A Guide to Industry Funding Regulations

Transcription

1 2010 A Guide to Industry Funding Regulations

2 2 A Guide to Industry Funding Regulations Contents Summary 3 Section 1 Background to the 2010 Industry Funding Regulations 4 Section 2 Significant Changes in Section 3 Calculation of the Industry Funding Levy 7 Section 4 Financial Information for Industry Sectors 19 Section 5 Appendices 21

3 A Guide to Industry Funding Regulations 3 Summary This guide is intended to provide a user-friendly guide as to how the industry funding levy for 2010 is calculated. The guide is divided into five sections: Section 1 Background to the 2010 Industry Funding Regulations Section 1 sets out the background to the levy and summarises the 2010 Industry Funding Regulations. Section 2 Significant Changes in 2010 Section 2 sets out any significant legislative or regulatory changes which have occurred in Section 3 Calculation of the Industry Funding Levy Section 3 explains the manner in which the levy is calculated for each industry sector. Section 4 Financial Information for Industry Sectors a) How the Annual Funding Requirement is determined b) Central Bank Supervision Departments staff numbers Section 5 Appendices Appendix Annual Funding Requirement (AFR) Appendix 2 Comparison of 2010 Annual Funding Requirement with 2009 Annual Funding Requirement Appendix 3 Population of each Industry Sector If you have queries regarding the 2010 Industry Funding Levy please refer to the FREQUENTLY ASKED QUESTIONS in the Industry Funding Levy area of our website or you can the funding unit at funding@centralbank.ie.

4 4 A Guide to Industry Funding Regulations Section 1 Background to the 2010 Regulations 1. The Regulations referred to in this Guide are the Central Bank Act 1942 (Sections 33J and 33K) Regulations 2010 (Regulations). The objective of the Regulations is to raise approximately 50 per cent* of the budget attributed to the Central Bank s supervisory activities directly from the financial service providers it regulates. Accordingly, the Regulations apply to all persons who are subject to regulation by the Central Bank. 2. The government gave the power to raise such a levy to the Chief Executive of the Financial Regulator under the Central Bank and Financial Services Authority of Ireland, Act 2003 (Section 33J). The Chief Executive has sought and obtained the prior approval of the Members of the Financial Regulator and the Minister for Finance for the introduction of the levy. See section 2 below for details regarding the creation of a new unitary body. 3. The Regulations, as amended, were signed by the Head of Financial Regulation on 30th of September 2010 and became law on the 12th of October From that date, all financial service providers are liable to pay an annual levy. The levy must be paid no later than 28 days from the date on the levy notice. 4. The method of calculation of the levy varies depending on the industry classification of a financial services provider. There are 14 categories (A N) contained in the Schedule to the Regulations. 5. A financial service provider may hold more than one authorisation from the Central Bank and, therefore, fall into more than one industry category. In such cases, the financial services provider must pay the levy for each category in respect of which it holds an authorisation. For example, a credit union (Category F) may also hold a multi-agency intermediary authorisation (Category C) and is therefore obliged to pay the levy for both categories. 6. Where a financial service provider carries on different types of business within the same category (for example, in Category C, an intermediary may hold an authorisation as a multiagency intermediary and an authorisation as a mortgage intermediary) the levy to be paid will be based on the total of declared income from all lines of regulated business. Collection of the Levy 7. The Central Bank sends almost all financial service providers a levy notice after the regulations are made. However, even if a regulated entity does not receive a levy notice, it is still legally obliged to pay the levy calculated in accordance with the appropriate industry category in the regulations. Any such financial service provider should request a copy of the levy notice by at funding@centralbank.ie. 8. Intermediaries authorised for the first time in 2009 must submit a Declaration of Income to the Central Bank for the period from date of authorisation to 31 December Should an intermediary fail to submit a self declaration of income form or the declaration proves to be incorrect or, for whatever reason, the Central Bank is prevented from properly assessing the levy amount, the intermediary may be assessed under Category L and required to pay a levy of 3,600. * Credit Institutions covered by the Credit Institutions (Financial Support) Scheme 2008 will be required to fund 100 per cent of supervisory costs. Please see Section 2.

