Committee on Finance. - Credit Union Bill, 1966: Committee Stage.
Section 1 agreed to.
SECTION 2.
I move amendment No. 1:
In subsection (1), page 4, line 7, to delete "individuals" and substitute "persons".
The purpose of this amendment is to cater for the fact that occasionally a credit union finds it desirable to admit to membership a person other than a natural person. That means a club or association or body corporate or incorporate, and so forth, which are based within the field of membership of credit unions and would normally qualify for membership in that connection; so, in order to remove any doubts on this point, it is considered desirable to change the word "individuals" to "persons". The latter word includes natural persons, partnerships and other groups, as I have stated. I should add that group membership is recognised by section 20, subsection (3), which we will be coming to later on. Finally, the word "person" is used elsewhere in the Bill and it seems desirable to use it here.
Amendment agreed to.
I move amendment No. 2:
In subsection (1), page 4, line 8, after "residence" to insert "or employment".
The purpose of this amendment is to cater for the fact that in certain areas— there was, in fact, a particular example of it—where the members of a particular credit union were drawn from different factories operating in the same area and most of them did not in fact reside in the area but outside of it and, furthermore, were not employed by a common employer, they would not, as they pointed out, come within the wording of the section as drafted and their credit union asked us to insert an appropriate amendment, which we agreed to do.
Amendment agreed to.
I move amendment No. 3:
In subsection (1), page 4, lines 16 and 17, to delete "for the purposes of this Act or for other provident and productive purposes".
This is an amendment to the main section, to delete the words "for the purposes of this Act or for other provident and productive purposes" and is really only a drafting amendment because the words "for other provident and productive purposes" might wrongly convey the impression that members' savings might be used for purposes outside the scope of the Act. This would be a wrong impression to convey. The words "for the purposes of the Act" are not necessary since members' savings cannot be used for purposes outside the Act.
Amendment agreed to.
Section 2, as amended, agreed to.
Section 3 agreed to.
SECTION 4.
I move amendment No. 4:
In page 5, to delete subsection (2) and substitute the following subsection:
"(2) A member of a credit union who ceases to have the common bond required of members of that credit union may retain membership therein and the credit union may continue to accept from that member money in respect of shares or deposits in the credit union and may make further loans to that member, provided that his total indebtedness to the credit union does not exceed the sum of his shares and deposits in that credit union."
This is in regard to membership and goes back to the basic principle that members must have a common bond. In drafting the Bill, it was considered logical that movement of a member from one place to another should involve that person in the loss of membership. However, the Credit Union League approached us in connection with that point and said that while the Bill as drafted is logical, it could operate very harshly against a person through a change in residence or for other such reason and it was suggested to us that this provision in the Bill should not be retained in its present rigorous form. We understand that it is the normal practice for credit unions to have a slightly less rigorous procedure in regard to this than was contained in the original section of this Bill. We accordingly agreed that they could continue to accept money in respect of shares on deposit and to make further loans, even though the member may have moved.
Amendment agreed to.
Section 4, as amended, agreed to.
SECTION 5.
Amendment No. 5 is in the names of Deputies Treacy and Tully, and if the Deputies are agreeable, we could take amendments Nos. 6 and 17 along with amendment No. 5, as they are consequential.
I move amendment No. 5.
In subsection (1), page 5, line 31, to delete all words after "the" to the end of the subsection and to insert "Annual General Meeting of the credit union and the decision of the Annual General Meeting shall be final."
Having regard to the set up of a credit union and the coming together of a group of people to save for their own good purposes, we feel that bodies of this kind are quite competent to determine their own membership at any given time and that full powers should be reposed in the annual general meeting of such a credit union to determine such membership. We feel that it is unnecessary to bring the district court into the matter at all. It is one of the basic constituents of a credit union that the control over membership should lie in the members themselves.
The annual general meeting of a credit union would have before it the views of the committee and of the executive council and it is to be presumed that these would have full knowledge of the character, honesty and integrity of a person applying for membership. That being so, the members of the union themselves would be the most competent people to determine who should be a member. It would be in the best interests of the credit unions that any reference to the district court in this section should be set aside.
I find myself in disagreement with the amendment. When we license, as we are licensing now, a bank or such other institution to carry on business, there are certain benefits that accrue from that business. In the case of a credit union, those benefits will be enjoyed by the members, but, at the same time, the citizen has rights and in the event of a refusal to allow membership to a citizen, that citizen should have recourse to the law of the land. I feel it is not right to leave as much power to an excellent organisation but one which could become an arbitrary organisation without the provisions of the original section.
The principal objection to the amendment is the one outlined by Deputy Donegan. Under the amendment if you have a dispute, one of the parties to that dispute is to be the final arbiter. If a person is entitled to the benefit of membership, and these benefits are considerable, it is a very important matter to him whether or not he is admitted to membership. It seems only just that such a person should have an appeal against refusal outside the body which made the refusal in the first case.
