Joan Burton (Dublin West, Labour)
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Question 126: To ask the Minister for Finance if he will introduce a code of practice in respect of lending by financial institutions to their senior staff including requirements for the institution to monitor and regulate such lending, particularly where such lending becomes impaired; if his attention has been drawn to the problems in the impairment of such lending at institutions covered by the bank guarantee or other financial institutions; and if he will make a statement on the matter. [29300/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Financial Regulator has the statutory authority and responsibility to regulate and supervise credit institutions. The Financial Regulator recently carried out a review of loans to directors in financial institutions and is imposing conditions on banks and building societies following this review.

With regard to staff, the Financial Regulator has informed me that it expects the Board and management of financial institutions to ensure that proper controls and procedures are in place in relation to staff lending. In a situation where the Regulator became aware of staff in senior positions who may be, or may be seen to be, compromised because the value of lending or because of the impairment of such lending from that institution, the Regulator would seek to ensure that the position was rectified.

Joan Burton (Dublin West, Labour)
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Question 127: To ask the Minister for Finance if he has examined the regulation of the Irish Financial Services Centre based companies, particularly those involved in the insurance and re-insurance sectors; if he is satisfied that the potential negative impact on the Exchequer in the event that one or more of these companies failed is not unsustainable; and if he will make a statement on the matter. [29301/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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All insurance and reinsurance undertakings, including those undertakings transacting international business, are obliged under EU rules to hold assets to cover their liabilities as well as a solvency margin, which acts as a buffer against adverse developments. In Ireland, insurance and reinsurance undertakings operate at a level above the EU minimum standard as an additional safety measure. The combination of these requirements together with close monitoring of solvency by the Financial Regulator is designed to minimise the risk of failure.

However, in the case of a threat of failure of a non-life insurance company, a life insurance company or a reinsurance company, a company is required to submit a financial recovery plan and ultimately an Administrator could be appointed to manage the business with a view to placing it on a sound commercial and financial footing. Also, provisions in insurance legislation protect the interests of policyholders in the event of insolvency. Consequently, the above measures act to mitigate any potential negative impact on the Exchequer in the event of a failure of an insurance or reinsurance company.

Finally, it should be noted that any new applications for business in Ireland are rigorously assessed from a regulatory viewpoint and are also considered by the Central Bank from a financial stability perspective where this is relevant.