5 A Guide to Industry Funding Regulations The preferred methods of payment are direct debit or electronic funds transfer. Options for payment are available on our website at To ensure that payments are dealt with efficiently, all payments made by electronic funds transfer (EFT) must include details of the levy notice number and/or the account number. Failure to include the required details may result in the payment being returned at the financial service provider s expense. Payment by cheque will also be accepted and should be made payable to IFSRA No. 1 account. Appeals 11. A financial service provider may appeal the levy amount to the Head of Financial Regulation to change the amount of the levy where it considers that the amount is incorrectly assessed but must do so no later than 21 days following the date of the levy notice. A financial services provider may only dispute the amount of assessment. A financial services provider cannot dispute an amount correctly calculated from the Schedule to the Regulations. Any such appeals must be in writing and must: dispute the calculation of the levy because of either an incorrect figure, or an incorrect category or categories; set out the grounds of the appeal in detail; be accompanied by the amount of required levy contribution that is not in dispute; and include any supporting documentation or representations, where relevant. Once an appeal has been considered and the financial services provider has been notified of the decision, it must pay the balance of the levy owing (if any) within 10 days of the date of notification. Recovery of the Levy 12. If a financial services provider fails to pay the levy by the required date, the Central Bank may take steps to recover the amount of the levy. Recovery action may include court proceedings. Records 13. A financial services provider must keep all records on which the levy has been calculated for so long as the Head of Financial Regulation stipulates. The Head of Financial Regulation has stipulated that this requirement is applicable for a period of six years.

6 6 A Guide to Industry Funding Regulations Section 2 Significant Changes in Role of the Central Bank The Central Bank Reform Act, 2010, creates a new single unitary body the Central Bank of Ireland responsible for both central banking and financial regulation. The new structure replaces the Central Bank and Financial Services Authority of Ireland of which the Financial Regulator was a constituent part. The Central Bank of Ireland was formally established on 1 October Credit Institutions In 2009, credit institutions covered by the Credit Institutions (Financial Support) Scheme 2008 (funding sub-category A1a) were required to pay 100 per cent of certain costs related to the more intensive level of supervision necessary to ensure compliance by relevant credit institutions with the provisions of the Scheme together with 50 per cent of the costs attributable to the more routine supervision which had applied theretofore. With effect from 2010, credit institutions within this category will be required to pay 100 per cent of all prudential supervisory costs attributable to the sub-category. Further details of the 2010 levies for credit institutions can be found in section Retail Credit Firms and Home Reversion Firms The Financial Regulator (and, subsequently, the Central Bank) has been responsible for the authorisation and supervision of retail credit firms and home reversion firms since 1 February For 2010 and subsequent levy years, home reversion firms and retail credit firms (treated in 2009 as a single levy category, M) will be separated into two levy sub-categories M1 (retail credit firms) and M2 (home reversion firms). These changes have been made to better reflect the structure of the industry, to make the levy calculation more transparent and to improve equity of treatment for the entities in this category. Further details of the 2010 levy for these entities can be found in section Payment Institutions The Financial Regulator (and, subsequently, the Central Bank) has been responsible for the authorisation and supervision of payment institutions since November Such firms now fall within the Industry Funding Levy process and have been included in funding Category N. Further details of the 2010 levy for these entities can be found in section Insurance/Reinsurance Intermediaries registered under the Insurance Mediation Directive (IMD) From the period 2006 to 2009, firms whose sole authorisation was in accordance with the European Communities (Insurance Mediation) Regulations 2005 (which give effect in Irish law to the European Communities Insurance Mediation Directive) ( IMD firms ) were subject only to a flat rate levy equivalent to the minimum levy in funding Category C. In addition, firms who also held any other Category C authorisations (e.g. mortgage intermediaries) were requested to exclude IMD income from their declaration of income earned for levy assessment purposes. With effect from 2010, all intermediaries (including IMD firms) falling within funding Category C will be required to declare all income earned from regulated activities for levy assessment purposes.

7 A Guide to Industry Funding Regulations 7 Section 3 Calculation of the Levy Category A: Credit Institutions Credit institutions are subject to two types of levy, a prudential levy and a consumer levy. Credit institutions are only required to pay a prudential levy if their head office is located in Ireland. The consumer levy applies only to financial service providers that conduct retail business in Ireland. For the purposes of the levy, retail business is measured by the level of deposits from, and lending to, individuals and households. It follows that a credit institution that does not undertake retail business is not liable to pay the consumer levy. A1a Credit Institutions authorised under Irish legislation and covered by the Credit Institutions (Financial Support) Scheme 2008 and their subsidiaries that are Credit Institutions authorised under Irish legislation All such credit institutions will be charged a minimum prudential levy of 30,000. In addition to the minimum prudential levy, a variable levy based on the minimum level of required regulatory capital is also payable. The regulatory bands and the relevant variable rates are shown in Table 1 below: Table 1 Band Pillar I Capital Requirements Range Charge per m or part thereof Min 0 200,000,000 Min 30,000 A 200,000, ,000, B 600,000, ,000,000 4, C 700,000,001 2,000,000, D 2,000,000,001 10,000,000, The range relates to the Pillar I capital requirements of the entity (net of any interim capital requirements imposed by the Central Bank but including Capital Requirements Directive capital floors) as at 31 December These data are contained in line item 2 (Total Capital Requirements) of Common Solvency Reporting, format CA, adjusted for any interim capital or Pillar II requirement. All such credit institutions that engage in retail lending or retail deposit taking will be charged a minimum consumer levy of 6,000 plus an additional amount based on Table 2 below: Table 2 Band Retail Lending and Retail Deposits Range Charge per m or part thereof Min 0 4,000,000,000 Min 6,000 A 4,000,000,001 5,000,000, B 5,000,000,001 7,500,000, C 7,500,000,001 22,000,000, D 22,000,000,001 50,000,000,

