Dáil Éireann debate -
Tuesday, 5 Dec 1967

Vol. 231 No. 9

Supplementary Estimate, 1967-68. - Trustees (Authorised Investments) Order, 1966.

Minister for Finance (Mr. Haughey)

I move:

That Dáil Éireann approves the following Order in draft:

Trustees (Authorised Investments) Order, 1966,

a copy of which Order in draft has been laid before the House.

The Trustee (Authorised Investments) Act, 1958 defines the investments in which trustees may invest trust funds unless expressly forbidden by the instrument, if any, creating the trust. The Minister for Finance may vary the authorised investments by Order. The primary qualification for trustee investments is that they should be secure, and, subject to this, that they should give a favourable income to the life tenant.

The purpose of the Order before the House for approval is to add Bank of Ireland Loan Stock 1986/91 to the list of trustee authorised investments. The loan stock was issued in connection with the acquisition last year by the Bank of Ireland of the Irish business of the National Bank. Shareholders of the National Bank received 36s 6d in cash and 20s nominal amount of the loan stock for each share held by them. The stock was issued at par and bears interest at 7% per annum.

The total amount of stock issued was £6,000,000 and roughly two-thirds of this was received by Irish shareholders of the National Bank. It is repayable at par between 1986 and 1991. Registered holders have the right to subscribe in cash for an aggregate of £15 nominal amount of Capital Stock of the Bank of Ireland in respect of each £100 nominal amount of the loan stock held by them. The subscription rights will be exercisable on 30th April in the years 1969 to 1971 inclusive at specified prices.

The loan stock is quoted on the Irish and London Stock Exchanges. The price on the Dublin Stock Exchange on 24th November, 1967, was £108 being a premium of £8 on the issue price.

The Capital Stock of the Bank of Ireland has been a trustee investment here and in Britain for about a century. The loan stock has been given trustee status in Britain and I am satisfied that it is a suitable stock for addition to the authorised trustee investments in this country.

The Minister for Finance is obliged under the Act to consult with the following persons in regard to the terms of any order he proposes to make to vary the list of authorised investments—a Judge of the High Court nominated by the Chief Justice, the Governor of the Central Bank, the Public Trustee, the Chairman of the Irish Bank's Standing Committee, the President of the Incorporated Law Society of Ireland, the President of the Dublin Stock Exchange and the President of the Cork Stock Exchange. I have consulted all these persons and they have no objections to the proposed Order.

I recommend the motion for the approval of the House.

Mr. T.J. Fitzpatrick

(Cavan): We have no objection to the proposed Order, but I should like to avail of this opportunity to say that from time to time the funds of minors and other persons who come under the wardship of the courts are invested in what are regarded as, and what are, trustee securities, and not infrequently a loss is suffered on these securities because they fall in value. For instance, a minor aged 14 or 15 may be awarded a couple of thousand pounds, and that sum may be invested in trustee securities, perhaps National Loan of one issue or another, and by the time that minor reaches the age of 21 he finds that the value of the stock in question has fallen. It does not always happen; sometimes he makes a profit, but if it falls in value he suffers a loss.

There should be some funds available to indemnify minors and other wards of court against this loss. It did strike me a few times in this House, when the unclaimed funds standing to the credit of wards of court were being voted in this House for one allegedly worthy cause or another, it would be much better to use some of those funds to reimburse minors and other wards of court who, through no fault of their own, suffer a loss through the fall in value of these securities. I suggest now that the Minister give this proposal of mine some thought, and I am sure it is a proposal that would meet with the approval of the Members of this House. It is merely a proposal that unclaimed funds should be devoted to making up losses suffered by wards of court through the fall in value of trustee securities in which their money is invested.

Mr. James Tully

We have no objection to this motion either, but I think what Deputy Fitzpatrick suggests is reasonable. From time to time, people who appear to have their funds securely invested or had them invested for them as wards of court, are surprised to find that when they want to avail of the funds when they reach the appropriate age, the value has depreciated considerably, and in one case I know of, very considerably. There should be some way, such as that suggested by Deputy Fitzpatrick, in which the value of the investment could be guaranteed. After all, the court does guarantee minors their money or should guarantee them their money. If it was suggested when an award was being made in respect of a minor, say, of £2,000, that that would be very much less when that minor reached the age of majority, everybody would raise his hands in horror and say this could not happen and should not happen. We all know it does happen, and if Deputy Fitzpatrick's suggestion is feasible, it should be adopted and, if not, the Government should find some way in which they could guarantee such funds.

Question put and agreed to.