Gerald Nash (Louth, Labour)
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365. To ask the Minister for Finance the cost of regulation of the financial industry by the Central Bank for 2019 and 2020 respectively; the amount of subvention provided by the Central Bank for both years; the estimated savings that would accrue to the Exchequer from moving the entire cost of regulation of the financial sector onto the industry; and if he will make a statement on the matter. [39928/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy may be aware the Central Bank disclose the total cost of Financial Regulation (Net Annual Funding Requirement or nAFR) in the Central Bank Annual Report each year.

The most recent report (see link below) includes details of the 2019 and 2020 cost of Financial Regulation which are as follows:

www.centralbank.ie/docs/default-source/publications/corporate-reports/annual-reports/annual-report-2020-and-annual-performance-statement-2020-2021.pdf

If industry was fully charged, there would be no subvention, however, there are certain costs (e.g. markets supervision) which it may be appropriate to continue to subvent on an ongoing basis where the costs cannot be attributed to specific firms but do relate to the orderly function of markets and the financial stability agenda.

As the Deputy will recall, in 2015, the Department of Finance and Central Bank of Ireland issued a joint public consultation on ‘Funding the cost of Financial Regulation’ (CP95).

In response to that consultation, my predecessor as Minister for Finance, Michael Noonan, agreed to a phased movement towards 100 per cent Industry Funding in order to eliminate subvention, by the taxpayer, of regulatory costs. Since then, recovery rates have increased in stages across most industry sectors, determined on a yearly basis. In April 2019, in order to give greater clarity to industry, I approved the trajectory to bring the recovery rate of levies across sectors to 100 per cent over the coming years. This change in policy will apply the user pays principle to the regulation of financial services.

The table below shows the planned trajectory for levy rates across all sectors. Credit Union recovery rates from 2022 onwards will be subject to review and a public consultation to guide strategy once 50% recovery rates have been achieved.

Link: www.centralbank.ie/docs/default-source/publications/corporate-reports/annual-reports/annual-report-2020-and-annual-performance-statement-2020-2021.pdf