8 8 A Guide to Industry Funding Regulations The range is based on the combined total of retail lending to Irish resident individuals and households (extracted from the Sectoral Return, LRS format, row code OPERSN, column code EURLRS) and retail deposits taken from Irish resident individuals and households (extracted from the Sectoral Return, LRS format, row code OPERSN, column code EURDRS) as reported to the Central Bank as at 31 December In addition, the covered institutions listed below shall be charged specific costs as follows (these specific costs shall be paid by each of the named covered institutions for, and on behalf of, each of its subsidiaries who are covered institutions): Covered Institution Anglo Irish Bank Corporation plc (197,343.21) Allied Irish Banks plc 181, The Governor and Company of the Bank of Ireland 181, Irish Nationwide Building Society 737, Irish Life and Permanent Plc 5, EBS Building Society 715, Postbank Ireland Ltd (35,714.00) A1b Credit Institutions authorised under Irish legislation and not covered by the Credit Institutions (Financial Support) Scheme 2008 All such credit institutions will be charged a minimum prudential levy of 30,000. In addition to the minimum prudential levy, a variable levy based on the minimum level of required regulatory capital is also payable. The regulatory bands and the relevant variable rates are shown in Table 3 below. The range in Table 3 relates to the Pillar I capital requirements of the entity (net of any interim capital requirements imposed by the Central Bank but including Capital Requirements Directive capital floors) as at 31 December These data are contained in line item 2 (Total Capital Requirements) of Common Solvency Reporting, format CA, adjusted for any interim capital or Pillar II requirement. Table 3 Band Pillar I Capital Requirements Range Charge per m or part thereof Min 0 25,000,000 Min 30,000 A 25,000, ,000, B 120,000, ,000, C 160,000, ,000, D 500,000,001 10,000,000, All such credit institutions that engage in retail lending or retail deposit taking will be charged a minimum consumer levy of 5,000 plus an additional amount based on Table 4 below. The range in Table 4 is based on the combined total of retail lending to Irish resident individuals and households (extracted from the Sectoral Return, LRS format, row code OPERSN, column code EURLRS) and retail deposits taken from Irish resident individuals and households (extracted from the Sectoral Return, LRS format, row code OPERSN, column code EURDRS) as reported to the Central Bank as at 31 December 2009.

9 A Guide to Industry Funding Regulations 9 Band Table 4 Retail Lending and Retail Deposits Range Charge per m or part thereof Min 0 1,000,000 Min 5,000 A 1,000,001 5,000,000 3, B 5,000,001 75,000, C 75,000,001 2,000,000, D 2,000,000,001 25,000,000, A2 Credit Institutions authorised in another EEA state operating in Ireland on a branch basis Branches operating in Ireland are not subject to prudential supervision by the Central Bank and accordingly they are not liable to pay a prudential levy. Branches will, however, be required to pay a consumer levy if they are engaged in lending to, or taking deposits from, Irish resident individuals or households. All branches that engage in retail lending or retail deposit-taking will be charged a minimum levy of 5,000 plus an additional amount based on Table 4 above. The range in Table 4 is based on the combined total of retail lending to Irish resident individuals and households (extracted from the Sectoral Return, LRS format, row code OPERSN, column code EURLRS) and retail deposits taken from Irish resident individuals and households (extracted from the Sectoral Return, LRS format, row code OPERSN, column code EURDRS) as reported to the Central Bank as at 31 December A3 Credit Institutions authorised in another EEA state operating in Ireland on a cross border basis Entities undertaking business on a cross border basis are not subject to the prudential charge as prudential supervision is the responsibility of the home country regulator. Entities carrying out business in Ireland are required to pay a consumer levy if they are engaged in lending to or taking deposits from Irish resident individuals or households (as defined for the purposes of the Sectoral Return). Table 4 above details the amounts payable by such entities. The range in Table 4 is based on the combined total of retail lending and retail deposits to individuals and households in Ireland. Entities operating in Ireland on a cross border basis are obliged to determine the amount of levy contribution they are due to pay by reference to this table and submit the appropriate amount to the Central Bank. No levy notices will be issued.

