As Gaeilge

Address by the Minister for Finance, Mr Brian Cowen, TD, to the Annual Lunch of Financial Services Ireland, 21 February 2005

I am delighted to be here today for the Financial Services Ireland Annual Lunch.

The Government value the important role that the financial services industry plays in the Irish economy. It is a very significant employer in today’s economy, with a total of over 51,000 working in the sector, of which over 17,000 are engaged in providing wholesale or international services. I am pleased to see that the sector’s contribution to employment continues to be robust, both in terms of direct employment and within its related services. An encouraging feature of the development of the industry in recent years is the extent to which financial service businesses are locating in areas outside the traditional hub of the industry - central Dublin.   Apart from its direct contribution to economic activity, the sector is a vital cog in the economic wheel. The protection, banking and investment services provided to hundreds of thousands of personal and business customers are indispensable in our modern economy.

Ireland has been exceptionally successful in attracting international financial services companies to locate here. That is a trend that we want to see continue. The Government responded to a concern among some in the industry that there had been a loss of momentum and a slowdown in the growth of the international services sector. It was decided to revisit and update the national strategy and policy for attracting inward investment from international financial services companies. As part of that exercise, IDA Ireland commissioned Deloitte Management Consultants to review future options for the International Financial Services Sector in Ireland.

That report, published in September last, concluded that there are still excellent opportunities to grow and develop the following sectors:

  • Specialist debt/financing products and securitisation
  • Managing global/regional banking products 
  • Funds servicing 
  • Asset management 
  • Pan European location for insurance products

The proviso was that we continue to be innovative and develop appropriate skills and expertise. A flexible, responsive and business-focused regulatory system has been the cornerstone of Ireland’s development, and continued progress on that front was recommended.

I would like to echo the words of the Taoiseach who, speaking at the launch, said: “It is important that we continue to innovate and develop our current position.  To do so will need a comprehensive strategy with commitment from the public and private sector to ensure its effective delivery."

Our regulatory environment is a key component both of our competitiveness and of our international reputation. My predecessor, Mr Charlie McCreevy, gave a commitment to simplify and consolidate the financial services legislation and I am happy to honour that commitment. The Central Bank and Financial Services Authority of Ireland Acts of 2003 and 2004 put in place a new regulatory architecture, based on the conclusions of the McDowell Report. The purpose of the forthcoming consolidation Bill will be to bring together in a single, modern legal text, all of the primary legislation governing the regulation of the financial services sector, providing a comprehensive legal framework for achieving the Government’s objectives in relation to consumer protection and financial stability; but in a way that does not impose a disproportionate burden on industry.

Following on from an informal updating and consolidation of the existing legislation which was published on the Department of Finance website, my Department launched a public consultation process in September last. Comments were invited particularly as to whether the Bill should lay down general regulatory principles applicable to all sectors, or continue with a modified version of the present sector-based approach. In addition, views were sought as to whether and how the overall burden on industry, arising from the current legislative structure, might be reduced, while still ensuring effective regulation and consumer protection. Finally, respondents were asked to consider the balance between the provisions of the proposed Bill and the requirements laid down by the Financial Regulator.

I am very pleased with the response to the public consultation process. It has resulted in the Department receiving in total some 24 submissions, from a variety of interested parties. I would like to offer my thanks to this organisation for its constructive input to the deliberations. I would hope to publish the new Bill later this year.

I would now like to say a few words about the Finance Bill that is currently going through the Oireachtas. I want to record how much I value the work of the Irish Financial Services Tax Group, which my Department chairs, in framing the changes being planned for the Budget and the Finance Bill.

In the Budget, I announced my intention to reduce the rate of Companies Capital Duty from 1% to ½% and this change is in the Bill which recently completed Second Stage in the Dáil. This measure should ensure that we remain competitive and assist in attracting high value-added business to Ireland.  I am also making changes to the encashment tax system that will alleviate some administrative difficulties in the retail banking sector.

In addition, I am introducing measures that will clarify the tax treatment of Common Contractual Funds, a new type of investment vehicle that will be created in legislation by the Department of Enterprise, Trade & Employment this year. This is in response to opportunities in the area of asset pooling that have been identified by the Funds industry. The new scheme will be subject to certain conditions and safeguards of the Revenue Commissioners, in order to ensure it is adequately supervised.

Conclusion

Thank you very much for your attention. I hope that I have touched on some of the main issues that were of interest to you. I look forward to an ongoing constructive relationship with this key industry.

ENDS


 
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