Dáil Éireann debate -
Wednesday, 1 Dec 1976

Vol. 294 No. 8

Building Societies Bill, 1975 [Seanad]: Committee Stage (Resumed).

SECTION 79.

Question proposed: "That section 79 stand part of the Bill."

Minister for Local Government (Mr. Tully)

This section deals with the arrangements to be made in connection with the assessment of the adequacy of security taken by a society and the persons who may report on the value of the security. A duty is imposed on every director of a society to satisfy himself that the arrangements for assessing the adequacy of the security to be taken in respect of loans will ensure that the security will be assessed by a director or other officer of the society and that every such person or persons assessing the adequacy of the security shall have available a written report prepared and signed by a competent and experienced person other than an officer. The report shall refer to the value of any freehold or leasehold estate and to any other matter likely to affect the value of the security. A report prepared by a person who has a financial interest in the disposal of the estate in question shall not be accepted by the person or persons assessing the adequacy of the security. Furthermore, the person assessing the adequacy of the security shall not be persons who have a financial interest in the disposal of the estate in question or persons who are entitled to receive any commission for introducing the parties to the transactions involving that disposal.

This section, which is new, is considered a necessary safeguard to ensure that adequate procedures exist for the evaluation and assessment of securities being offered for loans that such evaluation and assessment be carried out in an impartial manner.

Question put and agreed to.

SECTION 80.

Question proposed: "That section 80 stand part of the Bill."

Mr. J. O'Leary

I am far from happy about section 80 of this Bill. I have always had strong feelings regarding the propriety or otherwise of issuing loans on second mortgages or second charges. I would even go so far as to say that local authorities should give a loan on a second charge or a second mortgage provided always that the value of the existing house or the house being erected on a building site exceeds by far the amount of first mortgage plus second mortgage or second charge. I know personally that building societies have been very reluctant to, and rarely if ever do, give a loan on a second mortgage or a second charge. This imposes grave hardship on many persons building or buying houses. Some of these people go to the bank where the interest rate is rather high, but, more important still, the lending period is very short indeed.

I am firmly convinced that there is nothing wrong whatsoever with the local authority or a building society giving a loan on a second mortgage or a second charge in the same way as banks very often do in respect of business premises or commercial enterprises. The building society would, of course, take the necessary steps to make sure that the value of the property would by far exceed the amount of the mortgages or the charges in the same way as the bank would. Up to now the building societies have refused to give loans on second mortgage and second charge, but we have now reached the situation that if this Bill goes through with this section in it the building societies would say: "Sorry, but we are now compelled by law not to give a loan on a second mortgage or a second charge because it would be illegal for us to do so". That just closes the case, but up to now it has been optional at least. From now onwards the books will be closed.

I wonder whether this section is really necessary. I have grave doubts about it. I do not think it is necessary in this Bill because if the building society wants to say "No", they can say "No", without being compelled by law to say it.

Mr. Faulkner

I would like the Minister to explain why it is necessary to have this section because I do not think that any society would be expected, as it were, to make a second mortgage on a situation where it does not relate to a prior mortgage made by the society. For that reason I am wondering, first of all, why it is there. Secondly, I would like to develop in a brief way the point made by Deputy O'Leary. Where a society might for some lawful reason wish to make a second mortgage payable in favour of or in relation to a loan taken out from some other agency why should they be prohibited from doing so? We find at present that some institutions lending money for the building of houses, including the local authorities, are in some circumstances very limited in the amount that they make available and the second loan is necessary in many cases. Building societies, as I said a moment ago, might be slow to grant a second mortgage, but at least without this insertion they have the right to do so, again, as Deputy O'Leary said, provided that the value of the freehold or leasehold estate is not exceeded. For that reason there seems to be a case for at least leaving it to the discretion of the building societies. As I pointed out a moment ago, the total amount available for the SDA loans is very much below the level necessary to either build or buy a new house. Therefore, the person who manages to get one of these loans needs a further sum of money to buy or build the house. If building societies are willing to make that money available, they should have the right to do so. I would like to hear why this section was included in this Bill.

Mr. Tully

Deputy O'Leary misunderstood the position. It is a re-enactment of a section of the 1894 Act. Under existing legislation building societies are not allowed to give second mortgages. As Deputy Faulkner rightly said, not many societies would give it. I believe it is right to put in this section because the societies will not have to face long arguments. The law is there. It has worked for 100 years and will continue to work.

There has been another misinterpretation about banks. At present banks give second mortgages at very high interest rates because they can take risks building societies cannot. For the last two years banks have been giving house building loans on a 20-year repayment, as distinct from second mortgages. As Deputy Faulkner said, there is a big difference between the amount given by SDA loans and the amount necessary to build a house. At the same time, the new scheme will allow many people to get as much money as they require to build a house if they are in that category. This point should not be contentious because it is simply a re-enactment of existing legislation and it is sensible to have it there.

Mr. Faulkner

I was afraid that that would be the answer—that it is simply a re-enactment of existing legislation. What we are doing here is bringing the legislation up to date. The circumstances which pertained when the original Act was passed have changed considerably. Because this was part of the original legislation is no reason why it should be included here, especially if we can devise a new section which would be to the advantage of people who need to borrow.

I agree that building societies are not likely to break their necks giving loans on a second mortgage, but it seems to be particularly prohibitive that we are writing into law, at a time when people are anxious to buy or build their own houses and cannot get mortgages from other sources, that building societies, whether they like it or not, cannot make a loan on a second mortgage.