10 10 A Guide to Industry Funding Regulations Category B: Insurance Undertakings Insurance undertakings may be subject to two types of levy, a prudential levy and a consumer levy. Insurance undertakings are only required to pay the prudential levy if their head office is located in Ireland while the consumer levy is only applicable to insurance undertakings that generate premium income on Irish risk business. It follows that an insurance undertaking that does not write Irish risk business will not be required to pay a consumer levy. B1 Life undertakings with Irish head office and life undertakings authorised in another non-eea member state operating in Ireland Life undertakings with Irish head office and life undertakings authorised in another non-eea member state operating in Ireland are liable to pay a minimum prudential levy of 6,000. In addition to this amount, all such life companies will be charged a variable prudential levy based on a percentage of their gross global premium income reported in the Global Business Form 2, Line 9, Column 1 of the statutory annual return received from life insurance companies for Minimum prudential levy: 6,000 Variable prudential levy: % of gross global premium income Life undertakings with Irish head office and life undertakings authorised in another non-eea member state operating in Ireland that engage in the writing of Irish risk business will be charged a minimum consumer levy of 1,000. In addition to this minimum amount all entities will be charged a variable levy based on gross global premium income written on Irish risk business reported in the Irish Risk Business Form 2, Line 9, Column 1 of the statutory annual return received from life insurance companies for Minimum consumer levy: 1,000 Variable consumer levy: % of gross global premium income written on Irish risk business. B2 Life undertakings authorised in another EEA member state operating in Ireland on a branch basis Branches of life undertakings authorised in another EEA member state are not subject to the prudential charge as prudential supervision is the responsibility of the home member state regulator. Such branches, however, will be required to pay a consumer levy based on their gross premium income written on Irish risk business as reported to the Central Bank in their annual return for All life undertakings authorised in another EEA member state operating in Ireland on a branch basis that engage in the writing of Irish risk business will be charged a minimum consumer levy of 1,000. In addition to this amount all such entities will be charged a variable consumer levy based on gross premium income written on Irish risk business. Minimum consumer levy: 1,000 Variable consumer levy: % of gross premium income written on Irish risk business.

11 A Guide to Industry Funding Regulations 11 B3 Life undertakings authorised in another EEA member state operating in Ireland on a cross border basis Life undertakings authorised in another EEA member state operating in Ireland on a cross border basis are not subject to the prudential charge as prudential supervision is the responsibility of the home member state regulator. Such entities are, however, required to pay a consumer levy based on gross premium income written on Irish risk business for their financial year ended in Life undertakings authorised in another EEA member state operating in Ireland on a cross border basis are required to pay a minimum consumer levy of 1,000. These entities will also be required to pay a variable consumer levy based on gross premium income written on Irish risk business. Minimum consumer levy: 1,000 Variable consumer levy: % of gross premium income written on Irish risk business Life undertakings authorised in another EEA member state operating in Ireland on a cross border basis are obliged to determine the levy they are due to pay by reference to the details above and remit the appropriate levy to the Central Bank. No levy notices will be issued. B4 Non-life insurance undertakings with Irish head office All non-life insurance companies with an Irish head office are liable to pay a minimum prudential levy of 6,000. They will also be charged a variable prudential levy based on a percentage of their gross global premium income reported in the Total Business Form 1, Line 2, Column 1 of the statutory annual return received from non-life insurance companies for Minimum prudential levy: 6,000 Variable prudential levy: % of gross global premium income All non-life companies with an Irish head office that engage in the writing of Irish risk business will be charged a minimum consumer levy of 1,250. In addition to this amount, all such entities will be charged a variable consumer levy based on gross premium income written on Irish risk business reported in the Irish Risk Business Form 1, Line 2, Column 1 of the statutory annual return received from non-life insurance companies for Minimum consumer levy: 1,250 Variable consumer levy: % of gross premium income written on Irish risk business. B5 Non-life insurance undertakings authorised in another EEA member state operating in Ireland on a branch basis Branches of non-life insurance undertakings authorised in another EEA member state are not subject to the prudential charge as prudential supervision is the responsibility of the home member state regulator. Such branches are, however, required to pay a consumer levy based on their gross premium income written on Irish risk business as reported in their annual return for Branches of non-life insurance undertakings authorised in another EEA member state that engage in the writing of Irish risk business will be charged a minimum consumer levy of 1,250. In addition to this amount, all such entities will be charged a variable levy based on gross premium income written on Irish risk business.