The report of the Committee on Co-operative Societies recommended that clearly-defined eligibility for membership should be stated in the rules and they went on to state that a society should endeavour to ascertain a person's eligibility for membership. The report also suggested that an appeal against refusal should lie either to the courts or to the Registrar of Friendly Societies. I agree with that point of view. Here we are giving a person so refused the right to go to the lowest court and the procedure involved will not be expensive. All the person has to do is to state in writing the grounds of his appeal and he has a neutral person to adjudicate on the matter. It seems fundamentally wrong that where there is disagreement between two people, one of the parties to the dispute should have the final right to arbitrate.
There is a point I would like to make on this matter. It would be an impossible situation if the committee of a credit union felt that there were people whom they did not want in the union and they were told that they must take those people in, even though the people locally knew—and indeed it could be proven at national level—that they were people who could possibly wreck the union. There is in every organisation the danger that when a thing appears to be a success, people who did not want to touch it with a forty-foot pole want to come in on it. The credit union, while it is growing pretty strongly, is still a very tender plant and could be pretty easily broken up by the wrong type of person getting in and doing certain things. They are particularly anxious about the fact that the undesirable type of person, who can put up a face to those who do not know him, could go to the district court and get an order saying that he was entitled to be a member and could then say: "I am here by right of law and I am going to do this, that and the other thing," and for no other reason than perhaps to show contempt for those already there, wreck all the hard work that had already been done.
I do not for a second dispute that Deputy Tully has been in contact with certain unions and has got this impression but we had very lengthy discussions with the Credit Union League who suggested a whole series of amendments to us and at no stage did they suggest that this right of appeal to the district court should be deleted. Furthermore, in regard to the type of person Deputy Tully mentions, the undesirable person, there are later in the Bill adequate methods for dealing with people who behave in an undesirable way. They can be expelled from the credit union if they carry on in a fashion which is contrary to the rules of the union. In the case of expulsion, the person will have the right of appeal to the district court. It seems fair that in the first instance a person should have an appeal to some body other than the other party involved and that if it is a question of expulsion, he would not be unjustly expelled either. You will find when we come to it that if there is this type of person in the credit union—and I have no doubt that people who will prove to be undesirable will get into many of these unions—there are perfectly adequate provisions for dealing with them.
I thought the other amendment would be discussed at the same time.
The trouble is that we are in the difficulty that the undesirable who is expelled in normal circumstances is finished with but here he has the right of appeal to the district court. I distinctly remember the case of a man employed by a fairly sizeable farmer as a van driver. He was a pretty bad van driver and the employer tried to dismiss him. The man went to the Garda and succeeded in having a driving test, before driving tests were established, and got a certificate to say that he was competent. He was then able to say: "I am entitled to be here." I can see the same circumstances arising here, where an undesirable will be able to put up a plausible case in court and finish up as the big boss in the local society. The result will be that through his action, or inaction, he will wreck it. I hope it will not happen but this is one of the matters about which people are annoyed.
I just do not see this. As I see it, if certain capital is to be channelled into a credit union in an area, particularly the sort of area with which Deputy Tully and I deal, the people within that area should be entitled to get the benefits therefrom, unless they are extremely undesirable people. The right to go to the district court, even in regard to expulsion or on the question of admittance, is wise and proper. I do not agree with Deputy Tully in regard to the question of an undesirable man going to the district court and ending up as the big boss of the union. I do not think that is a practical possibility. One might as well say that the customer of a bank would end up as the bank manager.
The customer does not have any say in running the bank.
The customer will have only one vote. Before he ends up as a director or a member of the committee, he will have to have a majority to put him there. If he is undesirable, he will not have that majority. There is the possibility that perhaps a clique —and when I use that word in this connection, I do not wish to be misunderstood—might develop in charge of the credit union and might wish to exclude or include certain persons. In this situation it is only right that there should be an appeal. The Parliamentary Secretary's point in this regard is the right one, that there is no point in appealing to an interested party. The whole point is that the appeal is to an arbitrator, to another person who is not involved, who has competence and who will give a fair decision. I do not want to find myself arguing against Deputy Tully on this but that is how I see it, and I am a director of a credit union myself.
I will not force the issue if it is the considered view of the House that this is not necessary but I hope I will not have to say: "I told you so".
We must presume the impartiality of the district court.
I am not thinking about the impartiality of the district court but the gentleman who is able to wipe the district justice's eye. We have plenty of them.
Amendment, by leave, withdrawn.
Amendment No. 6 not moved.
Sections 5 and 6 agreed to.
SECTION 7.
I move amendment No. 7:
Before section 7 to insert a new section as follows:—
"Any debt due to a credit union whether before or after the passing of this Act shall be recoverable by action at common law on the suit of the credit union involved."
I am informed that there is no provision for the recovery of debts if the Bill, as it is at present, is passed into law. The Parliamentary Secretary may have other views or he may accept that. I do not want to make any further comment until I hear what he has to say.
