I move:
That Dáil Éireann calls on the Government to take immediate action to protect the interest of members of the general public who place money on deposit with finance houses, provident societies and similar institutions.
It would be appropriate if initially I read the motion in my name and the amendment in the name of the Minister so that the House is aware of the position it is considering having regard to the Government amendment. The motion in my name proposes that Dáil Éireann calls on the Government to take immediate action to protect the interests of members of the general public who place money on deposit with finance houses, provident societies and similar institutions.
The amendment in the name of the Minister proposes that Dáil Éireann notes that deposit taking institutions are subject to statutory regulations and that it is the intention of the Government to take such further steps as they may consider necessary to strengthen control in this area.
The purpose of the motion in my name is threefold: first, to evoke a response from the Government, secondly, to raise in public debate in the Dáil, the most appropriate forum for it, issues of this nature so that not only those who may have been affected by recent developments in provident societies are safeguarded but that those who invest in the future are aware of issues and constraints that may arise and, finally, to create a reassuring climate for investors generally and to restore confidence in the investment climate, especially in what was seen as safe haven investments.
I welcome the fact that the Government have, even in the terms of the amendment, already indicated a response in that the Minister obviously conscious of the fact that we are subject to statutory regulations in deposit taking institutions indicates that it is the intention of the Government to take such further steps as they may consider necessary to strengthen control in this area. There is an express indication that the Minister feels it is necessary to strengthen control in this area. There is an express indication that the Minister feels it is necessary to strengthen control and that the Government are considering further steps in this area. On that basis, obviously, I am anxious to hear, to the extent that the Minister can at this stage, what kind of steps he has in mind to protect deposits of this type and, if necessary, to strengthen the controls under the Provident Societies (Amendment) Act, 1958.
When a circumstance arises where investors in provident societies encounter problems like those which emerged recently in the Private Motorist's Provident Society, one must face the fact that hardships arise. Of course one can say that people should be more aware, more cautious and should ensure in every case that their investments are not only potentially profitable but secure in every sense. I wish to make it clear that I want to avoid political implications in this matter in the interests of what I hope can be achieved here this evening. Nonetheless, it is fair to say that there has been a trend in recent years to invest in what are called safe haven investments as distinct from investment in industry because of the unfavourable climate, not just here but for investment in industry generally and also for tax provisions.
Those who are well informed can distinguish between investments in bank deposit accounts, building or provident societies. However, for a certain type of investor who just wants to have a safe and secure return for his investment they are all of a kind. It is probably true that the more prudent and cautious the person is the more he will concentrate on outlets of this nature without necessarily distinguishing between them. That has been the case in examples we saw recently in relation to the PMPS. I am not trying to wring tears from anybody but the Minister must be aware of the profile of the investor in this case. I am told that there are approximately 9,000 depositors and we have all been approached by individuals. Like other Deputies, I have been made aware of genuine hardship cases. I do not want to imply that people who invested elsewhere are different from those in this instance but I will give two examples of the kind of person I am speaking about.
I am personally aware of a young farmer in the mountain regions of north Tipperary who has a farm of approximately 40 acres. By the standards of that region he is very progressive and has invested £12,000 in the PMPS. He is a young married man with three children and could not be described as anything but a prudent, hardworking young man. I am also aware of a disabled person who has three unemployed children between the ages of 18 and 24. He invested the proceeds of an accident award, over £20,000, in the society. I must ask the House and the Minister to take it on trust that these two cases have been brought to my personal attention. I am not saying that there are not other similar cases but we owe them some response here. I know there are difficulties for the Minister in this regard and I am also aware that the consequences of a decision in a particular case can give rise to issues in relation to other similar cases. However, we must measure each case separately. I am not making a case in respect of any one society but the public will be particularly aware of the circumstances relating to the PMPS as it has even been discussed on television. Rather than leave it in that kind of limbo we should at least have an opportunity of raising the matter here. I welcome the response from the Government even though it might be said that perhaps the Minister might have indicated, without having to await a motion from this side of the House, that he was contemplating looking at the statutory provisions already in existence and that it was his intention to take such further steps as might be necessary to strengthen controls in that area. It would have been well if the Minister had done that without the necessity to put down this motion. I do not want to make much of that. He has given us that indication now. That is important. I will be anxious to hear what the Minister has to say.
