Written answers

Tuesday, 15 April 2014

Department of Finance

Banking Sector Regulation

Photo of Billy KelleherBilly Kelleher (Cork North Central, Fianna Fail)
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152. To ask the Minister for Finance the progress the Government has made in implementing the recommendations of the Moriarty tribunal report; and if he will make a statement on the matter. [17801/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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In response to the Deputy's question the Moriarty Tribunal made a number of recommendations which affected a number of Government Departments. As Minister for Finance I can only respond in relation to the recommendations made in relation to my own Department.

The tribunal pointed out problems to be addressed in our system of financial regulation. Poor supervision, an overly-deferential attitude by regulators, poor assessment of risks and a lack of follow-through on enforcement, all played a part in the financial crisis.  This Government has undertaken a number of significant reforms since the financial crisis towards building a strengthened regulatory framework for the Irish financial services sector and to respond to the shortcomings identified. In 2011 the new Fitness and Probity regime was rolled out by the Central Bank in accordance with the provisions of the Central Bank Reform Act 2010. The regime provides for new powers to be exercised by the Central Bank to ensure the fitness and probity of nominees to key positions within financial service providers and of key office-holders within those providers. Following on from the Central Bank Reform Act, 2010, the Central Bank (Supervision and Enforcement) Act 2013 enhances the Central Bank's regulatory powers, drawing on the lessons of the recent past in Ireland and abroad. It strengthens the ability of the Central Bank to impose and supervise compliance with regulatory requirements and to undertake timely prudential interventions.  The Act also provides the Central Bank with greater access to information and analysis and underpins the credible enforcement of Irish financial services legislation in line with international best practice. The reforms introduced under the Central Bank (Supervision and Enforcement) Act 2013 are complemented by a number of strategically important reforms at EU level in financial services. Under our presidency, agreement was reached on the single supervisory mechanism, one of the main cornerstones of Banking Union which will provide for the European Central Bank to act as supervisor for systemic important banks throughout the Union. Agreement was also reached on the Capital Requirements package which will ensure that European banks hold enough good quality capital to withstand future economic and financial shocks. These legislative reforms have been supplemented by a significant increase in regulatory activity by the Central Bank with a corresponding increase in staff numbers and skill levels. The Central Bank of Ireland's Enforcement Priorities for 2013 highlight the importance of enforcement within its risk-based regulatory framework (PRISM). PRISM represents a challenging and proportionate risk-based system of supervision for all financial institutions operating in Ireland. The Central Bank's Strategic Plan 2013 2015 also sets out a strategy of assertive risk-based supervision underpinned by a credible threat of enforcement.In response to the Tribunal recommendations I have considered the provision of tax relief for donations to political parties and have decided against introducing such relief. The Electoral (Amendment) (Political Funding) Act 2012 provided for changes to the Electoral Act, 1997 and imposed new limits for donations. Donations to individuals exceeding €600 must be declared and donations exceeding €1,000 in any one year may not be accepted. Political party donations greater than €1,500 must be declared and donations greater than €2,500 in any one year may not be accepted. These limits, in themselves, should act to deter any attempts by wealthy individuals to influence political activity.The Office of the Revenue Commissioners have provided me with the following information in relation to Revenue issues raised in the recommendations of the Moriarty Tribunal.Recommendation: Independence of the Revenue Commissioners - Section 101 of the Minister and Secretaries (Amendment) Act 2011 has placed on a statutory basis the independence of the Revenue Commissioners in the exercise by the Commissioners of their statutory functions under the various taxation and customs enactments. This has given effect to the recommendation of the Report of the Tribunal into Payments to Politicians and Related Matters (that is, the report of Mr. Justice Moriarty), that the principle or convention of the independence of the Revenue Commissioners be placed on the more robust status of a legislative provision.Recommendation: Representations to Revenue by Office holders - In relation to this proposal I as Minister for Finance remain of the view that this recommendation could best be considered in the context of the Government's overall approach to political and parliamentary reform. Representations are a valid part of the political process. The Government may wish to consider whether this recommendation should be confined to Revenue, or to Office holders, or whether the Commissioners decision to publish data on the volume of representations made by each Deputy is an adequate response.Recommendation: Transmission to other agencies of information obtained by Revenue under bilateral agreements- This recommendation has been considered. These agreements are international treaties which are very precisely drawn as to the purpose for which information may be used and would not permit such transmission. However if opportunities arise in the future, the Commissioners will consider the matter further. The Deputy will appreciate that Revenue is not in a position to comment on matters relating to individuals for reasons of taxpayer confidentiality.

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