The sums behind ‘taxing’ the banks into a rate cut

Yesterday we were on the Sean O’Rourke show discussing variable rates on RTE Radio. We mentioned how doubling the ‘tax’ on banks won’t actually change anything. The mechanisms were briefly covered and we got a few emails asking for clarification so here it is.

The ‘levy’ was part of the Finance Act 2014 which imposed a new annual levy on financial institutions aiming to raise €150 million per annum for 3 years.

This sum is payable on October the 20th in each year (2014-2016) and it applies to a financial institution that is the holder of an Irish (or equivalent EU) banking licence or is an Irish (or equiv EU) building society that was obliged to pay DIRT – unless the amount required to pay in 2011 was not more than 100k.

The main outcry is centred on variable rates for primary home dwellers in particular. So how much of that debt is out there?

We know there are about 300,000 ‘loans’ but the quantum of debt is €39.638m which is about €3bn …

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RTE Today with Sean O’Rourke on mortgage rates

We were speaking with Sean O’Rourke about mortgage rates, that they were falling as part of a trend and that new moves to force them down would likely not work. It came on the back of a piece by Conor Pope in the Irish Times that quoted us in the article entitled ‘New bank levy could see mortgage rates rise not fall‘.

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RTE Drivetime ‘Talking money’, going broke in old age, 23rd February 2015

On the 23rd of February we looked at the very real issue of people going broke when they are advanced in years. This can be a problem due to bad investment performance for those who have pensions, having no pension and not having enough, or outliving your money – what refer to as having ‘too much month at the end of the money’.

We have suggestions, but as always, prudent planning is key.

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Talking Money on RTE 1 Drivetime: Cash in pensions for the over 55’s, 9th February 2015

On the 9th of February in the ‘Talking Money’ segment of  RTE 1 Drivetime show Mary Wilson had us in to discuss some changes that were coming down the line in the UK for the over 55’s regarding their pensions. This will have an effect on thousands of Irish people and we considered that as well as whether or not the move was a good idea or not.

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Answer: The Central Bank don’t deal with mortgage complaints is why…

We should probably pose the question, ‘Why haven’t the Central Bank dealt with any complaints about abuses of the Code of Conduct on Mortgage Arrears?’.

The answer is the blog topic. The Central Bank are a regulator, not a receiver of and adjudicator of complaints.

The Central Bank do have a sanction regime, but it is mainly regarding that of regulation from the perspective of qualifying for regulation, for complaints about the CCMA the most appropriate authority is the Financial Services Ombudsman.

And they have been dealing with mortgage complaints for quite some time, they even have a category for it in their reports.

Not only that, their own chairperson notes (see page 11) that mortgage related complaints were a massive 50% of the complaints received! And in many cases the complaints are partially substantiated and a lower number fully substantiated.

In general complaints are down, complaints received for 2014 were 4,477, a decrease overall of 42% year on year.

This is encouraging as it means more complaints are being dealt with prior …

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RTE Sean O’Rourke Show: Karl Deeter & Ronan Lyons on Central Bank rules

Last week on the Sean O’Rourke Show Karl Deeter and Ronan Lyons (Trinity College & Daft.ie) had a good robust debate about lending rules and whether restrictions were good or bad. This week in light of the actual changes that occurred they had a second conversation on the outcomes.

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