Joe Costello (Dublin Central, Labour)
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Question 55: To ask the Minister for Finance the total annual cost of regulating the Irish financial sector; the extent to which those entities regulated by the Financial Regulator cover the costs of this regulation; the way this cost coverage varies across different financial sectors, domestic banking, insurance, IFSC-based banking and so on; and if he will make a statement on the matter. [25619/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Central Bank and Financial Services Authority of Ireland (CBFSAI) is governed by the Central Bank Act 1942 (as amended), the Statute of the European System of Central Banks and the Treaty of Rome and is not directly responsible to me for the cost of financial regulation. However, the Central Bank Act 1942 requires my approval for an annual statement by the Irish Financial Services Regulatory Authority (IFSRA) of proposed income and expenditure specifying the amounts to be raised by levies in respect of financial regulation. Once I have approved it, the statement is laid before the Houses of the Oireachtas. In addition, the annual report of the IFSRA which shows the outcome of income and expenditure in the previous year is laid before the Houses of the Oireachtas each year.

The CBFSAI has advised me that over the three-year period from 2007 to 2009 some 50 per cent of the total costs of the Financial Regulator have been met by the imposition of levies on the industry. The balance of the total annual costs is provided by the CBFSAI in accordance with Section 33(L) of the Central Bank Act 1942. In 2009, the CBFSAI bore the full cost of certain securities market supervision activities carried out within the Financial Regulator. These costs, totalling €3.4 million, were excluded from the Net Industry Funding levies issued to the industry in 2009. In addition, under the provisions of the Central Bank Act 1942 (Section 33J) Regulations 2009, a supplementary levy was imposed on credit institutions covered by the Credit Institutions (Financial Support) Scheme 2008 which is designed to recoup 100 per cent of the costs of the more intensive level of supervision necessary to ensure compliance by relevant credit institutions with the provisions of the Scheme. There is also a cap on the amount of the levy payable by Credit Unions equivalent to 0.01% of a credit union's total assets.

The Budget of the Financial Regulator for the year ended 31 December 2009 amounted to €63.59 million of which €34.5 million was to be funded by way of a subvention from the CBFSAI. The following table shows the contribution from each industry category.