I was hoping that the Deputy might be a little bit more forthcoming because I was not quite sure what the precise purpose of the amendment was. I took it that he was thinking of a debt which arose before the passage of this Bill——
——and which the credit union would like, in this Bill, to have covered subject to the provisions of the Statute of Limitations. It is my opinion—although there is some doubt as to whether I am right in this—that as things stand at the moment it would not be possible successfully to sue in some instances in regard to debts contracted prior to enactment in respect of existing credit unions. I would propose to look further into this between now and Report Stage. I thought Deputy Tully might have something more to add, but the position is somewhat complex legally. I would like to see a situation created where credit unions could, subject to the Statute of Limitations, sue for debts after the passing of this Bill which had been incurred before.
That is the object of it. I did not want to go into it too deeply.
I was waiting to see what Deputy Treacy and Deputy Tully would have to say about it. I will look further into it between now and Report Stage to see if we can bring in a suitable section.
We will withdraw the amendment in that case.
Amendment, by leave, withdrawn.
Section 7 agreed to.
Sections 8 to 10, inclusive, agreed to.
SECTION 11.
I move amendment No. 8:
In page 9, to delete subsection (6) and substitute the following subsection:
"(6) (a) A credit union shall not make a loan to a person who is a member of its board of directors, Membership Committee, Supervisory Committee or Credit Committee except with the unanimous approval by secret ballot of a special committee present when the loan is considered, which special committee shall consist of a majority of the board of directors, a majority of the Credit Committee (if any) and at least one member of the Supervisory Committee, but shall not include the applicant for the loan.
(b) A credit union shall not accept from a person who is a member of its board of directors, Membership Committee, Supervisory Committee or Credit Committee a guarantee for a loan by the credit union to another member of the credit union."
This is again a relaxation of the Bill at the request of the Credit Union League. As at present drafted, subsection (6) limits borrowing by any of the officers to an amount equivalent to the total of shares and deposits pledged as security for his loans. The object of this was to prevent abuses by unscrupulous officers who might be tempted to provide loans for themselves in improper circumstances or against inadequate security. The history of the co-operative movement indicates the need for safeguards against abuses of this kind. The Credit Union League, however, argues that a restriction of that kind could have the effect of preventing less well off persons from seeking and retaining office since they would often want to borrow beyond the limit prescribed. The League felt the officers concerned should enjoy the same borrowing rights as members in general except that the unanimous approval of a special committee representative of the directors, the Credit Committee and the Supervisory Committee should be required. The amendment gives effect to that recommendation. I feel the demand for unanimity is a sufficient safeguard and accordingly we are proposing this amendment.
Is unanimous not a bit harsh? I know the people who control the credit unions have advised this but in no other case I know of is a unanimous decision required to have something done. Unanimous decision by secret ballot is a bit harsh.
It is a bit like the fellow who is blackballed.
The League were quite strong on this, that the approval would have to be unanimous.
If there is one fellow who does not like or is jealous of the person looking for the loan, particularly as it is secret, he has the opportunity of preventing that loan for no reason except petty spleen.
The Deputy has a point. As this refers only to officers, a small number of people is involved.
The Parliamentary Secretary will have an opportunity of discussing this again with the Credit Union League before Report Stage. It might be a good thing, if he feels the same way as we do, to discuss this point with them.
Yes, I think the Deputy's point is well taken, although the Credit Union League themselves are most emphatic that unanimity be preserved. Perhaps, if the House would pass the amendment, I would undertake to have another look at it, discuss it with the League again and bring the points raised before them.
The directors of the Credit Union League are people who would probably never have to look for a loan.
Amendment agreed to.
Section 11, as amended, agreed to.
Section 12 agreed to.
SECTION 13.
I move amendment No. 9:
In subsection (4), page 11, line 11, to delete "one" and substitute "three".
It is pointed out that the subsection as drafted would permit a credit union of one person only. It is felt this is not desirable and that a minimum membership of three should be prescribed.
I think that is all right.
Amendment agreed to.
Section 13, as amended, agreed to.
SECTION 14.
I move amendment No. 10:
In subsection (3), page 11, line 54, to delete "A person shall not be eligible" and substitute "Except where the rules provide otherwise, a person shall not be eligible".
This arises because one of the major difficulties that have been encountered in the co-operative movement over the years is that members tend to be elected year after year. Indeed, that situation is not confined to experience in credit unions. After some time they begin to look on the society as a sort of private affair of their own and they may begin to neglect the interests of the general body of members. Our original intention in drafting the section was to guard against that development. In theory, it sounds a very good thing but for practical reasons the Credit Union League were opposed to it. It is quite difficult to get experienced and knowledgeable people—and people who have an interest as well— to act as directors of credit unions. A statutory provision such as the one in the Bill as it stands would seriously reduce the available pool of persons and as a result would be likely to slow up the development of the credit union movement. The effect of the amendment is to permit credit unions the option of adopting or rejecting the rule set out in subsection (3). I suppose in practice this means most credit unions will opt to retain. I should also add I gave a good deal of consideration to the possibility of devising some form of rotating system which could be incorporated in the Act but it did not prove practicable.