When circumstances of this nature arise, the first responsibility is the responsibility of the Government. I am not trying to pin it on the Minister on the basis that they now have responsibility in this area, that we do not, that we can make all the promises and they have to deal with the consequences of the promises we make. That would not be appropriate or right. Nevertheless, the Government have responsibility for the actions they take in any case. In relation to the PMPA company the Government took immediate action which was seen to be firm and effective. I do not want to go into all the details, but that action secured the position of policy premium holders and ensured that the insurance industry was protected and vindicated. The Government had their own reasons for that action from information which is not available to me. Incidentally, I do not think that it is necessary that I should have that information.
That action had a stabilising effect on the insurance industry generally and on policy-holders in particular. Something similar is worthy of consideration in respect of what one might call a sister society having regard to the profile of investors generally. It seems we are talking about small depositors. Perhaps the two cases I mentioned are not representative in the sense that many depositors would deposit sums smaller than the figures I mentioned. They are people who have been prudently putting aside their savings with a view to finding a secure haven for their investment.
There is another factor which we must take into account. People are being encouraged to save and invest in Irish companies. Many people respond on that basis and those most likely to respond are members of the older generation who have prudently put aside savings and would like to be seen to continue to make a contribution to Irish companies. The evidence is that, in most of the societies, small investors, many of them retired people, tend to look in this direction, as distinct from young investors who for one reason or another might be prepared to take a chance on the stock market and in other areas.
This is not a matter which concerns the Minister immediately but, when we are talking about the investment climate generally, it is important that we should present a more reassuring front to the outside world. There has been a considerable deal of speculation in oil shares. In a bigger stock exchange that might not be of such considerable importance but, in a stock exchange of the size of the Dublin Stock Exchange, it tends to dominate dealings. It does not necessarily promote the greatest degree of confidence in our stock exchange when we see such fluctuations as we have seen in recent times.
We also have equities and gilts and securities of this kind. If we have fluctuations of the kind I have mentioned on the stock exchange, and what appear to be collapses of the kind I have been referring to in provident societies, there is cause for a certain degree of concern. Only the Government, through legislative action, can take the necessary corrective measures. I hoped that by raising the matter here this evening we could have endeavoured to create a healthy and secure climate for investment, particularly in the service sector of our economy. It is becoming quite clear that it is only through investing in the service sector, in addition to the manufacturing sector, that we will be able to generate the necessary jobs and job opportunities.
The Minister will be familiar with the difficulty in attracting manufacturing industry to Ireland at this point. He will acknowledge that in other countries where they coped better with the worldwide recession than we did — and that may be due to demographic factors as much as anything else — growth in the service sector, as distinct from the manufacturing sector, has maintained a level of employment to cope with the impact of the recession. We should be encouraging security for those who invest in that sector, in provident societies, banks and financial institutions generally. That is why I framed the motion in terms of finance houses, provident societies and similar institutions. The climate for investment in these societies must be healthy and in so far as the Government can ensure it, it must be seen to be as secure as any other prospect the State can offer. Where there seems to be a risk, or hardship, or insecurity, the Government have a particular responsibility to step in and take action.