As I said, legislation passed 100 years ago would not be suitable for the present day. I believe this is a good Bill and has made some very worth-while changes. We should not rely simply on the fact that this section was in the previous legislation or that it would create problems for the building societies because they would have to argue with their customers as to whether they would give the loans. It should only be there if we believe it is the proper thing.

Deputy O'Leary made the case that showed that something better could have been substituted.

Mr. Tully

As I said, the provision is a re-enactment of section 13 (1) of the 1894 Act. As Deputy Faulkner said, that should not be the only reason and, of course, it is not. Common sense is another reason. If a society makes loans on the security of property which was subject to a prior charge, not in favour of the society, the risk of incurring losses in the event of repossession of the property would be greatly increased as the amount outstanding on foot of the first charge would have to be settled in full before any part of the society's claim on foot of its interest in the property could be met.

The situation is that somebody might borrow a certain amount of money and have a first charge on the property. If the building societies proceeded to lend money on it at the normal rate of interest and if for any reason, failure to make repayments or repay interest over a period of a relatively short time, it could end with the building society getting very little after the first charge was satisfied.

Mr. Faulkner

That is hardly worth discussing. While I agree that Deputy O'Leary made a good case, we know building societies would concern themselves with the legal aspect before giving the loan. What Deputy O'Leary objected to, and what I find objectionable, is the specific proviso which states that they cannot make this type of loan whether they like it or not.

Mr. Tully

Deputy Faulkner seems to be falling into the same trap as Deputy O'Leary.

Mr. Faulkner

I have not fallen into any trap.

Mr. Tully

Deputy O'Leary said that up to now it was possible for building societies to give a second mortgage. It was not possible because the 1894 Act stipulated that it could not be done. It is imperative that the avoidance of losses should be safeguarded against. If second mortgages were given and even a relatively small number turned sour and they failed to recover on them, there would be talk that the building societies were lending money on bad securities and they were not safe places to put money. As Deputy Faulkner said, it is not worth talking about because even if we did not put it in, building societies would not lend money on a second mortgage. It is to ensure that they do not put at risk investors' money that that section is there.

Mr. J. O'Leary

Because the section is in the 1894 Act, does not necessarily mean it should be in the 1976 Bill. It is well known that managers, secretaries and accountants of building societies are good business people. They know if it is proper to give a second mortgage. They are the best people in the world to assess an applicant for the second mortgage or charge. These societies should not be compelled by law not to consider a second application.

An Leas-Cheann Comhairle

Is the section agreed to?

Mr. Faulkner

Deputy O'Leary was wise to have raised this matter. Our feeling is that the societies should not be bound by law, but we will accept it.

Question put and agreed to.

SECTION 81.

Question proposed: "That section 81 stand part of the Bill."

Mr. Faulkner

When does the Deputy visualise a ballot of precedence taking place or has he any example of it having taken place?

Mr. Tully

The section is a re-enactment of section 12 of the 1894 Act, except that the provision is not restricted, as section 12 of the 1894 Act was, to societies established after the passing of the Act. Subsections (2) and (3) of section 12 made special provisions in relation to societies established before 1894; such provisions are no longer necessary. In other words, they were a feature of very early societies but are not appropriate to modern building society operations. In case such a practice would be introduced, it is well to safeguard against it. While it is highly unlikely that this will occur, it could happen.

Mr. Faulkner

In what circumstances would the Minister visualise this occurring?

Mr. Tully

The same circumstances as occurred before. We do not know what will happen in 80 years' time; any time before the next Bill is introduced——

Mr. Faulkner

I could only visualise it in circumstances where the building societies were running short of cash, but the Minister's forecast is that they will have so much money they will want to invest it elsewhere.

Mr. Tully

That could happen.

Question put and agreed to.

SECTION 82.

Question proposed: "That section 82 stand part of the Bill."

Mr. Faulkner

Would the Minister explain this section?

Mr. Tully

Almost every building society mortgage confers on the society a power of sale of the mortgaged property in the event of default in making repayments, or on the breach by the mortgagor of some provision contained in the mortgage deed or in the rules of the society. At present there is no statutory obligation on a society, on exercising a power of sale, to give to the defaulting borrower the value of his equity in the property, although it is the practice of the societies to do so. This section, which follows in part the lines of section 39 (6) of the Housing Act, 1966, will put the matter on a statutory basis. I think it is a very good idea that this should be done.

Mr. T.J. Fitzpatrick

(Dublin Central): It certainly is. I never realised until now that there was no obligation on building societies to give the defaulting borrower the value of his equity in the property. This is a welcome section.

Mr. Tully

To be fair to the societies, I think all of them actually do this even at present.

Mr. T.J. Fitzpatrick

(Dublin Central): I should hope so. Does inflation enter into this? Take a property bought 50 years ago. Will the building societies be compelled to pay capital gains tax before they refund the remainder to the mortgagee?

