I move:
That Dáil Éireann approves of the following Regulations in draft:
Industrial and Provident Societies (Financial Limits) Regulations, 1978.
a copy of which Regulations in draft was laid before Dáil Éireann on 9th March, 1978.
These regulations are about increasing the financial limits which apply to industrial and provident societies. These are incorporated bodies which may be set up to carry on any trade, business or industry. The governing legislation, that is, the Industrial and Provident Societies Acts of 1893 to 1971, impose certain financial limits.
The limits are:
Firstly, the amount a person (other than another registered society) may hold in shares in an Industrial and Provident Society: this is £1,000 at present and I propose to make it £3,000;
Secondly, the amount of property in such a society a member may nominate, i.e., leave to any named person or persons on his death, with the minimum of formalities (a nomination is legally a will). This is £1,000 at present and I propose to increase this figure also to £3,000;
Thirdly, on the death of a nominator, the limits on the amount of shares a nominee may receive if he is also a member of the society— he may only receive such amount as would bring his total shareholding in the society to £1,000, this being the present maximum individual shareholding. I propose to increase this figure too to £3,000;
Fourthly, on the death of a member who has made neither a will not a nomination, the amount of his property in the society the committee may distribute among such persons as appear to be legally entitled to receive the same. This sum is £500 at present, and I propose to raise it to £1,500.
Sections 4, 25, 26 and 27 of the 1893 Act, which set out the original limits, were last amended in 1966 when the present limits on shareholding and on nominations were fixed. They have not been changed since. The regulations now before the House are designed to do just this for two main reasons, both of which are interconnected.
In the first place, time has taken its inevitable toll on the monetary sums fixed in 1966. The real value of these sums has been severely eroded due to the decline in money values. This fact automatically brings one to the second factor. Because of the decline just mentioned, a serious strain has been placed, and this is particularly so in the agricultural co-operative sector, on the adequacy of the capital structure of societies. It is, therefore, with a view to compensating for the drop in money values and relieving any capital constraints that may exist, particularly in the agricultural co-operative sector, that I am proposing the present regulations.
Of the increases proposed, the new figure of £3,000 for maximum shareholding by an individual in a society is by far the most important. I regret that I cannot introduce at the moment a greater increase in the case of agricultural co-operatives. My inability to do so is due to a technical difficulty in the existing law which provides me with the power only to apply the same limits to all classes of industrial and provident societies without distinction. Credit unions are, of course, industrial and provident societies and notwithstanding the splendid achievements of that movement, I am not satisfied that the time is right for a limit higher than £3,000 on an individual's shareholding in a credit union. I shall, however, introduce amending legislation shortly which will enable me to fix different limits for different classes of society, and I intend to use this power to increase certain of the limits now fixed in the case of agricultural cooperatives.
Such, therefore, is the background to the preparation of the present regulations. I am confident that, given their nature, and, more importantly, their aims, they will meet with the full approval of the House.
I should like to take this opportunity to say a few words on the general subject of deposit taking by industrial and provident societies. As I have already mentioned, the relevant Acts permit societies to carry on almost any kind of business, and this includes the business of accepting deposits from the public which would normally be thought of as banking business. Deposit-taking societies are not subject to the same supervision and controls as banks are under the Central Bank Act, 1971, and accordingly they do not offer the public the same safeguards as banks. While there is no reason for concern about the position of most deposit-taking societies, it would not be possible, in the absence of banking type controls, to be confident about the position of all such societies and, as I have earlier announced, I am preparing legislation designed to provide a suitable system of supervision.
Having said that, I refer again to the present regulations. I strongly recommend their approval by the House for the reasons I have already outlined.