I think it is wrong that this should be included. The amendment says that except where the rules otherwise provide a person shall not be eligible. The Parliamentary Secretary and Deputy Donegan, both of whom had considerable experience in the GAA world, know that most of the football clubs down the country are run by the same people over a period of years. If a rule such as this were introduced, the clubs would disappear in a very short time. Similarly, if it were suggested that county councillors could serve only three years as Dáil Deputies, there would be an outcry by them. In many credit unions, practically the same people have held office for some time; they have the experience and they have the respect of the members. It would be entirely wrong if it were written into the law that they would have to be removed after a certain limited period. For that reason I think the section should not be included at all.
The thinking behind the section is probably right. In regard to the GAA, one of my experiences was to be expelled for playing rugby. I had considerable experience before that sad event. As I see it, this works in two ways. There is the small credit union in the country parish; there is the possibility, as I said before on a different section, of a clique developing, people almost owning the credit union, and that situation has been mentioned by the Parliamentary Secretary. At the same time, there is the difficulty that you might not have available the requisite number of officers of the standard that would be desired, and this would leave it up to the credit union in a particular instance to do what it would wish. I think, on balance, it is the best solution.
Amendment agreed to.
Section 14, as amended, agreed to.
Sections 15 to 17, inclusive, agreed to.
SECTION 18.
I move amendment No. 11:
In subsection (1), page 13, line 18, to delete "five" and substitute "seven".
This amendment was put down because a particular credit union asked that the period be extended to ten days, and we have reached a compromise at seven. It is obviously desirable that the election of officers should take place as soon as possible after the meeting at which directors are elected and I suppose what normally happens is that the two meetings are held on the same evening, with those involved waiting on. However, there does not seem to be any objection, in principle, to the extension to seven days from five.
Amendment agreed to.
I move amendment No. 12:
In subsection (7), page 13, line 44, after "thereof" to insert "except where the rules provide otherwise".
This again is an amendment which was put down as a result of representations from the Credit Union League. They pointed out that in certain circumstances a credit union may find it desirable to employ as manager some person other than the treasurer. As the Bill is drafted, it would have to be the same, and we are proposing this amendment to provide the necessary flexibility in this connection.
Amendment agreed to.
I move amendment No. 13:
In subsection (7), page 13, line 45, to delete "fifteenth" and substitute "last".
This is another amendment which was requested by the Credit Union League who represented that it might be difficult in some cases to have the balance sheet ready by the middle of the month and suggested that the last day of the month should be prescribed instead. In other words, there will be a period of two weeks longer in which to prepare and furnish the balance sheet than was provided in the Bill.
Amendment agreed to.
I move amendment No. 14:
In page 13, to delete subsection (8) and substitute the following subsection:
"(8) The rules shall provide for the signature of at least two officers of the credit union on all conveyances of property of the credit union and on all cheques, drafts, notes and other obligations of the credit union and on all transfers by the credit union of shares or other investments."
The desirability of having two signatures on the cheques is recognised in all clubs, societies and so forth, and there is no need for me to say anything further on that. However, some difficulty in drafting was encountered as it is necessary to provide for the possibility of one or both of the officers being away or not being available. Ultimately, it was decided to deal only with conveyances of property and the subsection as drafted is limited to conveyances of property. Nevertheless, we feel, after consultation with the Chairman of the Committee of Co-operative Societies, that this is not enough and that some attempt should be made to deal with the dual signatures on cheques and so fourth. The amendment as now proposed achieves this and, at the same time, permits the credit union to decide in its rules which particular two officers will do the signing in the normal course and what substitution will be allowed. This applies, as the House will note, to the transfer of shares or other investments, and so forth, where any obligation is incurred on behalf of the union.
Amendment agreed to.
Section 18, as amended, agreed to.
SECTION 19.
I move amendment No. 15:
In subsection (3), page 14, line 14, to delete "thirty" and substitute "ten".
This amendment arises from the fact that the quorum as in the Bill is 30 per cent and we have had representations from several sides to the effect that this was too high. It is obviously considered desirable that members of the credit union should take an active part in its affairs, and general participation in its working is of the essence of the co-operative idea. The Credit Union League pointed out, however, that in practice it is not easy to get members to come to meetings and I do not have to explain that to Deputy Tully and Deputy Treacy. People may be very interested but they do not come along; accordingly we have agreed to reduce the quorum from 30 per cent to ten per cent or 15 members, whichever is the lesser, as is dealt with in amendment No. 16.
I presume I may discuss amendments Nos. 15 and 16 together?
I am thinking of a country credit union where the membership might be 20 people. Ten per cent of 20 people is 2 people, and it is less than 15. In that situation, which would not be a weird one in an ordinary country parish, it might well be that a meeting of two people could make decisions which would not be in accordance with the wishes of the general body. I know that the thinking behind this amendment is good and proper, but I wonder whether the percentage could not be looked at before Report Stage to see whether ten per cent is right or a little too low. I think we should move from 30 per cent but I am not sure whether we have moved too far in the case of the small credit union. The Parliamentary Secretary, being a rural man himself, will know the sort of place about which I am thinking.
I am aware that the Credit Union League have got the idea that the proposed amendment is all right but I do not altogether agree with Deputy Donegan because they probably missed out the problem he has raised. In most cases it would be a case of two or three people——
——because they are pretty small. In a small village in a country district, four people would be ten per cent. The Parliamentary Secretary might, I think, have another look at it.