Mr. Tully

Under the section, where a society recovers possession of a mortgaged property on the default of the mortgagor and the property is sold, the society shall pay to the mortgagor the price obtained less the outstanding principal on the loan, interest and cost incurred by the society in the recovery and disposal of the property. The section also provides that all practicable steps shall be taken to ensure that the property is sold for the best price reasonably obtainable at the time of sale and that the society shall, within 21 days of the completion of the sale, send to the mortgagor particulars of the sale in such form as the registrar may require. In addition to this latter requirement, the further provision is made that nothing in the section shall affect the operation of any rule of law relating to the duty of a mortgagee to account to a mortgagor. As the period over which a building society loan is repayable normally extends for 20 years or more, the term "mortgagor" is defined to include the successors in title to a person to whom a loan is made by a society, so that the rights enjoyed by a mortgagor in this section shall also be enjoyed by his successors in title.

Mr. Moore

Subsection (2) (a) provides:

In exercising any power of sale under a mortgage a society shall ensure as far as is reasonably practicable that the estate is sold at the best price reasonably obtainable.

Is there any way we can ensure this is done? We do not want the case of two fellows walking in, one offering £X and the other offering £X+1 in which case he, being the highest bidder, will get the house and the amount offered may not represent the market value at all. The price of a house bought five years ago will have appreciated. Is there some way of ensuring that the proper price is obtained?

Mr. Tully

The best price will be obtained. The house will be sold by auction. Sometimes, and I am sure the Deputy is aware of this, when a bank sale takes place there is a boycott and the person who originally owned the property is able to buy it back at a fraction of what it cost. That is not what Deputy Moore has in mind. I will check on this, but I am sure there would be a right of appeal to the registrar and possibly to the courts for someone who felt he had not got fair value.

Mr. Moore

We have a specific provision in the SDA Acts. If a house is repossessed those operating the Acts will act very fairly and try to get the best possible price.

Mr. Tully

I imagine the same thing will apply here. The building society officials will be reputable people and as responsible as the officials of a local authority.

Mr. Moore

The Minister is satisfied about this.

Mr. Tully

I am satisfied, yes.

Question put and agreed to.

Section 83 agreed to.

SECTION 84.

Question proposed: "That section 84 stand part of the Bill."

Mr. Faulkner

Perhaps the Minister would give us some explanation in regard to this section.

Mr. Tully

This section deals with the arrangements which shall apply when all moneys due under a mortgage have been paid. The section makes appropriate provision for the discharge of mortgages of both registered and unregistered land. It will be noted that, in the case of registered land, a receipt under the seal of the society that all moneys secured by mortgage were fully paid shall be sufficient proof of the satisfaction of the mortgage and, in the case of unregistered land, such a receipt shall reconvey and vest the estate in the mortgagor without the necessity for a formal reconveyance or resurrender. I think this is a very sensible arrangement and I believe it adequately covers what should be done.

Question put and agreed to.

NEW SECTION.

Mr. Faulkner

I move amendment No. 24:

In page 49, before section 85, to insert a new section as follows:

"85. —The Registrar shall be appointed by the Government and may be removed by the Minister. Such removal shall not take effect except on the passage of a motion by each House of the Oireachtas with a two-thirds majority of those voting in each House".

This amendment is very important so far as we are concerned and it has grown in importance since the passing of the Friendly Societies Bill recently. Prior to that I was satisfied to have the Registrar for friendly societies act as registrar for building societies though I had put in an amendment to strengthen the hand of the registrar and I had hoped that during the passage of the Bill in relation to friendly societies the position of the registrar would have been strengthened. When I noticed in the Friendly Societies Bill that the registrar could be removed by the Minister for Industry and Commerce at will I became perturbed and I spoke in favour of an amendment tabled by Deputy O'Malley, the purpose of which was to ensure that the registrar could not be dismissed in this summary fashion but rather that the Oireachtas would be called upon to decide the issue in the event of the need arising to remove the registrar from office. The Parliamentary Secretary, who was dealing with the Bill, resisted that amendment and we were left in a situation where the Minister for Industry and Commerce could remove the registrar from office when he felt like it. This insecurity will mean that the registrar will feel obliged to conform to a considerable extent to the wishes of the Minister for Industry and Commerce and the other Ministers concerned in the Building Societies Bill and the freedom we believe he should have in the exercise of his duties will not be available to him. Another problem can very easily arise in that well qualified people who would be likely to apply for the position of registrar will not do so because they can be removed from office at will. We will then have a situation where instead of the best people applying for the job we will get applications from people with second-rate qualifications. This could be a calamity in what is an exceptionally important position.

In the course of the debate on the Friendly Societies Bill the Parliamentary Secretary stated that it was more than likely that the person appointed to the position as registrar of friendly societies would not be a civil servant. I am fully in agreement with this. I should much prefer to see somebody from outside the service appointed to that position but the fact that this is likely to be the case creates an even greater problem. The removal of a civil servant from the position of registrar usually would mean simply a transfer to another section of the Department without loss of pay unless there were some serious allegations involved and without loss of pension rights. However, the removal of a person who came from outside the civil service would mean not alone the loss of his income but also the loss of pension rights. Obviously a married man with a family would not consider he had the freedom to act in a manner required of a registrar of building societies. As I said, I am in favour of a well-qualified person from outside the civil service getting the job but I have pointed out the problems that could arise and that could severely restrict the autonomy of the registrar.

The amendment we have subtrar' mitted underlines the importance of the position of registrar and the need to ensure his freedom of action. It is in line with all our thinking in relation to State involvement in this Bill. In relation to a number of amendments we submitted and which we withdrew with the proviso that we might resubmit them, we pointed out we were not happy with the amount of State intervention that can occur if this measure becomes law. We must be concerned about this aspect also. The registrar will have an exceptionally important job. He will be dealing with the financial institutions that are very large bodies. They have grown from small beginnings thanks to the energy and effort put into them by the management and others during the years. In his dealings with such institutions the registrar should be autonomous and should have the freedom which we consider necessary if he is to carry out his duties.

