seanad debate after we had finished in this Chamber. I am disappointed with that. I shall not pretend. We all acted in the best interest to make sure that as many products as possible were covered. This has not been covered. Officials from the Department of Finance will be available to whoever wishes to contact them to bring this to a conclusion.

Deputies Doherty and McGrath outlined concerns for constituents. I have similar constituents in my area who have outlined the issues around the whole-of-life products. I would like to see it concluded and we have the opportunity to do so now.

I will try to touch on as many aspects of this as I can. Deputy McGrath spoke of the tracker scandal and holding people accountable. The Minister, Deputy Donohoe and the Department of Finance are ensuring this happens. The Minister has put a lot of effort and personal energy into this. I believe it is moving in the right direction because of the Minister's intervention.

Reference was made to engagement with the Central Bank in the context of white-collar crime. I do not see anything wrong with wanting that engagement.

With regard to the capital markets and monetary union the Government believes it is crucial to move the Irish economy into the next phase. The next phase would mean a person could purchase a mortgage on the Continent at continental interest rates and purchase insurance on the Continent at continental rates.

We are doing everything we can to ensure that it happens. We are hopeful that, within the next six to nine months before the end of this calendar year, there will be significant movement. Approximately two thirds of the areas are now resolved. There is a third still to be done. To be fair to the Bulgarian Presidency, it is something it has prioritised and it is at the top of the priority list so that we have a Single Market in Europe for those products for the citizens of Europe.

I touched upon the Financial Services and Pensions Ombudsman and the statutory limitations relating to that. In response to Deputy Pearse Doherty, the reason that primary legislation is required for this is that it is a criminal sanction. The previous legislation was transposed by statutory instrument and that is sufficient for the legislation. Where there is criminal sanction, primary legislation is required. As for whether composite legislation is required, I do not know the answer to that. We can look at it. There is quite a lot of legislation moving through the Department of Finance at present. The Insurance (Amendment) Bill 2017 is one such Bill, on foot of the Setanta issue. Deputy Michael McGrath is eager to have that done.

I wish to touch upon the shadow banking aspect of finance. Figures are quoted to the effect that it is 25% of the sector, possibly as high as 30%. To put that into context with regard to the funding side in Ireland, there is €4 trillion under administration in Ireland. That is the level of funds that are traded. We are one of the largest trading centres in the world. I am concerned about it. It is a legitimate concern, not just of mine but of every central bank in the world that there is a sector that is unregulated to such a degree and we are continually playing catch-up. Central banks worldwide are doing their best to ensure that we are catching up.

I have touched upon the fixed term, the whole-of-life policy and the mis-selling of products. Nobody would be happier to see the conclusion of the tracker issue than us. Deputy Burton raised the issue of the Tobin financial transaction tax. We have a stamp duty rate here of 1% on transactions that gathers in €428 million. We have a tax in place. Deputy Burton is talking about a tax that we cannot adopt on our own. There is a requirement for it to be international. We have seen this before with regard to digital taxation here in Europe. There needs to be a global impact from this taxation. The companies in question are global. They are not just based in one particular area and capital is very liquid. It can shift very quickly.

On the credit register, I will ask officials from the Department to speak with the Central Bank. I do not know that it is available from the Central Bank for the Department of Finance to give out here. I am not able to answer that question. The credit register is there to outline people's credit history and nothing else. It is not there to make a determination as to whether it was a loan for a young person or not. That is outside its remit.

I am not sure that a consumer information campaign is the role of the Department of Finance. There are auspices within rural areas for people to engage in that. I do not have the answer for Deputy Broughan's question about the UK and Germany and the period for non-implementation of MiFID II. We can try to get that information and make it available to the House, perhaps on Committee Stage. Deputy Broughan made a point about EU equivalence with the UK. That remains to be seen. We are getting close to the conclusion of the conversation on Brexit discussions. As to whether there will be a trade deal including services, the Irish Government has been clear that we believe it is in everybody's interest that we retain a close trading relationship with our UK counterparts, since there is a huge amount of crossover. When I say "we", it is a European "we" and not just an Irish "we". The UK will remain as a global hub for financial services. There is no question about that. That will not change. It will lose some business because of the opportunity to passport into the free trade area that will be the EU 27. That is unquestionable.

I have not touched on everything. I am not sure how much time I have. Since the financial crisis, there has been a substantial body of work with legislation coming from our European colleagues. The legislative initiatives that have been put in place to ensure that the financial markets are more transparent and resilient, including the capital requirements directive, CRD IV, MiFID II, bank recovery and resolution, BRRD, and the benchmarking regulation, have all been transposed into Irish law in order that we are not behind the curve. I am very pleased with that. The sanctions are significant, whether ten years in jail or €10 million. Those are substantial sanctions. That is why we must use primary legislation. I have touched on the Single Market and capital markets, and just about everything. I thank the members of the finance committee, in particular relating to the Financial Services and Pensions Ombudsman Act 2017. Everybody worked well together and I think we can work equally well on this occasion to try to conclude the matter relating to whole-of-life policies. I think we can conclude that.

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