12 12 A Guide to Industry Funding Regulations Minimum consumer levy: 1,250 Variable consumer levy: % of gross premium income written on Irish risk business. B6 Non-life insurance undertakings authorised in another EEA member state operating in Ireland on a cross border basis Non-life insurance undertakings authorised in another EEA member state operating in Ireland on a cross border basis are not subject to a prudential charge as prudential supervision is the responsibility of the home member state regulator. Such entities are, however, required to pay a consumer levy based on gross premium income written on Irish risk business for their financial year ended in Non-life insurance undertakings authorised in another EEA member state operating in Ireland on a cross border basis are required to pay a minimum consumer levy of 1,250. In addition to this amount, they are required to pay a variable levy based on gross premium income written on Irish risk business. Minimum consumer levy: 1,250 Variable consumer levy: % of gross premium income written on Irish risk business Non-life insurance undertakings authorised in another EEA member state operating in Ireland on a cross border basis are obliged to determine the levy they are due to pay by reference to the details above and remit the appropriate levy to the Central Bank. No levy notices will be issued. B7 Reinsurance undertakings with Irish head office Any reinsurance undertaking entitled to conduct reinsurance business in Ireland (i.e. any reinsurance undertaking authorised or notified to the Central Bank as at 31 December 2009) is required to pay a prudential levy. All such entities will be charged a minimum levy of 7,500. In addition to this amount they will be charged a variable levy based on a percentage of the combined total of gross premium written (Profit and Loss Technical Accounts, Line 1 and 2) and gross technical reserves (taken from Balance Sheet, Technical Provision Sum of Unearned Premiums plus Claims Outstanding plus Long Term Provisions plus Other Technical Provisions) as reported in their audited accounts for the financial year ended Minimum prudential levy: 7,500 Variable prudential levy: % of the combined total of gross premium written and gross technical reserves.

13 A Guide to Industry Funding Regulations 13 Category C: Intermediaries The levy payable by an intermediary is based on the total income generated from the regulated activities which it undertakes. The total income figure will determine which of the income bands the intermediary will fall into and, consequently, the levy payable. All intermediaries that held an authorisation on 31 December 2009 must pay the 2010 industry funding levy. Table 5 below details the income bands and levy payable: Table 5 Band Income Range Levy , , , , , ,001 1,000,000 1, ,000,001 1,250,000 2, ,250,001 1,500,000 3, ,500,001 4,000,000 7, ,000,001 6,000,000 15, ,000,001 7,500,000 20, Over 7,500,000 23,400 Intermediaries who were authorised for the first time in 2009 and have not already submitted a self declaration of income form to the Central Bank are required to declare income earned from regulatory activities immediately to enable the Central Bank to issue accurate levy notices. The declaration should cover the period from the date of authorisation to 31 December Copies of the declaration form are available on the Central Bank s website at

14 14 A Guide to Industry Funding Regulations Category D: Securities and Investment Firms D1 Designated Fund Managers Designated Fund Managers are liable to pay a flat rate levy of 1,300. D2 Receipt and transmission of orders and/or provision of investment advice; no client asset requirements imposed All financial service providers in sub-category D2 will be charged a minimum levy of 6,000. In addition to the minimum levy a variable levy based on turnover, as reported for the year ending 2008, is also payable. The turnover bands and the relevant variable levy rates are shown in Table 6 below: Table 6 Band Turnover Range Charge per 000 or part thereof Min 0 400,000 Min 6,000 A 400,001 2,000, B 2,000,001 5,500, C 5,500,001 22,000, D 22,000, ,000, D3 Portfolio management; execution of orders; client asset requirements imposed All financial service providers in sub-category D3 will be charged a minimum levy of 6,000. In addition to the minimum levy a variable levy based on turnover, as reported for the year ending 2008, is also payable. The turnover bands and the relevant variable levy rates are shown in Table 7 below: Table 7 Band Turnover Range Charge per m or part thereof Min 0 422,500 Min 6,000 A 422,501 1,250,000 3, B 1,250,001 3,200,000 2, C 3,200,001 5,500,000 3, D 5,500, ,000,