The Minister has said that in the United Kingdom the registrar is even more tightly restricted than in this Bill. I read the British Act on a number of occasions during the course of my consideration of this Bill and I cannot agree with the Minister. As I see it, the registrar is given the sole function of controlling the societies. The system has worked very well in the United Kingdom since the Act was passed. The registrar is in control and is seen by his various activities to be in control. This should be the position here and our amendments point to this. It should be the duty of the registrar to consult with the appropriate Minister so that the Government can keep the whole system under surveillance but the registrar so far as possible should be free to act. We do not believe that a registrar who can be dismissed at will without reference to anybody other than the Minister can have the freedom of action which we consider vital.

The person to be appointed as registrar must be highly qualified and he must have a full and suitably qualified staff. He will quickly become au fait with the workings of the societies and will develop an expertise which we are convinced will redound to the advantage of the societies. That would be a considerable improvement on the position we have had up to now where civil servants deal with the societies. However competent they may be and however well versed in the affairs of the societies, almost invariably after a relatively short space of time the personnel concerned are transferred either on promotion or for some other reason. The result is that some new people move in and they have to learn all about societies from the beginning.

The basic point I am making is that the independence of the registrar must be assured and it must be seen to exist. I am not at all happy that this will be the case in relation to the registrar of friendly societies. After the discussion we had on that Bill I was forced by the situation that is evolving in relation to the registrar of friendly societies to withdraw my original amendment and to substitute another amendment.

The registrar will be taking on an onerous task in dealing with financial institutions that have grown enormously in the past decade. The argument put forward by the Minister in his defence of the wording of section 38 was that the registrar would fix limits in respect of investments by a society and not the Minister for Finance but the fact remains that he must consult with the Minister for Finance and, presumably, he must get advice from the Minister and his Department. If, having got that advice, he decides it would not be in the interests of the societies he has then to concern himself whether he is sufficiently free to decide on his own and to act against the advice given by the Minister and his Department. The fact that he can be removed by the Minister will prohibit him from acting as he might like to act in certain circumstances.

We feel strongly about this matter, as we felt about other aspects of what we considered was undue State interference in the commercial aspect of the workings of the building societies. I would ask the Minister to give further consideration to this matter, particularly in view of the attitude adopted by the Parliamentary Secretary on the Friendly Societies Bill when he refused to accept any amendment to the position as it was. There are many other instances in the public service where certain appointees cannot be removed except with the permission of the Oireachtas. The position we are discussing is not a menial one, it is a very important one. It concerns the future of building societies to quite a considerable extent and, therefore, is something in which those who borrow from and those who lend to the building societies must have a particular interest. We must, in those circumstances, not only ensure that the registrar is completely free but, at the same time, we must allow the State the right to ensure that irregularities will be put down and that the registrar is as free as it is possible for us to make him. I ask the Minister, especially in considering the position in relation to the Friendly Societies Bill, to reconsider this.

Mr. Tully

I think Deputy Faulkner is making a mountain out of a molehill. The Bill, as drafted, proposes in section 85 that the Registrar of Friendly Societies shall, for the purpose of this Act, be the Registrar of Building Societies. The Minister for Industry and Commerce, as the Deputy said, recently passed through the Dáil a Bill entitled The Friendly Societies (Amendment) Bill, 1976 which includes a provision for the appointment of the Registrar of Friendly Societies. I understand this section was very fully discussed by the Deputies during the debate.

Deputy Faulkner's amendment would require that a separate Registrar of Building Societies be appointed. I gave full consideration to this matter before deciding that there was no necessity for two registrars, that one could amply cope with the duties of the two offices and that the appointment of the two registrars would be wasteful of resources. There are 25 registered building societies in Ireland. In the United Kingdom, where there are over 450 registered building societies, the registrar of friendly societies acts as registrar for all the societies, friendly societies, building societies and so forth.

Deputy Faulkner referred loosely to the powers they had in the Bill and he said he read the UK Bill a couple of times. I suggest he read it again because, in fact, the registrar there cannot move without reference to the Treasury. Here the registrar has wide powers. Here he is not a civil servant. He will decide the amount of money which will be allocated or invested in certain funds, as the Deputy said. It is bordering on the ridiculous to suggest that it would require a two-thirds majority of the Houses of the Oireachtas to have him removed. This applies to the Judiciary for a very good reason. It is out of the question to suggest that this should apply to somebody employed on a job like this. I cannot understand why Deputy Faulkner should now find that this requirement is essential in view of the fact that since the 1935 Act the registrar could be removed. There never was a requirement that there would be a two-thirds majority of the Houses of the Oireachtas.

I do not know why the Deputy should suddenly get into his head that for some peculiar reason, not alone present Ministers but future Ministers, would be corrupt and would, therefore, for reasons of their own or political reasons, want to remove the registrar. It is ridiculous to suggest that. I believe Deputy Faulkner did more harm than good to this cause. I believe the regulation which is laid down is the sensible one. He will not be a civil servant. He will be a respected person in society. He will be a qualified accountant with at least ten years' experience in practice after qualification. He will easily be able to handle the matters which will come before him.

