Deputy Desmond was in possession.
Consumer Information Bill, 1976; Committee Stage (Resumed) and Final Stages.
This section is opposed by Deputy O'Toole. As I said yesterday, the licensed banks are governed by the provisions of the Central Bank Act, 1971, and we decided to leave the position as it was but to include all other banks under the provisions of this Bill.
I think that is section 22.
It is section 23. This was decided on after we got the assurance of the Central Bank and of the Department of Finance that, in regard to the controls we are bringing in now, there would be parallel powers brought in and the Central Bank Act, 1971, would be amended, if needed, so that the licensed banks would be under the same control as those covered in this Bill. That, I think, covers Deputy O'Toole's point.
After we adjourned the debate at seven o'clock last evening I had an opportunity of checking through the Central Bank Act, 1971, and it is indeed quite evident, as we are strongly suggesting, that the very conditions we propose here to impose on a wide range of services and trades will not be imposed on consumer relationships with the associated banks. Between now and any amendment of the Central Bank Act, 1971, it is a bit odd, to say the least, that there should be a very special exemption given to the licensed banks. I do not know how the Department of Finance and the Central Bank can advise the Minister for Industry, Commerce and Energy that this special exemption should be given. If a small credit union or a money lender were to publish a prospectus giving misleading information this Bill would apply. On the other hand, if one of the major associated groups—the Bank of Ireland, the Allied Irish, the Northern or the Ulster Banks—were to issue a prospectus inherently deceptive there would be no way, and there is no way at present, in which they could be prosecuted. We know from experience of a well known—notorious in some respects—bank over which the powers of the Governor of the Central Bank proved to be extremely limited. I do not know why this exemption should be given.
It is worthy of note that only God knows at times what precisely the parties have agreed to in these confidential personal relationships and it is only on the rarest occasions that there is an opportunity of questioning such relationships. I should not like it to go out from this House that I, as a Labour Party spokesman, have the general view that the conduct of the four main banking institutions is not of the highest and most reputable nature. But that applies to the bulk of manufacturers, traders and those providing services who also come under the scope of this Bill. As regards the banks that in the past two or three years have been advertising interest rates, term loans and particular services to customers, I have wondered if the consumers had an opportunity of closely questioning these offers would they have ensured, as happened in Northern Ireland, that some of the phenomenal profits made by the banks would have been more equitably distributed among consumers.
For example, if we take the combined pre-tax profits of the two main banking groups, Bank of Ireland and Allied Irish, and even making provision for bad debts which are relatively low, we find their profits increased from £41.5 million in 1975-76 to £55.4 million in 1976-77. This is a matter that should be brought to public attention—their profits after tax rose by 51 per cent in a 12-month period. We have seen some of the six-monthly profit returns from, for example, Allied Irish recently. Their profits for the first six months of 1977 have been phenomenally increased——
I do not think we should have a detailed debate on the banking system.
I am talking of a situation where, if consumers had access under law to the details of services offered by the licensed commercial banks, I am fairly certain that the banks would be more circumspect and more informative in terms of how, for example, they managed to pay dividends last year, 1976-77, something like 42 per cent higher than in the previous year. I contrast that with the situation in Northern Ireland where the pre-tax profits of the Northern Bank and the Ulster Bank were only about 8 per cent higher in 1976 than in 1975.
There is a great hooha about it at present and we all expect a major EEC directive on consumer credit. Some of the interest rates charged in this area are phenomenal. The present Minister for Industry, Commerce and Energy used the word "astronomical" in this context in his Second Stage contribution on this Bill last March. In many ways they have remained astronomical. In that connection it is a great pity that in section 23 of this Bill a very privileged exemption should be given by the exclusion of banks licensed under the Central Bank Act, 1971. It is no consolation to know that in the future we can expect legislation which will deal with consumer information aspects of banking in the form of an amendment of the Central Bank Act. We have the anomalous situation of directors of commercial banks on the board of the Central Bank and they are the people who will be drafting legislation —presumably it will be vetted by the Central Bank and the Department of Finance—regarding consumer information. Since the board of the Central Bank has a heavy representation of commercial bank directors they are not likely to break their hearts to bring forward legislation to bring themselves under the general control of the Consumer Information Bill.