15 A Guide to Industry Funding Regulations 15 D4 Own account trading; underwriting on a firm commitment basis; client asset requirements imposed; operation of multi-lateral trading facilities All financial service providers will be charged a minimum levy of 6,000. In addition to this minimum levy a variable levy based on their regulatory capital is also payable. The bands and the relevant variable levy rates are shown in Table 8 below: Table 8 Band Range of Regulatory Capital Charge per m or part thereof Min 0 750,000 Min 6,000 A 750,001 1,250,000 10, B 1,250,001 3,000,000 4, C 3,000,001 12,000,000 1, D 12,000, ,000, D5 Stock Exchange Member Firms All Stock Exchange Member Firms will be charged a minimum levy of 12,000. In addition a variable levy based on turnover, as reported for the year ending 2008, is also payable. The turnover bands and the relevant variable levy rates are shown in Table 9 below: Table 9 Band Range of Turnover Charge per m or part thereof Min 0 5,000,000 Min 12,000 A 5,000,001 15,000,000 2, B 15,000,001 30,000,000 1, C 30,000,001 55,000,000 2, D 55,000, ,000,000 1, D6 Non Retail Investment Firms Non Retail Investment Firms are liable to pay a flat rate levy of 1,300.

16 16 A Guide to Industry Funding Regulations Category E: Collective Investment Schemes and Other Service Providers and UCITS Self Managed Investment Companies (SMICs) E1a Collective Investment Schemes (CIS) (Authorised Unit Trusts; Authorised Investment Companies; Authorised Investment Limited Partnerships; Non-Irish Authorised Schemes) A Collective Investment Scheme will be levied based on its structure. All Collective Investment Schemes will pay a levy of 2,000 whether they are an umbrella or a sole fund. Umbrella style funds will also pay a levy of 450 per sub-fund on the first five sub-funds resulting in a maximum levy for umbrella funds of 4,250. Table 10 Type of Fund Levy per fund Levy per sub-fund Single 2,000 n/a Umbrella 2, per sub-fund to a maximum of five sub-funds (maximum levy payable 4,250) E1b UCITS Self Managed Investment Companies (SMICs) A SMIC will be levied based on its structure. All SMICs will pay a levy of 2,025 whether they are an umbrella or a sole fund. Umbrella style funds will also pay a levy of 475 per sub-fund on the first five sub-funds resulting in a maximum levy for umbrella funds of 4,400. Table 11 Type of Fund Levy per fund Levy per sub-fund Single 2,025 n/a Umbrella 2, per sub-fund to a maximum of five sub-funds (maximum levy payable 4,400) E2a Non UCITS Managers (Delegating) Non UCITS Managers (Delegating) are liable to pay a flat rate levy of 2,000. E2b Administrators; UCITS and Non UCITS Managers; Trustees An E2b firm will be charged a minimum levy of 4,700. They will also pay a variable levy based on the net asset value administered. The rates of the variable levy and the ranges to which the rates apply are shown in Table 12 below: Table 12 Band Range of Net Asset Value administered bn Charge per m or part thereof Min bn Min 4,700 A 0.005bn 1.6bn 1.39 B 1.6bn 7.5bn 0.53 C 7.5bn 34bn 0.19 D 34bn 300bn 0.11 The range is based on the Net Asset Value administered as at 31 December 2009 as reported to the Central Bank.

17 A Guide to Industry Funding Regulations 17 Category F: Credit Unions A Credit Union is liable to pay a levy of 0.01% of total assets as reported in their annual returns setting out their balance sheet as at 30 September Category G: Moneylenders Moneylenders are liable to pay a minimum levy of 1,250. In addition, they are liable to pay a variable levy based on a percentage charge of the total value of loans outstanding as recorded in their application for authorisation submitted in The maximum amount payable by a Moneylender is 25,000. This levy contribution will cover operation in all Court Districts. Minimum levy: 1,250 Variable levy: % of total value of loans outstanding Maximum levy: 25,000 Category H: Approved Professional Bodies Each approved professional body is liable to pay a flat rate levy of 11,650. Category I: Exchanges Exchanges are liable to pay a flat rate levy based on their authorisation status. The amounts payable are as follows: An approved stock exchange authorised under the Stock Exchange Act, 1995 is required to pay 150,000. Category J: Bureaux de Change and Money Transmitters J1 Bureaux de Change The minimum levy payable by a Bureau de Change is 1,600. In addition a variable levy based on a percentage charge on self-declared income, as at 31 December 2009, will also be charged. Minimum levy: 1,600 Variable levy: % of self-declared income as at 31 December J2 Money Transmitters The minimum levy payable by a Money Transmitter is 1,600. In addition a variable levy based on a percentage charge on self-declared income, as at 31 December 2009, will also be charged. Minimum levy: 1,600 Variable levy: 0.512% of self-declared income as at 31 December Category K: E-Money Providers Each E-Money Provider will be required to pay a levy of 1,000.

