IFSC vetoed insurance levy for their firms
The financial services industry successfully lobbied Government to have IFSC-based international insurers excluded from the Quinn Insurance levy amid concerns about overseas policyholders being forced to pay for the insurer’s losses.
The Government changed the legislation so foreign policyholders whose insurance companies were based in the IFSC would not be levied.
A 2 per cent levy has been imposed on all non-life Irish insurance policyholders to cover the cost of Quinn Insurance which could reach €1.65 billion.
Minutes of eight meetings of the IFSC Clearing House Group, seen by The Irish Times, also reveal the extent of the industry’s access to senior Department of Taoiseach and Department of Finance officials, and the Central Bank, the industry’s regulator.
The group, which is chaired by the country’s most senior public official Martin Fraser, includes top civil servants and representatives of the industry.
The Government has agreed to lift the secrecy around the group’s work amid criticism that the financial industry has unfettered access to senior civil servants to lobby on issues affecting it.
Politicians, including Labour MEP Nessa Childers and TD Kevin Humphreys, and Fianna Fáil finance spokesman Michael McGrath, have expressed concern about the level of influence exercised by the IFSC on the Government.
The minutes show how the Government’s strategy for the the IFSC was driven by the industry and how the industry raised concerns about more intrusive regulation of the domestic banks post the crash affecting international financial services companies.
The meetings date from March 2011 to June 2012.
Minutes of a meeting in June 2011 show that the Taoiseach wrote to Minister for Finance Michael Noonan to raise the concerns of international insurers about the Quinn levy.
Concerns of the industry
The minutes noted concerns of the industry representatives about the “severe competitive damage that the imposition of the proposed levy would have on the international industry”.
A spokesman for the Department of Finance said yesterday that the legislation was changed to exclude foreign policyholders from the Quinn levy on the advice of the Attorney General.
He said that the department was advised that imposing the levy on foreign customers of Irish-based insurance companies would appear to have infringed EU insurance rules.
In an IFSC Clearing House Group meeting in January 2012, the Department of Finance ruled out a “bespoke” tax regime for a new type of investment vehicle known as an “alternative investment company” proposed by the funds industry.
The minutes of the meeting say that the department’s view was that such a vehicle could be viewed negatively as “overly aggressive” and it refused to consider it under the Finance Bill.
In a sign of appeasement to the industry for rejecting the tax regime, senior officials conceded that the department was proceeding with almost all other issues raised by the industry in a pre-budget submission.
“The department understood the industry’s disappointment but highlighted that virtually all of the other issues contained in the funds industry pre-budget submission were being progressed,” the minutes said.
At a meeting in March 2011 Willie Slattery, then head of the Irish operations of US bank State Street, expressed concern and disappointment at why there had been no consultation on new audit regulations.He also raised concerns about new banking regulations.
“He believed that the regulatory terms now being applied in the domestic banking sector were over-reaching unreasonably into the international financial services sector,” the minutes said of his contribution.