(South Tipperary): The percentage might vary in proportion to membership. With a small membership, one could ask for a bigger percentage in order to ensure there would be at least more than two people present.
One could do that by putting in a clause saying that a quorum shall consist of not fewer than x people.
That might be a solution.
We could leave the amendment but add that in no circumstances shall a quorum consist of fewer than x people.
To tell a story against myself: I was out addressing meetings on behalf of the Presidential candidate and I was five minutes late for my credit union meeting. A directors' meeting was called to discuss a problem similar to a problem the Government have at the moment. People wanted loans of £1,300 and there was only £260 in the funds. In the first five minutes, Termonfeckin had produced a loan of £250 and Ardee a loan of £500. They had no problems. I commend that action to the Government.
Amendment put and agreed to.
I move amendment No. 16:
In subsection (3), page 14, line 15, after "credit union" to insert "or fifteen members, whichever is the lesser number".
Amendment agreed to.
Section 19, as amended, agreed to.
Amendment No. 17 not moved.
Sections 20 to 26, inclusive, agreed to.
SECTION 27.
Amendments Nos. 18 and 19 could be discussed together. They are related.
I move amendment No. 18:
In subsection (1), page 17, line 22, after "Committee" to add ", of which one member shall be a representative of the Credit Union League of Ireland."
The Minister's amendment came in after my amendment. I tabled this amendment because I felt that, whilst this committee was absolutely necessary, it could consist of persons nominated by a Minister who would not have the same sympathy with credit unions as many of us here have and I felt that one member at least should be a representative of the Credit Union League of Ireland. This would have the effect of leavening the committee and would make it a more helpful committee.
I notice the Minister has changed the situation in his amendment; every person appointed shall be appointed by reason of such person's knowledge of matters pertaining to credit unions. But that does not mean that he cannot appoint persons who are ex-bankers or civil servants and who are not associated with credit unions. He is not bound to appoint even one person with a practical knowledge of matters pertaining to credit unions. If my amendment were accepted, I feel it would be of great help. If there is a clash between my amendment and amendment No. 19 from a drafting point of view, then I suggest the spirit of my amendment could be incorporated on the Fourth Stage. It is right there should be a representative of the Credit Union of Ireland on this committee.
The reason the official amendment was put in after Deputy Donegan's was that we had direct representations from the Credit Union League in regard to this matter. We also had certain other representations. I was anxious to discuss this with the Credit Union League and I had two of the most important officials of the League to see me a short time ago. There are certain difficulties in the proposal that the League itself should be named in the Bill. In the first place, the League is not registered under any Act of Parliament and its legal status is somewhat indefinite. If the name of the League were incorporated in the Bill, there would be nothing to stop the League changing its name in a few years' time. It would then be necessary to bring in amending legislation to cater for that situation.
Unless there are very cogent reasons indeed, it is not generally desirable to name any particular society in an Act of Parliament. Let us face it: even though this particular society is of the highest standing and repute, it may not always remain so. This applies to every institution now in good standing but which may not be in good standing at some future date. We should look foolish if we were not to take account of these facts. We did say, of course, that as a matter of practice, there would certainly be at least one and, in fact, probably more than one member of the Credit Union League appointed by the Minister. It is obvious to the House that a rapport has been established between the League and the Department. Both parties are satisfied that the other is doing its best and we are anxious that the Credit Union because of its activity, status and so forth, should have people on the committee whom the Minister would appoint but, for the reasons I have mentioned, and for other reasons, I find considerable difficulty in actually incorporating the name of the League in the Bill itself.
We do, of course, go a considerable distance in clause (b) of my amendment, which reads:
Every person appointed to membership of the Credit Union Advisory Committee shall be chosen by the Minister for such appointment by reason of such person's knowledge of matters pertaining to credit unions or because he is capable of giving substantial practical assistance in the work of the Committee.
This was accepted and agreed to by the representatives of the League as being completely satisfactory to them. It is right to say they were under some misapprehension as to what our intentions were in regard to the advisory committee and I am glad to say that we have dispelled their doubts and achieved full agreement in regard to the amendment. Perhaps, in those circumstances, Deputy Donegan would withdraw his amendment.
I do not entirely accept the position indicated by the Parliamentary Secretary that the Credit Union League of Ireland has in fact no legal standing. After all, it has been created by the constitution of the Credit Unions. It is their headquarters body. It would appear impossible to me to be any other body than the Credit Union League of Ireland, seeing that the name is now accepted and is enshrined in the constitution of the credit unions. I accept, however, the Minister's assurance to me that the Credit Union League of Ireland, with which he was dealing, has been placated on this matter and that they are happy. Personally, I should prefer, from my experience of Parliamentary activity and legislation within this House, that the Minister, whoever he might be, would be bound more closely. However, if it is their view that everything is all right, though they can part with me on that point, I shall certainly withdraw the amendment.
Amendment, by leave, withdrawn.
I move amendment No. 19:
In page 17, to delete subsection (3) and to substitute the following subsection:
(3) (a) The Credit Union Advisory Committee shall consist of not more than seven persons appointed for such period as the Minister thinks fit.