Under the circumstances I do not think there is any merit in the case made by Deputy Faulkner. I am sorry I could not possibly accept his amendment because it would make a situation where we would have two registrars, one of whom would be a registrar for building societies looking after 25 societies and as he was looking after them he would then be a person to whom there would be special terms applicable while the Registrar of Friendly Societies, who would be dealing with a lot of other matters, would be under different terms of employment entirely. I believe Deputy Faulkner, having had the matter debated on the other Bill, having had the matter teased out and a decision taken, must understand that the decision taken here is the correct one. The question of having a second registrar was considered fully and it was decided that it would not be justified under any circumstances.

Mr. Faulkner

I would like to make the point that because it was passed in relation to the Friendly Societies Bill it does not mean that it was right. It does not mean that we accept it. I would like to make my position clear in regard to this matter. I did not want two registrars but I was forced into this particular situation because the only way I could put down an amendment was in the form I have it because I disagree with the situation that will prevail under the Friendly Societies Bill, if passed in its present form. The Registrar of Friendly Societies who, in accordance with this Bill as it stands, will also be the registrar for building societies, can be removed from office at will by the Minister for Industry and Commerce.

I need not go into the whole argument again but I believe the registrar who will be responsible for building societies will not have freedom to act in the way he feels he should act in certain circumstances. That problem will always loom large in his mind when he feels that he must disagree with the advice given to him by the Minister and the Department of Finance. This is why I was forced into a situation where I had to submit the amendment as it stands.

The Minister said that the Registrar of Friendly Societies was dealing with this work for many years. Circumstances have changed very considerably, particularly in relation to building societies. In the early days building societies were a relatively small financial group but now they are enormous. While it is true to say that in Britain the registrar has to deal with over 400 building societies and that there is only a relatively small number here, I would have preferred if we could have allowed this section to pass as it stands and that the registrar of Friendly Societies would also be the registrar of building societies if I were satisfied with the situation as it should have developed in relation to the friendly societies. As the Minister said, and as I pointed out, we debated the position of the Registrar of Friendly Societies particularly regarding the fact that the Registrar of Friendly Societies would also be the Registrar of Building Societies. We did not feel, in those circumstances, that an appointee who could be removed at will by a Minister would have the freedom of action we believe he should have. Therefore I have no option but to express my dislike of the situation which will now arise if we are to allow the registrar of friendly societies to become the registrar for building societies in circumstances where the appointee can be removed by the Minister at will. The Minister also stated that the registrar for friendly societies in Britain was a civil servant and that he is not here. To date so far as I know he is.

Mr. Tully

He is not here.

Mr. Faulkner

He is attached to the Department of Industry and Commerce. I accept that in the future it is the intention to have the registrar of friendly societies appointed from outside the service. My basic problem has arisen principally because the Friendly Societies (Amendment) Bill has gone through the House. I thought the Committee Stage of the Building Societies Bill would have gone through the House before the Friendly Societies (Amendment) Bill. That is no fault of the Minister's. I am just pointing out that I thought it would have done so, and we could have made our arguments here and have prevailed on the Minister in the circumstances of the case we were making to discuss the matter with his colleague in Government the Minister for Industry and Commerce. For some reason or other, the Friendly Societies (Amendment) Bill went through the House quicker than this Bill. Therefore I had to change the amendment I had put down. I am not at all happy about the situation which will pertain if the Bill passes in its present form.

Mr. Tully

I may have said inadvertently that the registrar should be a solicitor with ten years' service. If I said that, I did not mean it. I meant he should be an accountant with ten years' service. I think that is what I said but, if there is any doubt about it, the record will show it.

This is a matter on which there is a difference of opinion. Deputy Faulkner holds a point of view which he is entitled to hold. I hold a different point of view. We will not meet no matter how long we argue about it. I considered the matter very deeply with my officials and eventually I came around to what is contained in the Bill. I am sorry I am not able to accept the amendment. If we are having one—and we are having one— it is not really a matter for this Bill. There could not be two different terms laid down, which appears to be what Deputy Faulkner is suggesting. I must stick to my guns on the section and I am sorry I cannot accept the amendment.

Mr. T.J. Fitzpatrick

(Dublin Central): Is the Minister making a hard and fast rule about the appointment of an auditor? I would have some reservations about that.

Mr. Tully

I should like to refer back for a moment to the discussions on the other Bill. Deputy O'Malley moved an amendment as follows:

In page 3, lines 42 and 43, to delete all words after "a person" and to substitute therefor:

"who is a qualified accountant with at least ten years' experience in practice after qualification".

The Parliamentary Secretary, Deputy Bruton said:

...the person appointed will be the right one in terms of meeting the needs of the Bill. It is anticipated that he will be a man, not necessarily with ten years' experience of accountancy, but with adequate professional accountancy experience.

Deputy O'Malley said:

From outside the public service?

The Parliamentary Secretary said:

We went into that on Committee Stage.

He will be a man with considerable experience from outside the public service.

Mr. T.J. Fitzpatrick

(Dublin Central): I can think of people from other walks of life, not necessarily accountants but doing very well in the financial world, who could fill the post as well as any accountant. I am not taking away from accountants.

Mr. Tully

That would apply more so if he was only the registrar of building societies. We are talking about the registrar of friendly societies.

