Róisín Shortall (Dublin North West, Social Democrats)
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199. To ask the Minister for Finance the actions his Department and bodies under the aegis of his Department have taken in response to each of the relevant recommendations of the interim report on the Committee of Public Account's examination of bank stabilisation measures. [34315/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Interim Report on the Committee of Public Account's examination of bank stabilisation measures had nine recommendations. The Deputy will be aware that responsibility for addressing these recommendations is spread across the Central Bank and several Government Departments.  Therefore, I will confine my response to the issues that come under my direct responsibility, as Minister for Finance and Public Expenditure and Reform.  There have already been substantive legislative changes that directly address many of the recommendations and a number of them have been addressed through European changes in bank supervision and regulation, particularly through the introduction of Bank Recovery and Resolution powers.

Recommendation 3:The issue of whether the Central Bank should have the power to put financial services firms into administration was subject to extensive consideration as part of the Central Bank (Supervision and Enforcement) Bill 2013. At that time, the Department had a number of concerns, including around the constitutionality of State interference in property rights, the issue of funding of administrators, and the potential costs to the State of such interventions. The introduction of recovery and resolution regimes is a better approach to dealing with financial services firms in difficulties as they give a greater level of protection to taxpayers. 

The 2013 Act also enhanced the Central Bank's regulatory powers, strengthening its ability to impose and supervise compliance with regulatory requirements and to undertake timely prudential interventions. The Act provided 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 2013 Act also provided the Central Bank with powers to enable it to apply to the High Court for a restitution order against any person who has been unjustly enriched, or caused another person to suffer loss or detriment, as a result of committing a contravention of financial services legislation.

Recommendation 4:This recommendation was addressed through the Oireachtas Joint Committee of Inquiry into the Banking Crisis. The Report of the Joint Committee of Inquiry into the Banking Crisis is publically available.

Recommendation 5:There have been a number of measures taken to address this recommendation including:

- The Central Bank introduced resolution targets for banks for the restructuring of SME loans, which have been worked through and are evident in the significant fall in non-performing loans.

- The Programme for Partnership Government places consumers at the centre of the Government’s banking sector policies by fostering greater competition in credit provision through supporting non-bank credit providers, such as the Strategic Banking Corporation of Ireland, and also reducing the State's ownership of the banking system.

- The recently published Competition and Consumer Protection Commission (CCPC) review of the residential mortgage market set out a number of short, medium and long term options to allow for greater competition from new entrants in the mortgage market, and could also encourage lenders to compete more vigorously on price, quality and innovation.

However, it is necessary to exercise caution in relation to the entirety of this recommendation, which proposed that the Central Bank should introduce measures whereby those banks that do not reach stipulated lending targets are subject to an appropriate sanction.  The State has borne, and is still bearing, the cost of excessive credit growth and the introduction of Central Bank sanctions would be inadvisable in terms of the perception that the Central Bank is driving credit growth.

Recommendation 6: A comprehensive framework is in place to address mortgage arrears with the Central Bank reporting quarterly on the numbers of mortgages arrears and restructuring arrangements.  Furthermore, my predecessor wrote last year to the Governor of the Central Bank to request that a further assessment be undertaken of the range of available sustainable restructure solutions offered by banks and non-bank entities. The subsequent report is published on the Department of Finance website. The assessment found a comprehensive range of available restructuring solutions being offered and noted considerable progress in addressing mortgage arrears since the peak.  The Central Bank noted further that there is strong evidence that both banks and non-banks look to exhaust available restructure options before moving to the legal process.  In addition, the Central Bank considered the range of restructures offered by banks to be broadly appropriate in balancing consumer protection imperatives, and maintaining a mortgage market for all borrowers, and a functioning banking system.

Recommendation 7:As evidenced by recent Central Bank departures, the Bank has ensured appropriate cooling-off periods for staff leaving the bank for other employments.

Recommendation 8: The issue of Oireachtas oversight on the Annual Performance Statement is addressed in Section 32(L)(6) of the Central Bank Act 1942, as amended, which requires the Governor of the Central Bank (or a Head of Function/Deputy Governor), if requested by a Committee of the Oireachtas, to attend before the Committee, and provide that Committee with information relating to the Bank's performance statement.

Recommendation 9: The peer reviews of theCentral Bank are published on completion and as set out above, the Governor of the Central Bank (or a Head of Function/Deputy Governor), may be requested by a Committee of the Oireachtas, to attend before the Committee.