This was a decision of the previous Government and I hold no brief for it. In Opposition, Deputy O'Malley waxed eloquent and indignant. To use Deputy Kelly's favourite phrase, he really got up on his hind legs in a big way when he pointed out that in the general area of consumer credit we are far behind. Our hire purchase Acts are the best part of 18 years out of date and our general regulatory provisions in regard to consumer credit are decades out of date.
We are not dealing with consumer credit, nor do business profits come into this.
I thank the Ceann Comhairle for his forbearance. The previous Government were remiss in my opinion in not having this inclusion. It would have been singularly appropriate if, the present Government, with a solid majority and knowing that no commercial bank can launch a campaign against it for at least another four years, had on this occasion ensured that the legislation did include the licensed banks. The Parliamentary Secretary's predecessor was a most industrious and concerned Parliamentary Secretary. The same applies to the present Minister's predecessor, Deputy Keating, and on many occasions we were assured that they were bringing forward amending legislation. Somehow or other, the legislation having to go through the bureaucratic treadmill of being vetted by other Departments and in this case, perhaps, more by the Central Bank, delays inevitably occur and reasons tend to develop for them. The result is that the parliamentary draftsmen have the legislation for months. In fairness, they are much maligned. It tends to end up in the Attorney General's office awaiting sanction. In view of this I should prefer to make the necessary provision now rather than await amending legislation.
If I may be allowed to repeat a point I have raised here in Dáil Questions, outside and in RTE, if the licensed banks were included in this Bill and if this legislation had been enacted, say, two years ago, we would never have had the debacle of the Irish Trust Bank because investors would know the position. If prospectuses were circulated offering fancy rates of interest tax free, automatically one would be in a position to pick up such a prospectus, go to the Director of Consumer Information and have the matter checked.
Because we did not enact this type of legislation we finished up with the Fianna Fáil Party for purely political reasons paying out £2 million of the taxpayer's money. That is what this kind of amendment is all about in terms of preventing a repetition of that kind of situation. Would the Parliamentary Secretary bring back both Deputy O'Toole's and my view to the Minister for Industry, Commerce and Energy and to the Minister for Finance, and perhaps on Report Stage we might have a fresh look at it and improve the situation dramatically in relation to the Bill?
I reiterate my conviction concerning the overall situation with regard to the inclusion of banks. It can be fairly said that the conduct of the associated banks is above reproach and as I said last night the latest circular from the standing committee of the associated banks and the suggestions contained therein go far beyond any requirements that might be made under the provisions of this Bill. Last night the Parliamentary Secretary mentioned that some of the banks who did not come under the Central Bank Act, 1971, would automatically come under the provisions of this Bill. My confusion arises from the fact that in my innocence I thought that all banks, merchant banks and all financial institutions, came under the Central Bank Act. The Central Bank Act which I have perused concerns itself with the renting of licences and with the solvency of a bank and the Central Bank do not involve themselves with the conduct of the day-to-day business of banking and financial institutions, be they lending banks, merchant banks or members of the associated groups. The Parliamentary Secretary's assurance that amendments to the Central Bank Act will be undertaken goes part of the way towards satisfying my opposition to section 23, but if the Central Bank Act is to be amended by the Minister for Finance on parallel lines with the provisions of this Bill with regard to banks which do not come under the Central Bank Act, why is there reluctance to have the banks come under the provisions of this Bill? I must assume that the Parliamentary Secretary and the Minister for Industry, Commerce and Energy have been told by the Minister for Finance to keep their hands off the banks. That is the only conclusion I can come to. If parallel amendments are going to be made, why not do it here so that we would end up with this major service area coming under this Bill? It is logical to expect this.