There is another type of action which can be contemplated in cases of this nature, that is, legal action. Of its nature, legal action does not solve problems. As a lawyer I have to acknowledge it can only do what is available to it within its area of responsibility. It can only come to a judicial conclusion and make a decision on that basis which may have consequences in terms of the investment climate which it is no function of the Judiciary to consider. Their function is to make a decision between the parties on the question at issue. It is likely that legal action is contemplated in cases of this nature. Depending on the indication the Minister can give us this evening, I hope it may not be necessary to pursue to a legal conclusion action which may be contemplated. I am not suggesting people should not consider their legal rights. In the event that the Government may be able to give some indication of what their proposals may be, actions which may already be under consideration might be stayed until such time as we can see the outcome of those considerations.
If these figures are correct and if upwards of 9,000 small depositors are involved, we can see that in a small integrated society such as ours not only are those 9,000 small depositors immediately affected but their experience will be communicated to others who might intend to invest in what are generally perceived by that type of person as safe places for investment. This would make them even more cautious and more reluctant and it could well be that the funds necessary to maintain and develop the programmes of provident societies, building societies and even banks, might not be as forthcoming from the public as they otherwise might be.
It is important and necessary to note that people have a responsibility. If not fully informed, people should seek the best possible advice before making investments. I would hope that this debate and the manner in which it will be conducted will make potential investors conscious of the need to get the best possible advice when they are contemplating investing their lifesavings or the greater portion of them. The Government of the day cannot pick up the tab in every case, no matter how unfortunate the consequences. I would not suggest the introduction of a new principle whereby in circumstances of this nature the Government would always pick up the tab. It is important that people should inquire very closely and should be influenced not just by the level of interest payable but also by the security, in so far as it can be ascertained, of the investment they are making.
The fact that the Government took certain action in relation to the PMPA cannot be ignored when one looks at the situation of the PMPS. I should like to see a strengthening of the legislation involved. In the public mind a question is being asked: what is the difference between a policy-holder who is secured and protected and the small investor who has taken a prudent step, as he sees it, by investing in a society? In the public mind there is not any great distinction in that both parties might have thought they were being prudent. Where there is a connection between the insurance company and the society it can be fairly argued that action taken in respect of one suggests to the depositors in the provident society that the Government might contemplate some protection in respect of them as well.
It is not appropriate that I should go into details in respect of any one society and what the assets might be. I know that the liquidator examines all the circumstances and I do not intend that the Dáil should constitute itself to be a committee of inquiry. A committee of inspection has already been set up and has been in contact with the liquidator. The Minister can communicate with the liquidator and find out all the information available. He knows the extent of the liability and the prospects for the viability of this and every other society. I suggest that before coming to a conclusion the Minister should examine all the possibilities in the greatest detail. It may well be that there is considerably more for distribution to depositors than is being publicly suggested. It is not my business to know that information at this point but it is the Minister's business, although whether he would feel free to give that information publicly in the Dáil is another matter.
If there is a need for more immediate and direct intervention by the Registrar of Provident Societies and if the legislation which regulates these societies is not as effective as it should be in ensuring such intervention at an early stage, then the Minister would have the full support of this side of the House in any action he would propose to deal with it. With the changing climate for investment it may well be that legislation which seemed adequate in 1978 is not either effective or adequate in 1984.
I hope the Minister will see that the purpose of this motion is not to put the Government in the hot seat. It has the three-fold purpose I mentioned: firstly, to evoke a response from the Government; secondly, to raise the matter in public debate here in a calm and restrained way so that people will become conscious of their own obligations; thirdly, to endeavour to assure the public that we have a healthy and safe climate for investment, particularly at a time when investment in the service sector is becoming more important.
Where there are hardships of the kind I have mentioned, we have responsibility. I know the taxpayers' capacity is not unlimited to meet hardships of all kinds but the Minister will find that investors in these societies are people who need to be protected and who otherwise will suffer considerable hardship and might have to be helped through social welfare. They are trying to be independent through saving for old age or providing a secure basis for developments taking place on their farms, in their homes and elsewhere. I would hope for a positive and sympathetic response to our motion. I wait to hear in greater detail what the Minister has in mind when he elaborates on the terms of his amendment.