Written answers

Tuesday, 31 March 2015

Department of Finance

Financial Institutions Levy

Photo of Pearse DohertyPearse Doherty (Donegal South West, Sinn Fein)
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256. To ask the Minister for Finance if he will provide a list of all levies currently in place on the financial sector; the amount each levy raised in 2014; if he will indicate in each case whether the levy is intended to be borne by the industry directly or can be passed onto the consumer; and if he will make a statement on the matter. [12762/15]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The following response outlines levies imposed relating to bodies which are under the remit of the Department of Finance only.

Central Bank 

On an annual basis the Central Bank publishes a Guide to the Industry Funding Levy which includes a comprehensive list of the levy rates applicable for the year in question.  The Guide to Industry Funding Regulations 2014 is available on the Central Bank website

Under 32D and 32E of the Central bank Act 1942, I have a role in approving the Central Bank regulations providing for fees and levies for the regulation of financial services providers, but the levels of those fees and levies is in the first instance a matter for the Central Bank. Under the current funding model, the objective of the regulations is to raise approximately 50 per cent of the cost of financial regulation directly from the regulated financial service providers. There are some exceptions where credit institutions fund 100 per cent of the cost of their regulation. For example, Irish authorised credit institutions admitted to the ELG Scheme 2009. In addition, credit institutions directly and indirectly supervised by the Single Supervisory Mechanism (SSM) will be required to fund 100 per cent of the budgeted costs of SSM-related activities incurred by the ECB.

A review of the current funding model is underway. A joint Working Group led by my Department with representatives from the Central Bank has been established to examine the introduction of a funding model that moves from the current partial funding model to a model that covers the full cost of regulation.

The following table outlines the Net Annual Funding Requirement (nAFR) for regulated financial services entities for 2014.

CategoryDescription2014 nAFR (€'000)
A1aIrish authorised Credit Institutions admitted to the ELG Scheme 2009 and their subsidiaries 13,543
A4Supplementary Levy for Credit Institutions 21,793
A1b/A2Irish authorised Credit Institutions not in A1a/EEA Branches 8,022
BInsurance Undertakings 12,167
CIntermediaries 2,519
D/E2Securities & Investment Firms and Investment Fund Service Providers 9,498
E1Investment Funds 2,974
FCredit Unions1,400
GMoneylenders293
HApproved Professional Bodies 11
JBureaux de Change 16
MRetail Credit/Home Reversion Firms 98
NPayment Institutions & E-Money Institutions 540
Total72,874
There are a number of exceptions to the 50% funding model as follows:

- Credit Institutions: Credit Institutions admitted to the Eligible Liabilities Guarantee Scheme 2009 are required to fund 100 per cent of supervisory costs.  Where appropriate, individual credit institutions are also required to fully fund costs incurred by the Central Bank in carrying out any external review of the institution.

- Credit Unions: The amount of the levy payable by a credit union is currently capped at 0.01per cent of their total assets as at 30 September in the previous year.  As a result, credit unions currently contribute approximately 8% to the cost of their regulation.

- Securities Market Supervision Costs: The excess of costs

- incurred by the Central Bank in performing its responsibilities under the Prospectus, Transparency, Market Abuse, Short Selling, Securities Financing Transaction Regulation Directives together with the European Markets Infrastructure Regulation over

- Transparency fees and Prospectus Approval and related fees is currently funded by the Central Bank by way of subvention.

Credit Union Restructuring Board (ReBo)

- Stabilisation Levy

Credit unions have to pay a stabilisation levy for the purpose of building up a fund that can be used, in certain circumstances and subject to certain conditions, to assist credit unions that have fallen below their statutory reserve requirement but are otherwise considered viable. 2015 is the first year in which credit unions are required to pay this levy. Hence it did not raise any money in 2014. The stabilisation levy contributions that individual credit unions have to pay is based on a percentage of their total assets. 

- ReBo Levy

For the year 2014, a ReBo levy of €1.4 million was provided for by Statutory Instrument. This has been charged to credit unions and €1,354,586 had been collected by late-March of 2015. The purpose of the levy is to finance the performance of ReBo of its functions under the Credit Union and Co-Operation with Overseas Regulators Act 2012. The levy is borne by credit unions.

Financial Services Ombudsman

Financial service providers are liable to pay a levy where they are registered with the Central Bank. The Financial Services Ombudsman Bureau is funded by financial service providers. The levy amounts are prescribed by the Financial Services Ombudsman Council with the consent of the Minister for Finance.

The Financial Services Ombudsman Bureau is 100% funded by issuing an annual levy on all regulated financial service providers.

The following is a table of the funding allocation for the Financial Services Ombudsman Bureau for 2014.

Funding Allocation2014 (€)
Life Assurance 1,613,234
General Insurance1,759,936
Credit Institutions  1,357,586
Credit Unions  585,791
Stockbrokers  164,472
Other Regulated Entities  412,460
Total 5,893,479
Investor Compensation Company Limited (ICCL)

The ICCL applies a single levy per annum - the Annual levy for the Investor Compensation Scheme. This levy is to be borne by the industry participant. The levy raised in their financial year ending 31/07/2014 came to €4.072m from their Fund A and €1.484m from their Fund B. 

Revenue Commissioners

I am informed by the Revenue Commissioners that the following levies are currently payable by financial institutions:

- Stamp duty Levy on cash cards, debit cards and combined cash/debit cards under Section 123B of the Stamp Duties Consolidation Act 1999. The yield from this levy in 2014 was €18.76m million.  The levy is payable by the financial institution, but the legislation provides that it may be passed on to the cardholder.

- Stamp duty levy on credit cards and charge cards under Section 124 of the Stamp Duties Consolidation Act 1999. The yield from this levy in 2014 was €45.85m million. The levy is payable by the financial institution, but the legislation provides that it may be passed on to the cardholder

- Levy on financial institutions under Section 126AA of the Stamp Duties Consolidation Act 1999. The yield from this levy in 2014 was €154 million. The levy is payable by the financial institution and the legislation does not provide for it to be passed on to accountholders. Financial institutions may of course reflect some or all of the levy in any charges they apply to accountholders. 

In addition, the following levies are currently payable by insurers:

- Levy on life insurance premiums under Section 124B of the Stamp Duties Consolidation Act 1999. The yield from this levy in 2014 was €27.85 million.

- Levy on general insurance premiums under Section 125 of the Stamp Duties Consolidation Act 1999. The yield from this levy in 2014 was €1.97 million.

- Levy on Health Insurers under Section 125A of the Stamp Duties Consolidation Act 1999. Insurers incur the levy. The yield from this levy in 2014 was €581.71 million.

These insurance levies are payable by the relevant insurers and the legislation does not provide for them to be passed on to the insured persons. Insurers may of course reflect some or all of any levy in the premium they charge to insured persons.

Furthermore, the Deputy may be aware of the pension fund levy under Section 125B of the Stamp Duties Consolidation Act 1999. It is a stamp duty charge that applies to the market value, on the valuation date, of assets under management in pension funds and pension plans approved under Irish tax legislation. The chargeable persons for the levy are the trustees or other persons, including insurance companies, responsible for the management of the assets of the pension schemes or plans. The payment of the levy is treated as a necessary expense of a pension scheme and the trustees or insurer, as appropriate, are entitled where needed to adjust current or prospective benefits payable under a scheme to take account of the levy. In accordance with the provisions in section 125B of the Stamp Duties Consolidation Act 1999, the stamp duty levy on pension fund assets will end after 2015. The yield from this levy in 2014 was €743 million.

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