The directive on consumer credit was mentioned by Mr. Burke, the EEC Commissioner on Consumer Affairs. Not so long ago there were headlines in the paper concerning the treatment which will be meted out under this consumer credit directive to what the Commissioner termed "loan sharks". I presume that this directive will be forthcoming in a short time. I can envisage a situation where the Parliamentary Secretary will be coming into the House to rush some Bill through in order to harmonise our legislation with the EEC directive. I assume that if banks were included in the provisions of this Bill it would obviate the necessity for having to do that when the time comes. The Parliamentary Secretary may have to ensure the harmonisation of our laws with the EEC directive on consumer credit even before Christmas. What did the Parliamentary Secretary mean by differentiating between banks which come under the Central Bank Act and financial institutions which do not? Can I get a guarantee that the financial institutions which do not come under the provisions of the Central Bank Act come under the provisions of this Bill? I would like to know what type of institutions they are.
All banking, savings, financial and credit institutions, excluding the licensed banks, are included in the provisions of this Bill. We understand that the consumer credit directive will not be forthcoming for at least 12 months, and possibly more than 12 months. Legislation within my Department on consumer credit will be very far advanced by the time the directive can come. It is possible that we could bring in a Bill on consumer credit before the directive but that would be highly unwise. I believe that we should see what the directive contains before making any move. Deputy Desmond raised a point in relation to the issue of prospectuses in respect of banks. The issue of the prospectuses is governed by the Companies Act and by the stock exchange rules and not by this Bill.
I am concerned about what are known as loan sharks. The Parliamentary Secretary knows that they are there. Some of them operate under fairly reputable covers but at the same time exploit poorer sections of our community and charge exorbitant rates of interest. Can I take it that these are covered in this Bill?
I move amendment No. 47:
In page 12, before section 24, to insert the following section:
"24.—The fact that a trade description is a trade mark, or part of a trade mark, within the meaning of the Trade Marks Act, 1963, does not prevent it from being a false trade description when applied to any goods, except where the following conditions are satisfied, that is to say:
(a) that it could have been lawfully applied to the goods if this Act had not been passed,
(b) that on the passing of this Act the trade mark either is registered under the Trade Marks Act, 1963, or is in use to indicate a connection in the course of trade between such goods and the proprietor of the trade mark,
(c) that the trade mark as applied is used to indicate such a connection between the goods and the proprietor of the trade mark or a person registered under section 36 of the Trade Marks Act, 1963 as a registered user of the trade mark, and
(d) that the person who is the proprietor of the trade mark is the same person as or a successor in title of, the proprietor on the passing of this Act.".
The effect of the proposed new section is that a false trade description will be treated as such, even though it might be a trade mark. This would not apply to existing trade marks, whether they are registered or not, which would not have been false trade description but for the passage of this Bill. Representations in favour of such a provision, which is included in section 34 of the UK Trade Descriptions Act, 1968, have been received by the Department from the Confederation of Irish Industry who are concerned that thebona fide use of a trade mark could come within the revised definition of “trade description” and, in certain circumstances, the use of such a trade mark could be regarded as applying a false or misleading trade description. This amendment will provide a defence in bona fide cases, and the defence is limited to trade marks which are in use at the time the Bill is enacted.
The object of the amendment is mainly to clarify the position of exist-trade marks rather than to make any change in the law. It will ensure that existing trade marks which had been registered or in use for some time prior to the enactment of the Bill will not be inadvertently outlawed by the new provisions on merchandise marks.
Under Trade Mark law there is already an obligation on the Controller of Patents not to register as a trade mark any matter the use of which, because of the likelihood of deception or confusion, would not be entitled to protection in a court of law. Despite this, there may be on the register a trade mark which could be held to be in conflict with the law as amended by the Bill. The amendment will, therefore, have the effect of protecting the register. Future trade marks are not affected by this provision.
This is a sensible amendment.
I agree with the amendment.