Mr. T.J. Fitzpatrick

(Dublin Central): Whoever is appointed I have sympathy for him. It is often said that when somebody is appointed he should at least know who his boss is. The fewer people he is responsible to the better, if he is to exercise his functions properly. This person will find his boss is the Minister for Industry and Commerce. He will be appointed and can be dismissed by him. He will also be subject to directions and rules and regulations from the Department of Local Government, the Department of Finance and the Central Bank. That is not a very easy situation for the registrar to find himself in. He will be trying to promote the interests of the building societies.

Under this Bill the registrar for friendly societies is the same person as the registrar for building societies. Deputy Faulkner said it was not his intention that we should have two registrars. He is concerned about the independence of the registrar. It is of vital importance that the registrar should be independent and should be able to say "No. I think you are wrong." He has to agree with there or four different Departments. He will know exactly what he is talking about. He will know the day-to-day operations of the building societies. Deputy Faulkner wants to make it as difficult as possible for the Minister for Industry and Commerce without taking his right away from him.

Ministers should be consistent in their policies on appointing and removing people. The Minister said only the Judiciary can be removed by a resolution of this House. That is not altogether true. In a section in the new Broadcasting Bill the Minister for Posts and Telegraphs has provided that the authority shall not be removed except by a resolution of the House.

Mr. Tully

That is entirely different.

Mr. T.J. Fitzpatrick

(Dublin Central): The principle is the point.

Mr. Tully

One is a commission and one is a person doing a job.

Mr. T.J. Fitzpatrick

(Dublin Central): What does the Minister think the authority are doing? They are doing a job.

Mr. Tully

In a different way.

Mr. T.J. Fitzpatrick

(Dublin Central): They are appointed by a Minister.

Mr. Tully

They are not salaried persons.

Mr. T.J. Fitzpatrick

(Dublin Central): They are.

Mr. Tully

They are not.

Mr. T.J. Fitzpatrick

(Dublin Central): The principle is the same. Two Departments cannot operate differently. The registrar's job is important. He is just as important as any single member of the authority. Look at the responsibilities he is carrying. The Minister for Posts and Telegraphs in a section in the new Broadcasting Bill deems it necessary to provide that a resolution must be placed before this House with a proviso about being rescinded within 20 days. The Minister for Local Government should be consistent with the Minister for Posts and Telegraphs who said his suggestion was more democratic. He said he did not want to take a dictatorial line. He wants Oireachtas Éireann to decide whether he should remove the authority. Deputy Faulkner is asking for the same type of resolution to be placed before the House which would make it more difficult for the Minister for Industry and Commerce to remove the registrar and enable the registrar to take independent decisions which may be unpopular at times. At times Members of the Government can be demanding or unreasonable. We want to ensure that the registrar has the type of independence we believe is necessary.

The registrar will certainly carry a responsibility equal to that of any member of the RTE Authority with regard to millions of pounds of public investment and an enormous amount of property so far as loans are concerned. All of that will rest on his shoulders. Since the Minister for Posts and Telegraphs deemed it necessary that even if one member of the RTE Authority was to be removed the matter was to be brought before this House, surely the registrar who will occupy a much more important position financially should have that protection also. One must remember that the RTE Authority do not have any great control over the financial activities of RTE. I cannot understand how the Minister can refuse an equal safeguard in this Bill which will play an important role in the expansion of building societies. Indeed, if we want to have appointed a person capable of carrying out this job—and only the best in Irish society is good enough whether he be an accountant or financial expert; I am not worried about what field he is engaged in— such a person will not leave a good job without that safeguard in his terms of reference. Such a person will have proved himself in the financial world whether through his own business or having been employed in some financial institution. He will be very hesitant about leaving that position, having looked at his terms of reference and seeing how he can be removed from office.

If Deputy Faulkner's amendment is accepted, then we will have a proper applicant for the job; we will have the cream of our financial advisers applying because they will see that there is this extra guarantee that they cannot be removed because they happen to incur the displeasure of a Minister for Industry and Commerce. Perhaps the Minister would reconsider Deputy Faulkner's amendment. Furthermore, I would ask him to have a chat with his colleague, the Minister for Posts and Telegraphs, and ask him why it was inserted in the Broadcasting Bill. I cannot see any reason why it should not be included in this one.

Mr. Tully

There is a very good reason that it does not have to be included in this Bill. There never was a registrar removed and Deputy Fitzpatrick is aware of that.

Mr. T.J. Fitzpatrick

(Dublin Central): But we are legislating for the future.

Mr. Tully

We cannot have it both ways. We are talking about consistency. Last week during the discussion on the Bill Deputy O'Malley had an amendment down asking that the appointee be an accountant with at least ten years' experience. Deputy Fitzpatrick said it did not matter who was appointed as long as he was the proper man for the job.

Mr. T.J. Fitzpatrick

(Dublin Central): I said that he must be qualified in the financial field.

Mr. Tully

Deputy Fitzpatrick said he had a reservation about accountants anyway. Therefore, where is the consistency? We are making very heavy weather of this. Two Opposition Deputies have already said they do not want two registrars. There is no way the amendment could be accepted unless there were two registrars appointed.

Again Deputy Fitzpatrick referred to the millions of pounds over which the registrar will have control. For example, the UK registrar has similar control over £24,000 million and he does not have to be safeguarded in the way suggested here.

The debate has progressed very nicely. We have had our disagreements across the House and all the rest of it.