(b) Every person appointed to membership of the Credit Union Advisory Committee shall be chosen by the Minister for such appointment by reason of such person's knowledge of matters pertaining to credit unions or because he is capable of giving substantial practical assistance in the work of the Committee.
Amendment agreed to.
Section 27, as amended, agreed to.
Sections 28 to 31, inclusive, agreed to.
SECTION 32.
Question proposed: "That section 32 stand part of the Bill".
I feel it is wrong that the credit union should be forbidden by law to advertise. I agree with the thought behind credit unions or a section of society or employees at a factory or any group of people brought together by their ordinary lives, but while that is true, there may be situations in which the credit union might desire to advertise so as to receive greater sums in investment at a time when they would be pressed for finances and would desire to advertise so as to give people, who do not know, at that stage, the benefits that can accrue from membership of a credit union, information as to these benefits. I think section 32 is a mistake and that the credit union should be allowed to advertise.
I do not foresee advertisements from credit unions on Telefís Éireann, such as we see at the present moment from building societies, seeking funds. I do not think it would ever go that far. However, I think that the provision that credit unions may not advertise is a mistake. I should like to hear the Parliamentary Secretary comment on that matter now, before we proceed any further.
The position here is, as Deputy Donegan knows, that very large-scale frauds have been perpetrated on the public in this country. We must take whatever steps it is necessary to take in this Bill to protect the public against fraud. The section as it stands now is modified, at least to some extent, by an amendment to section 35, to which we shall be coming later. The effect of this amendment is to enable the Minister, after consultation with his advisory committee, to relax the restriction to such extent as he may consider desirable. I have in mind, for instance, a circular type of progress report that a credit union may send to its members in a confined locality. This is not national advertising but it is letting those who have a common bond know the position in printed form. That may not be described as advertising within the meaning of the section.
I think the Minister now has or will have, if the House agrees to the amendment, the power by regulation to allow such advertising as he, after consultation with the advisory committee, thinks proper. This also was a matter which was discussed at some length with the representatives of the Credit Union League. They, having originally expressed uneasiness, as Deputy Donegan has now, about the blanket prohibition in section 32, also expressed their approval of the relaxing arrangement under section 35 which will enable the Minister at the one time to keep firm control, in pursuance of section 32, while allowing such limited advertising as he may consider desirable. In other words, so far as form is considered, the Minister will always be in control: he will have to be fully satisfied that any form of advertising is necessary before, by regulation, he will permit it. I foresee circumstances in which the Minister would, in practice, make a regulation allowing an advertisement in certain form and subject to whatever regulations he would prescribe.
I see, in the growth of credit unions, a very real intrusion upon the money that is collected by way of investment from the citizens of this country and its application. Money that would go to commercial banks, post offices and a lot of other places such as building societies will now go to credit unions. If this growth were encouraged by advertisements, I could well see a situation arising whereby the volume of business done by credit unions would become much greater than the volume of business done by building societies and the Post Office and it would certainly be something that would appear in the little blue book we get at every Budget time that is called the Capital Budget. Let us face the fact that the Minister and the Cabinet have a vested interest in this because availability of capital or shortage of capital affects their administration. The channelling of capital into credit unions means that it will be locally employed and employed towards individual citizens of the State through an agency which has no relation to central Government. I am not saying the Government want to restrict the expansion of credit unions but I say that section 32, notwithstanding the amendment mentioned by the Parliamentary Secretary to section 35, does give the Minister that power.
Even though the Parliamentary Secretary has indicated to me that the representatives of the Credit Union League of Ireland have had their doubts and fears allayed by his assurances, I would now say that I am getting a little worried about the fact that he has been far too efficient in allaying these doubts and fears because these people have not perhaps been as long on the road looking at legislation and its application afterwards as the Parliamentary Secretary and I have. We never know what sort of a Minister we shall get the next time. While the Parliamentary Secretary and his senior colleague may have every desire to expand credit unions, nevertheless, when they have got a bit bigger, I could well imagine a successor of the Parliamentary Secretary on any side of the House taking the view that further expansion of credit unions might be contrary to the laudable desire he might have of channelling a larger percentage of capital towards Government coffers. That is why I object strenuously to the refusal to allow advertising by credit unions. Is it not true that we all believe that credit unions will handle a larger volume of money in a few years' time than the Post Office or the building societies? I use these as examples because the other example, the commercial banks, is so much bigger business that one could never see the credit unions coming up to even ten per cent of the volume of business transacted by commercial banks.
This is a bad provision. It is the only amendment about which I have strong views. It would be far better if this section were removed from the Bill.
I join with Deputy Donegan in his criticism of this section. I cannot understand the reasoning of the Parliamentary Secretary in the case he makes for the section, which positively restricts a credit union from advertising its affairs to its members or advertising any aspect of its financial affairs. This kind of restriction must hinder the growth of a credit union. It does not apply, I think, to any other savings group.
Hear, hear; that is true.