Section 24 reads:
A contract for the supply of any goods shall not be void or unenforceable by reason only of a contravention of any provision of the Acts or this Act.
Does this mean that the supplier or vendor would be forced into signing a contract even though he may make the excuse that he is in breach of some section of the Act? Surely the section leans too heavily on the supplier.
It means that if a purchaser is injured or at a loss as a result of falsely described goods he can bring an action for damages against the supplier.
The section forces a vendor who is already in breach of the Act into creating a second wrong. It means that he can now be forced into commiting a second offence under section 24.
When a purchaser is pressed to enter into a contract he cannot avoid doing so by saying that he has already breached a provision.
Does that compound a contravention?
The Bill is one imposing penalties.
If a person is not in breach of some provision in the Bill and is forced into commiting a second offence, criminal, or civil, he is now in default under section 24.
No. He could not get out of a contract because he had breached a provision of the Bill.
I move amendment No. 48:
In page 13, subsection (3), lines 3 to 6, to delete from "unless" to the end of the subsection.
The portion now removed by this amendment was originally drafted to ensure that an amending or revocation order would not be subject to prior consultation with interested persons. However, subsection (5) was subsequently added in order to relieve advertising orders under section 11 and amending or revoking orders under subsection (4) (b) of this section of the obligation of two months' notice and prior consultation. Subsection (5) makes it unnecessary to have such a provision in subsection (3) and this amendment will remove it.
I move amendment No. 49:
In page 13, subsection (4), line 7, after "section" to insert "9,".
The effect of this amendment is to provide that an order which the Minister might make under section 9 (6) conferring further functions on the director must be approved by the Oireachtas before it is made.
Are sections 10, 11 and 2, which refer to the issuing of ministerial orders, included?
They are included.
They are included under section 25 (4) (a). This amendment relates to subsection (4).
During yesterday's debate I referred to the idea of consolidation. It should be the objective of the Parliamentary Secretary, in order to tidy up consumer legislation and ensure that information concerning it and the interpretation of it is available to and understood by consumers, that consolidation of Acts, such as the Merchandise Marks Acts, 1887, amended up to 1970, takes place. That would be a worth-while exercise and in the interest of consumers. I would like an assurance from the Parliamentary Secretary that she will see to it that this is done.
My predecessor, on Second Stage of this debate, mentioned that there was a possibility of ultimately merging the Act referred to by the Deputy and this Bill into one, and that is my objective.
I commend the Parliamentary Secretary on having that objective. As soon as we pass this and the other Bill the work of consolidation should proceed. I should like to point out that a colleague of mine who was extremely good as a Parliamentary Secretary, Deputy Cluskey, when he was appointed to the Department of Social Welfare asked one of his senior officials to carry out the work of consolidation. That was one of the first actions of Deputy Cluskey. The official spent the best part of 12 months consolidating all the Social Welfare Acts and the massive piece of legislation that resulted has been lauded as a masterpiece. Although the instruction to carry out that work was given as soon as Deputy Cluskey was appointed it was only towards the end of the period of office of the National Coalition that the Consolidation Bill was introduced. I am aware that in the Department of Industry, Commerce and Energy all officials have many duties and that it would be difficult to extract a senior official to be given the exclusive task of consolidating all the Acts. That should be done now because when that work is complete the matter must be referred to the Attorney General and then to the parliamentary draftsman.
It is my view that this work should be carried out within the Department. I am aware that there is a feeling within Departments that such work should be given to the Consolidation Office. I hold the officials of that office in great esteem, but the urgency, the knowledge and the ability in many cases rests within the Department. The last great exercise of that Department in relation to company law proved worth while. I hope that in the lifetime of this Dáil we will consolidate the four or five major pieces of legislation now being put on the Statute Book.
When is it proposed to take Report Stage?
We agreed that rather than have a second Committee Stage debate on Report Stage, I should consider amendments Nos. 2 and 16 on Committee Stage in the Seanad.
That is correct.