Minister for Finance Paschal Donohoe has decided to phase in plans to impose the full cost of financial regulation on banks, insurers and other Central Bank-regulated firms, as the Government seeks to lure financial activity from London to Dublin under Brexit.
The Central Bank outlined plans two years ago to move from a regime where industry generally pays half of the cost of financial regulation to 100 per cent.
Exceptions to the current system include bailed-out Irish banks, which have been forced in recent years to cover their entire regulatory costs and credit unions, who pay a lower rate, currently equivalent to 8 per cent of what it costs for Central Bank supervision.
However, the Minister said on Thursday that he has decided to make industry pay 65 per cent of its regulatory costs this year, bowing to pressure from financial firms who had called for a phased increase.
Regulation
"This formally concludes the consultation process on the subject of industry funding costs of financial regulation, which has been ongoing since July 2015," the Department of Finance said in a statement.
“The objective at the time of the public consultation was to look at moving towards industry funding the full cost of regulation, however, industry was wary of an immediate increase from 50 per cent to 100 per cent funding and called for a phased increase.”
The department said this view “along with the changes in the financial regulatory landscape caused by the UK’s decision to leave the EU” informed the decision to proceed with a 65 per cent levy this year.
It is understood that the Central Bank will publish details in the coming weeks of how individual sectors are impacted.
The Minister’s approval will be needed for any further increases in the levy in future years.
Industry paid €79.1 million of the total €148.3 million cost of financial regulation last year, the Central Bank has previously disclosed.