One thing I do not like—I do not think Deputies opposite mean it; I would hate to think they did—is the continual reference to the fact that nobody except somebody who was not a first-class person would be interested in the job because this safeguard is not written into the Bill, that Ministers for Industry and Commerce are merely waiting to have some fellow appointed and the first time he puts a foot wrong he will be thrown out, that, therefore, nobody else will apply. That is wrong. I do not think Opposition Deputies really mean what they say—that this will inhibit people from applying. I think the job will be applied for and will be well done by the registrar appointed whoever he or she may be. It is ridiculous to suggest that a registrar must have the right to come before the House of the Oireachtas no matter what he has done before he can be dismissed.

Deputy Fitzpatrick mentioned also the fact of his having more than one boss. The Minister for Industry and Commerce will be in charge. As Deputy Fitzpatrick must know, possibly from his own experience in business, there are sections that will be dealt with by a number of people, with somebody answerable to a person in charge of a section, or possibly two or three different sections. But ultimately they come back to the boss when a final decision has to be taken. The same situation arises here. We are making an awful lot of mountain out of a very small molehill.

Since Deputies do not want two registrars appointed, there is no way what they are talking about can be achieved at present. In any case, all of those aspects were considered before the final draft of the Bill was placed before the Seanad. It is reasonable for me to say that I am satisfied with the Bill as it stands. If there are different opinions across the House that is too bad. The House will decide finally what the issue will be and I am not prepared to alter the section.

Acting Chairman (Mr. M.E. Dockrell)

Is the amendment withdrawn?

Mr. Faulkner

No.

Mr. Moore

I am disappointed with the Minister's attitude because this simple request would give satisfaction all round. May I put it to the Minister, as a trade unionist, that if somebody is unjustly dismissed naturally he would be up in arms and say that that must not happen?

Mr. Tully

And if a competent professional man was dismissed in the wrong he would not have to go to a trade union. I know the row he would kick up, and rightly so, if a particular Minister threw him out just because he did not like the colour of his hair.

Mr. Moore

As the Minister pointed out, legislation lasts so long. In, say, 50 years or less circumstances may have changed considerably. While individuals like ourselves will pass on, we hope parliament will last and that any person with a grievance would have the protection of the Oireachtas in ensuring that he was not penalised unjustly. I want to ask the Minister also if there is any right of appeal for the registrar.

Mr. Tully

The registrar will have a right of appeal, which anybody has, to the courts. Anybody in the State who feels aggrieved has a right of appeal to the courts. I am quite sure that a professional man who considered he was dismissed unjustly would not be very slow in availing of that right; it happens every day.

Mr. Moore

Why should he have to go to the court because, first of all, it costs a lot of money?

Mr. Tully

What would it cost to pass a motion through this House and the Seanad? It would cost about ten times as much as in the High Court.

Mr. Moore

But justice must be seen to be done even though the heavens may fall. Therefore, if money is spent on it in the House of the Oireachtas, it is money well spent. I cannot see why the Minister will not accept the amendment. Deputies Faulkner and Fitzpatrick made a very able case. They have been lavish in their praise of the Bill. In order to remove a gnawing doubt in our minds the Minister might accept the amendment. The situation may never arise, a registrar may never be dismissed. To my mind, this will be a very prestigious appointment. For example, in section 87, an amount of £20 million is mentioned. This registrar must ensure that all moneys invested in building societies and the general running of them will be kept at the very highest pitch. We want a man appointed who will be independent, who will realise he has fixity of tenure, who will not be afraid to step out of line, will do his duty fearlessly but he can only do that if he is assured of this fixity of tenure.

We boast here that we have not got the spoils system as obtains in some other countries, where, after an election, many people in government service and so on are sacked. Ours is a healthy situation. We should like to ensure that the registrar would have the same protection as a civil servant or even that of a trade unionist. The man working on some factory floor who is unjustly dismissed has the right of appeal. It is ironic that here we are refusing to protect the registrar while at the same time passing the Unfair Dismissals Bill through the House Why should we be selective with our justice?

Mr. Tully

If we included the Registrar of Friendly Societies in that Bill there would be an uproar. People would want to know why he was included. He is in a different position altogether. That Bill is to protect people who are not able to protect themselves.

Mr. Moore

What the Minister says is true. Therefore the registrar should be protected under this Bill.

Mr. Tully

He has the protection of an ordinary person in the country in a job.

Mr. Moore

Any man has that protection. Why should we have to resort to the courts when if the Minister accepted this amendment, it would be all tied up and we would be happier with the Bill.

Mr. Tully

Is Deputy Moore suggesting that it would be simpler to bring a motion before the two Houses of the Oireachtas than to bring a matter before the court?

Mr. Moore

I am saying that the Parliament should ensure that the right of any citizen can be guaranteed on the floor of this House if necessary.

Mr. Tully

Should we have everybody who was dismissed in here and have a motion every day?

Mr. Moore

That is not necessary. The Minister must remember that other workers are covered by other legislation.

Mr. Tully

Up to now many were not covered by any legislation.

Mr. Moore

Our society should improve as it develops. We are asking the Minister to accept this amendment thereby making this a better Bill. I cannot understand the Minister's reluctance. If this was contrary to the principles of the Bill I could understand it, but it is not. As far as this Bill is concerned the registrar is the most important man in the whole structure. Deputy Faulkner's amendment is very reasonable and the Minister should match the reasonableness of Deputy Faulkner by accepting this amendment. Even at this late stage I would like the Minister to give the registrar some right of appeal. If we wanted to remove a judge, we would have to go through that procedure. I do not know whether one would say that the registrar is equivalent to a judge but there are many people here who cannot be dismissed without the sanction of the Houses of the Oireachtas. I cannot understand why for some unknown reason the registrar in this case cannot be given the protection of the Oireachtas. If the Minister thinks about this further, he might well see the sense of our case.

