The Central Bank of Ireland (the ‘CBI’) has published a consultation paper (‘CP61’) on proposed changes to the industry funding levy.  The paper proposes closer alignment between the levy payable by a regulated entity and the costs of its supervision, as determined by its “PRISM” category. Under the CBI proposals, a single levy rate for each PRISM impact category per industry would apply.

There are five impact categories under PRISM and regulated entities have already been informed of their categorisation.  CP61 suggests that the levies per PRISM-category will be as follows:

• Ultra-high (€1,313,240)
• High (€599,166)
• Medium-high (€136,249)
• Medium-low (€27,086)
• Low (€9,361)

The consultation paper also provides some examples of how various entities would compare under the existing process and the proposed impact based approach.  The following two examples show that while the levy payable by some companies will be higher than under the current regime, other companies will be charged less if the proposals are implemented:

• A high impact life insurer with an Irish head office which has a gross global premium income of €4bn.  €3.95bn of that gross premium relates to Irish risk business.  Under the existing regime, that company paid a total of €431,428 (i.e. a prudential levy of €315,680 and a consumer levy of €115,748) in 2012.  Under the proposals, it is estimated that a levy of €599,166 would be payable
• A medium-low impact reinsurer with an Irish head office which has a combined total of gross premiums written and gross technical reserves of €800m.  In 2012, the reinsurer paid a prudential levy of €31,684, which compares with an estimated €27,086 under the proposals

It should be noted that the European Central Bank is considering the regulatory funding costs of Eurozone credit institutions in the context of the proposed Single Supervisory Mechanism; this could have implications for the levy calculation process.

The CBI is also seeking comments on the treatment of monetary penalties, application fees, pro-rata levies and unpaid levies. The closing date for submissions is 22 February 2013.

Contributed by Gillian Young