We must, therefore, assume some form of bias in regard to this section, especially since one must remember that credit unions are world-wide and this is not merely an Irish association for thrift and lending money to members at reduced rates of interest. This is a world-wide organisation and it is reasonable to assume that it grew to world dimensions as a result of propaganda in regard to the intrinsic worth of credit unions as such.
The Parliamentary Secretary seemed to feel that if he allowed credit unions to advertise ad lib, it might not have good effects. When one recalls that the primary purpose of credit unions here and in many other countries is to eliminate usury and fraud, the Parliamentary Secretary should have more confidence in the Irish organisation and the high principles to which they adhere and should allow them the liberty which all other groups have to advertise themselves.
I disagree with Deputy Donegan when he goes on to suggest, perhaps, a rivalry between the Post Office and the banks and the credit unions. There were fears of such rivalry but it is now clearly understood that the resources of the credit unions are deposited in some of the banks—in which, is a matter of indifference—and the capital is available at large to the banks, the Post Office, possibly, and the Government. I see no rivalry but I see an inhibition or bias and a very serious restriction on the growth of the credit movement in this country if credit unions are to be debarred from advertising the advantages which membership has to offer to the general public.
I hope the Parliamentary Secretary will have another look at the section and I feel sure he will satisfy himself that it is too rigid. I am mindful of his remarks in respect of section 35 but again any advertisement in respect of the credit unions would be solely at the discretion of the Minister in power and he would determine, I should imagine, what he would allow them to advertise and that might not be sufficient for the aims of the Credit League of Ireland.
Deputy Treacy has well taken a point on which I think Deputy Donegan is in error in suggesting that if credit unions absorb a great deal of money, this would be to the disadvantage of the Government. On the contrary, the more money they get, the better I like it.
I assure Deputy Treacy that there is no bias whatever against the credit union movement. It is not because of bias that this Bill was introduced or because of bias that the proposals of the Credit Union League and all other individual credit unions and individual citizens who made suggestions to us have been so carefully considered. It must be obvious that a credit union is in a different position from any other type of society by reason of the fact that it is composed of people who have a common bond and that membership is confined to those who have that common bond. Since there is this common bond, then, a fortiori, it is not necessary to advertise. But in case either Deputy Treacy or Deputy Donegan consider we are being biased —which is far from true—I certainly undertake between now and Report Stage to have another look at this section with a view to modifying the section itself rather than keeping the machinery which I proposed a few moments ago, namely, that the Minister should have power by regulation to control the extent to which advertising could be done by a credit union.
I should also like to add that if, as Deputy Treacy said, the credit union movement is world-wide, so is credit union legislation and the prohibition against advertising contained in this Bill is not peculiar to this country but operates in some other countries because of the fact that a credit union exists with people or individuals or a group who have a common bond and cannot otherwise exist. I will see what can be done, in view of the points raised by the Deputies, to water down this section but I do wish to repeat that the Minister has an obligation to protect the public against fraud. In saying that, I am not for a moment suggesting that the Credit Union League or anybody connected with it is now or at any time in the future likely to commit fraud. What I am saying is that frauds do occur as a result of advertisements and that it is our duty and it will be the Minister's duty and continuing obligation to ensure that he has the power to prevent persons under any guise from attracting funds from the public by means which turn out to be fradulent.
(South Tipperary): I am pleased that the Parliamentary Secretary has told us that he will have another look at it. He mentioned something I did not know, namely, that advertising for credit unions is restricted, if not prohibited, in many other countries. I envisage this credit union movement as a co-operative savings movement. Our position here financially might be a little different from many other countries in so far as money can so freely move out of the country at a rate which we cannot afford. It seems to me that we should not limit advertising by a credit union which essentially conserves money here and keeps it here while at the same time we allow free advertising, for example, by finance houses. One need only go down to Grafton Street and withdraw all the money one has and get a higher rate of interest than is obtainable in the commercial banks. As to what happens to that money afterwards, we appear to have no particular knowledge or control. It seems to me that money could easily move out of the country through organisations like that which are quite free to advertise here and at the same time we are putting restrictions upon what is a savings movement and would tend to conserve and keep money here. In fact, it would appear that if too many restrictions are imposed as regards advertising, our credit union movement will be just a system of little money boxes in every parish and will not become anything worth while.
I admit, the Parliamentary Secretary is worried about the question of fraud but I would suggest that he might be able to think up some other sections to embody in the Bill to circumvent the possibility of fraud and at the same time allow a little more latitude on the question of advertising so that we would allow this movement a little better opportunity to expand because I think it is essentially good and will prevent money leaving the country.
I certainly will have a look at it.
I am very pleased to hear that. I just want to make one point against the Parliamentary Secretary. I do not see the relation between advertising and fraud about which he tells us. He says that frauds resulted from advertising. People get shot as a result of other people having guns but that does not mean that I should be refused a licence for my shotgun. One has to be extremely clear on this. I do not accept at all that advertising by a credit union would tend to make them more prone to fraud. I do not mind discussing fraud in relation to credit unions or any financial institution because it is our job on Committee Stage here to do that sort of thing and to think up all the odd sorts of situations that might occur. That is what we are being paid an allowance for once a month. I do not see that relation and I do not see why a credit union that was advertising would be more prone to fraud than any other credit union, with the exception that they might have to pay the cost of advertising and might for that reason be spending more than they should. I do not see how advertising affects the common bond and I do not see why a common bond removes the necessity for advertising.