Mr. Tully

I have been thinking of it for weeks and the section is all right as it stands.

Mr. Moore

Even at this late stage I ask the Minister to consider giving this man some right of appeal.

Mr. Faulkner

I am not sure that the Minister is correct in his assumption that the best qualified person will occupy the position. In my experience of a somewhat similar situation where the security is not what it might be and where, fortunately, for the concern involved one or two worth-while applicants applied, one of whom obtained the position, applications were received from other people who would have ended the industry in a very short term given the opportunity. The Minister states that a registrar has never been removed. We are legislating for the future and one never knows what can happen. What I said was that I would prefer to have one registrar but in the circumstances I was left with no option but to put in the amendment.

An Leas-Cheann Comhairle

Is the amendment withdrawn?

Mr. Faulkner

No.

Mr. J. O'Leary

To be quite honest, Deputy Faulkner's amendment is reasonable and suitable.

An Leas-Cheann Comhairle

The Deputy made that point before.

Mr. J. O'Leary

During the course of discussion on this Bill and in accordance with the provisions of this Bill the registrar has been portrayed as the key figure in its operation with the exception of sections 37 and 38 where, regrettably, our amendments were not accepted. Is it intended that the registrar at the moment will be the registrar in the future?

Mr. Tully

It is an acting registrar who is there at the moment so I would assume that at some time a new registrar will be appointed. Because it has nothing to do with this Bill I am not aware of any plans in relation to that.

Mr. J. O'Leary

I know from dealings which I have had with the existing registrar that he is a most suitable person.

Mr. Tully

He is a very competent person.

Mr. J. O'Leary

What we are arguing about here is the method of appointing and removing a registrar. The Government should accept this responsibility and a registrar should be removed only by the Minister on the passage of a motion through both Houses. The Minister mentioned that this would cost far more than a High Court or a Supreme Court case. We came across such cases in the past and we will come across them in the future. I cannot see why we should be afraid of additional responsibility in this House.

Amendment put and declared lost.

Sections 85 to 87, inclusive, put and agreed to.

SECTION 88.

Question proposed: "That section 88 stand part of the Bill."

Mr. Faulkner

This means that the financial year will end in all cases on 31st December.

Mr. Tully

Yes.

Question put and agreed to.

Sections 89 to 95, inclusive, put and agreed to.

SECTION 96.

Question proposed : "That section 96 stand part of the Bill."

Mr. Faulkner

I note here that the committee shall consist of certain persons and that it shall include the Irish Building Societies Association. May I take it that every society that is regarded by the registrar to be a proper society will be a member of the Irish Building Societies Association and will therefore have an opportunity of being represented on this committee?

Mr. Tully

That does not follow. Ninety-eight per cent of the business of building societies is done by those who are in the association. Some of the smaller societies are not yet members but I expect that eventually they will become members. However, that would be a matter for the association.

Mr. Faulkner

I appreciate that but at the same time it would be proper that in the event of a society being rated by the registrar as being up to standard, it should be given favourable consideration in regard to admission to the association.

Mr. Tully

I expect that would be the case but the association have their own standards and in any case some of the smaller ones may not wish to become members.

Mr. Faulkner

Would the Minister express a view on the point I am making?

Mr. Tully

I have discussed this matter with building societies. The point has been made that so far some of the societies the Deputy is talking of do not wish to become members of the association. The association are anxious that those who are of the required standard would become members. However, if these do not wish to join I would not wish to endeavour to force them into joining.

Question put and agreed to.

SECTION 97.

Mr. Tully

I move amendment No. 25:

In page 55, to delete line 5 and substitute "a society to which this subsection applies.".

Amendment agreed to.

Mr. Tully

I move amendment No. 26:

In page 55, lines 6 and 7, to delete "an exempted society under subsection (6)" and substitute "a society to which subsection (6) applies".

Amendment agreed to.

Mr. Tully

I move amendment No. 27:

In page 55, line 29, to delete "an exempted society" and substitute "a society to which that subsection applies".

Amendment agreed to.

Section, as amended, agreed to.

SCHEDULE.

Question proposed: "That the Schedule be the Schedule to the Bill."

Mr. J. O'Leary

I agree in principle with this Bill. It is good legislation but I would make the point that here again we seem to be enacting so much of the legislation of the last century. This is true particularly in regard to section 80. It raises the question as to whether we should get away from the practice of studying copies of British Acts and working from there or whether we should disregard these Acts and work on our own in regard to legislation.

Mr. Tully

In updating legislation it is found that much of the existing legislation is as relevant now as it was when enacted. In the interest merely of changing words it would be a pity to interfere with the procedure we have been following. However, in quite a number of cases the wording has been changed where it was considered that theses changes improved the legislation. We have now reached a stage where we are able to wipe out old legislation instead of introducing small amendments here and there. The ideal way of working on legislation is to put everything into one Bill so that what Deputy O'Leary has suggested is in fact what is being done.

Question put and agreed to.

Title agreed to.

Report Stage ordered for Wednesday, 8th December, 1976.