18 18 A Guide to Industry Funding Regulations Category L: Default Assessment Each regulated entity defined as a defaulting entity pursuant to Regulation 11(d) is liable to pay a flat rate levy of 3,600. Category M: Retail Credit Firms and Home Reversion Firms M1 Retail Credit Firms The minimum levy payable by a retail credit firm is 1,400. In addition a variable levy based on a percentage charge on the value of declared outstanding loans as at 31 December 2009, will also be charged. Minimum levy: 1,400 Variable levy: % of declared outstanding loans as at 31 December M2 Home Reversion Firms The minimum levy payable by a home reversion firm is 1,400. In addition a variable levy based on a percentage charge on declared income, as at 31 December 2009, will also be charged. Minimum levy: 1,400 Variable levy: % of declared income as at 31 December Category N: Payment Institutions The minimum levy payable by a payment institution is 1,500. In addition, a variable levy based on a percentage charge on the Regulatory Capital Requirement for 2010, a variable levy based on a percentage charge on projected income for 2010 and a flat rate levy based on the number of agents will also be charged. Minimum levy: 1,500 Variable levy: 3.3% of Regulatory Capital Requirement for 2010 Variable levy: 0.018% of projected income for 2010 Flat Rate Levy: 100,000 for agent numbers in excess of 1,000.

19 A Guide to Industry Funding Regulations 19 Section 4 Financial Information for Industry Sectors a) How the Annual Funding Requirement is Determined The budget for 2010, approved by the Minister for Finance, is 78.1 million. The Annual Funding Requirement (AFR) arising from the budget is 43.3 million 1. In order to determine the amount that must actually be collected from industry during 2010, adjustment is made for any under/over recovery of costs in the prior year. This adjustment is calculated by comparing the amounts collected from the 2009 industry funding levy with actual expenditure for A surplus of 1.3 million arose in 2009 mainly because actual expenditure during 2009 was less than budgeted expenditure. This surplus increased to 1.75 million when account was taken for receipts in 2010 relating to the 2009 levy. The required amount to be collected from industry in 2010 has been reduced accordingly. In effect, this means that the amount to be collected from industry in 2010 is 41.6 million. This amount is allocated across industry sectors using the cost allocation model developed for this purpose. Appendix 1 sets out a table showing the 2009 surplus and the net AFR for 2010 for each industry sector. b) Calculation of Levy Rates for individual Service Providers Once the amount to be collected for 2010 has been determined, the next stage in the process is to calculate the levy rates for each industry sector leading to the net levy to be raised from each regulated financial service provider within that sector. The levy rates vary for each industry sector and are dependent upon: the total amount to be raised for that sector; the total tariff data for that sector; the distribution of the tariff data across the financial service providers in the sector; and the number of financial service providers in the sector. The model used to determine an individual financial service provider s levy will depend on the industry category into which it falls, as follows: in the case of industry categories A, B, D2 to D5, E1a, E1b, E2b, G, J and M the model used comprises a fixed minimum levy for each firm combined with a variable levy amount based on financial service providers tariff data. In turn, the tariff data used depends on the industry category as set out in the regulations (e.g. regulatory capital, gross premium income, annual turnover, number of sub-funds, net asset value, value of loans outstanding, income etc.); financial service providers in industry categories D1, D6, E2a, H, I and K pay a flat rate levy; for financial service providers in industry category C, a fixed levy, determined by reference to income range bands, is payable; and the levy for credit unions (industry category F) is capped at 0.01% of total assets. 1 The Annual Funding Requirement exceeds 50 per cent of budget primarily due to the decision that the domestic credit institutions covered by the Credit Institutions (Financial Support) Scheme 2008 will be required to fully fund the cost of the intensive prudential supervision provided for as part of the Scheme. This was, however, partially offset by: a) the continued capping of the credit union levy at 0.01 per cent of total assets. This results in additional funding by the Central Bank of 1.2 million. b) the surplus of 1.7 million carried forward from 2009; and c) the exclusion of the 2010 budget for costs of 4.0 million relating to certain market supervision activities carried out by the Central Bank in respect of the Prospectus (Directive 203/71/EC) Regulations 2005 and the Market Abuse (Directive 2003/6/EC) Regulation 2006.

20 20 A Guide to Industry Funding Regulations c) Central Bank Supervision Departments Staff Numbers Department Complement 2010 Actual as at 31 December 2009 Senior Management 7 2 Consumer Protection and Codes Consumer Information n/a 29.2 Financial Institutions and Funds Authorisation Domestic Credit Institutions International Credit Institutions Investment Service Providers Supervision Insurance Supervision Legal and Enforcement n/a 12 Planning and Finance n/a 4 Markets Supervision Registrar of Credit Unions Risk 6 n/a Policy 16 n/a Enforcement 34 n/a Total The complement for 2010 as set out above represents the allocation of the approved complement as at the commencement of 2010.