I would just like to give an example —Drogheda town, with something less than 20,000 population—where the credit union movement is but at the initial stages and where the good curates of that town are trying to push it forward. I could easily imagine a situation whereby men in factories — the cement factory employing 800 or 900 persons — would not know anything about the credit union if there were not some means of advertising that if they left 10/- of their wages behind every week as a saving, they would be in a position at any time to walk into a credit union office and get cash whereby they could make a bargain for a television set at cash price rather than buy it on the instalment system at the colossal rates of interest mentioned by Deputy Hogan.
I would ask the Parliamentary Secretary, in friendship, seeing that he is going to look at it before Report Stage, to examine it from the point of view that I have expressed. For instance, I have in my pocket for a constituent — I am aware that exhibits are unparliamentary and therefore not allowed — an advertisement for farm credit bonds from the excellent Agricultural Credit Corporation and also an advertisement detailing the extra one per cent available for larger amounts left for a period of more than three months. This sort of advertising is extremely necessary so that the organisation will get that sort of investment. I hope what I am saying will be read not only by anybody interested but by the officers of the Credit Union League of Ireland. The necessity for advertising does exist in the case of credit unions. I am more than thankful to the Parliamentary Secretary for the kind way he has met us here today and for the fact that he will look at it.
Some existing credit unions do, in fact, circularise their members.
Yes, but it is questionable whether they will be entitled to do so after the passage of the Bill.
We can clarify that, but the Deputy is suggesting that we should go a good deal further. I will consider it between now and Report Stage.
Thank you very much for that. It is very good to meet somebody here who will do that.
Question put and agreed to.
Sections 33 and 34 agreed to.
SECTION 35.
I move amendment No. 20:
In subsection (1), page 19, line 12, to delete "subsections (6) and" and substitute "subsection"; and line 16, to delete "to (3)" and substitute "and (2)".
There are amendments here which are all consequential upon amendments Nos. 15 and 16.
Amendment agreed to.
Section 35, as amended, agreed to.
Section 36 to 39, inclusive, agreed to.
SCHEDULE.
I move amendment No. 21:
In page 20, in Part I, in column (2) opposite the mention in column (1) of Section 25, to delete "five hundred pounds" and substitute "one thousand pounds".
Amendments Nos. 23 and 24 go with amendment No. 21.
The House will notice from the Schedule that the maximum shareholding permitted by section 4 of the Industrial and Provident Societies Acts, 1893 to 1936, is being increased to £1,000. A similar change is being made in relation to the maximum benefit that will be payable under section 8 of the Friendly Societies Act, 1896. Representations have been made to me that it would be logical to provide that the limit for nomination would be the same as that provided by the members' shares and these amendments are designed to achieve this purpose. If the minimum shareholding is £1,000, a person may nominate up to that full amount.
Amendment agreed to.
I move amendment No. 22:
In page 21, in Part II, in column (1) before "Section 8" to insert "Section 6", and in column (2) opposite the mention in column (1) of Section 6 to insert the following:
"By the insertion after `Parliament' of the following:
`The report required by this section shall include particulars relating to credit unions and, in particular, a list of all statutory instruments in operation at the end of the year in question together with explanatory notes regarding such instruments and a copy of such particulars shall be sent free of charge on request to any credit union in the State.' "
This amendment really arises from the discussion on Second Reading when Deputy Corish and Deputy Ryan expressed some misgivings about the powers given to the Minister to amend by regulation the various sections of the Act. What we decided to do was to oblige the Registrar of Friendly Societies in his annual report to include particulars of all statutory instruments in operation at the end of the year with which his report is concerned, together with explanatory notes regarding them and to provide a copy on request and free of charge to any credit union within the State.
I may say that I had my own misgivings with regard to the wide powers of regulation given to the Minister and the undesirability, especially from a practitioner's point of view, of finding at the very tailend of an Act huge provisions including times, limits etc. to be altered by the Minister. I think the obligation we now impose on the Registrar of Friendly Societies to publish an up-to-date notice of these regulations and to send it on request free of charge to every credit union provides the remedy. It satisfies my own misgivings in the matter and I hope it satisfies the Deputies'.
Amendment agreed to.
Amendments Nos. 23 and 24 were discussed with amendment No. 21.
I move amendment No. 23:
In page 21, in Part II, in column (2) opposite the mention in column (1) of Section 56, to delete "five hundred pounds" and substitute "one thousand pounds".
Amendment agreed to.
I move amendment No. 24:
In page 21, in Part II, in column (2) opposite the mention in column (1) of Section 57, to delete "five hundred pounds" and substitute "one thousand pounds".
Amendment agreed to.
Schedule, as amended, agreed to.
Title agreed to.
Bill reported with amendments.
Report Stage ordered for Wednesday, 3rd May, 1966.