21 A Guide to Industry Funding Regulations 21 Section 5 Appendices Appendix Annual Funding Requirement (AFR) Industry Category Net 2009 Surplus/(Deficit) Budget Funding Requirement AFR 000 A: Credit Institutions 1,445 22,661 21,216 B: Insurance 366 7,975 7,609 C: Intermediaries (48) 2,458 2,506 D: Securities Firms (92) 3,150 3,242 E: Collective Investment Schemes 8 4,086 4,078 and Service Providers F: Credit Unions (1) 2,672 1,440* G: Moneylenders H: Approved Professional Bodies (7) I: Exchanges J1: Bureaux de Change J2: Money Transmitters (16) K: E-Money Providers L: Default Assessment n/a n/a n/a M1: Retail Credit Firms (7) M2: Home Reversion Firms (1) N: Payment Institutions n/a Total 1,750 44,624 41,641 * This does not represent 50 per cent of the 2010 Budget due to the cap in place for Credit Unions. See Category F in Section 3.

22 22 A Guide to Industry Funding Regulations Appendix 2 Comparison of 2010 Annual Funding Requirement with 2009 Annual Funding Requirement Industry Category 2010 AFR AFR 000 Comment A: Credit Institutions 21,216 18,578 Related to the establishment of new Risk, Policy and Anti-Money Laundering units and the increase in staffing levels necessary to carry out the more intensive level of supervision B: Insurance Undertakings/ Reinsurance Companies 7,609 5,296 Related to the establishment of new Risk, Policy and Anti-Money Laundering units and the increase in staffing levels necessary to carry out the intensive level of supervision C: Intermediaries 2,506 2,240 Related to the establishment of new Risk, Policy and Anti-Money Laundering units D: Securities Firms 3,242 2,059 Related to the establishment of new Risk, Policy and Anti-Money Laundering units E: Collective 4,078 4,197 Investment Schemes and Other Service Providers F: Credit Unions 1,440 1,394 Change directly linked to changes in total assets of the sector G: Moneylenders Related to shortfall brought forward from 2009 and additional budgeted costs due to level of work planned in 2010 H: Approved Professional Bodies 35 5 Related to shortfall brought forward from 2009 and additional budgeted costs due to level of work planned in 2010 I: Exchanges J: Bureaux de Change/ Money Transmitters K: E-Money Providers 0 0 L: Default Assessment n/a n/a n/a M: Retail Credit Firms/ Home Reversion Firms N: Payment Institutions 684 n/a Included in the funding process for the first time in Total 41,641 34,547

23 A Guide to Industry Funding Regulations 23 Appendix 3 Population of each Industry Sector Industry Sector Description 2010 Number of entities 2009 Number of entities A1b and A2 Consumer Credit Institutions Consumer Levy A1a Consumer Covered Credit Institutions Consumer Levy A1a Prudential Covered Credit Institutions Prudential Levy A1b Prudential Non-Covered Credit Institutions Prudential Levy B1 and B2 Consumer Insurance Life Irish Head Office/Branch Consumer B1 Prudential Insurance Life Irish Head Office Prudential B4 Prudential Insurance Non-Life Irish Head Office Prudential B4 and B5 Consumer Insurance Non-Life Irish Head Office/ Branch Consumer B7 Prudential Reinsurance C Intermediaries 4,242 4,170 D1 Designated Fund Managers 7 8 D2 Receipt and Transmission of Orders and/ or Provision of Investment Advice; No Client Asset Requirements Imposed D3 Portfolio Management; Execution of Orders; Client Asset Requirements Imposed D4 Own Account Trading; Underwriting on a Firm Commitment Basis; Client Asset Requirements Imposed; Operation of Multi-Lateral Trading facilities D5 Member Firms of the Irish Stock Exchange D6 Non Retail Investment Firms 9 10 E1a Collective Investment Schemes (umbrella and sole funds) E1b Self Managed Investment Companies E2a Non UCITS Managers (Delegating) E2b Administrators; UCITS and Non UCITS Managers; Trustees F Credit Unions

24 24 A Guide to Industry Funding Regulations Industry Sector Description 2010 Number of entities 2009 Number of entities G Moneylenders H Approved Professional Bodies 3 3 I Exchanges 1 1 J1 Bureaux de Change J2 Money Transmitters M Retail Credit Firms/Home Reversion Firms n/a 9 M1 Retail Credit Firms 13 n/a M2 Home Reversion Firms 2 n/a N Payment Institutions 10 n/a

25 A Guide to Industry Funding Regulations 25

26 26 A Guide to Industry Funding Regulations

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