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Dáil Éireann debate -
Wednesday, 14 Jun 1995

Vol. 454 No. 4

Investment Intermediaries Bill, 1995: Committee Stage (Resumed) and Final Stages.

Debate resumed on amendment No. 4.
In page 19, subsection (5) (a), line 48 and in page 20, line 1, to delete "in a country which is not a Member State" and substitute "outside the State".
—(Minister of State at the Department of Finance)

Amendments Nos. 4 and 5 are being discussed together. The Investment Services Directive requires that firms operating in the European Union must be supervised by their home member state. For that reason section 10 (5) (i) requires that to be authorised in Ireland a European Union firm must have its head office here. However, some of the investment business services regulated under the Bill are not directly covered by the European Union Investment Services Directive, for example, the provision of investment advice where the firm does not act on behalf of the client in a transaction.

As the Bill stands a European Union firm providing such services here would have to set up its head office and registered offices here in order to get authorisation and we believe this goes too far. Amendment No. 4 will ensure that the directive is complied with, but does not rule out the possibility that a branch of, for example, a French firm could provide services here not covered by the European Union directive but covered by this Bill under an authorisation from the supervisory authority. If an investment firm from an EU member state wished to carry out non-EU directive business here it would require authorisation.

Amendment agreed to.

I move amendment No. 5:

In page 20, subsection (5) (i), line 39, before "it satisfies" to insert "where the supervisory authority considers it appropriate, having regard to Council Directive No. 93/22/EEC of 10 May 1993 (1),".

Amendment agreed to.
Question proposed: "That section 10, as amended, stand part of the Bill".

Does Deputy O'Keeffe wish to make the point he had been advancing?

Will the Minister of State explain why the word "not" is included in the wording of amendment No. 4? Is it his intention to give authority to countries outside the European Union?

It is not a question of giving them authority, they would have to seek authorisation here. We wanted to safeguard against circumstances arising in which an existing relationship, between finance houses and the like, in other words, professionals in the field, with a bank in Japan or whoever, who were obtaining advice or conducting business with them would be preserved. While we would prefer to allow that relationship to continue, such an institution outside the European Union, attempting to conduct business directly with private individuals here, would not be lawful. They would need to seek authorisation to do so; that is the distinction we are drawing.

Question put and agreed to.
Question proposed: "That section 11 stand part of the Bill".

This section refers to requests from the commission. Will the Minister give an outline of what is intended here?

This section requires the supervisory authority to comply with requests from the European Commission to limit or suspend decisions in cases where a direct or indirect subsidiary of a parent firm from a non-European Union country applies for authorisation, or, where an undertaking from a non-European Union country acquires a holding of such size in an authorised member firm, the member firm would become its subsidiary.

The section is a requirement of the Investment Services Directive designed with a view to ensuring that non-European Union countries provide reciprocal opportunities for European Union-based firms to operate in their territory or to acquire subsidiaries there.

Question put and agreed to.

I move amendment No. 6:

In page 23, subsection (7), line 49, to delete "(5)" and substitute "(4)".

This is a small drafting amendment to ensure the correct reference is used.

Amendment agreed to.
Question proposed: "That section 12, as amended, stand part of the Bill".

I suggest to the Minister and his Department that, not only in respect of this Bill but others which come about as a result of European Union directives — recognising the amount of work in drafting legislation on foot of such directives — perhaps the original directive could be attached to the explanatory memorandum with Bills. I understand this Bill arose from two such directives of the European Commission. If that could be done in the case of all Bills, irrespective of their sponsoring Department, everybody would more easily understand the purpose of the relevant directives.

Within my term of office in Government, before such European directives came into being, an enormous amount of background work was involved on the part of civil servants working for various Governments throughout the European Union, but, when it came to the stage at which politicians had an input it was often unwelcome. My colleague, Deputy O'Rourke, spoke about this some time ago. In the last Department in which I served, Tourism and Trade, which had enormous supervisory responsibilities in overseeing European Union directives. I became acutely aware of the tremendous amount of work undertaken even halfway through drawing up such a directive.

Nonetheless, when a final directive is produced, forming the basis of any Bill to be introduced, it would be a good idea to attach the original directive to the explanatory memorandum. Perhaps the Minister would be the first to introduce that idea in his Department.

That is a good idea. Indeed we may have an opportunity to implement it sooner rather than later, since there is a directive in preparation dealing with investor compensation which would be of direct relevance to this Bill. I cannot think of any good reason we should not do so. In fact if it had been done in this case, it would have rendered it easier for me to accept what the Deputy is advocating. I take his point.

Question put and agreed to.
Question proposed: "That section 13 stand part of the Bill."

This section deals with existing investment business firms. Perhaps the Minister will outline the procedures that will have to be adopted by existing business firms to comply with these regulations. Since the enactment of this Bill will lead to the establishment of elaborate machinery, I do not know how many civil servants will be required to oversee these regulations. I make this suggestion not merely in the case of this Bill but with regard to various supervisory activities of other Government Departments, which do not come into play until something happens. For instance, if somebody defrauds an investor, the relevant investor will have lost the money before the supervisory functions resulting from the enactment of this Bill come into play but, as I have already pointed out, will be of little use.

What procedures will have to be adopted by an existing investment intermediary, say, an accountancy firm or whoever, to comply with the regulations specified in this Bill?

First, this section deals with transitional arrangements in the case of persons providing investment business services prior to this section coming into effect. They must apply for authorisation within three months of this part of the Bill coming into operation and will stand authorised under the Bill, subject to the supervisory authority's conditions and requirements, pending the decision of the supervisory authority; in other words, they can carry on provided they apply within three months and will be deemed to be acceptable until deemed otherwise.

There is also provision for the treatment of firms based in other European Union member states during this transitional period. Section 13 (1) provides that a person providing investment business services on the day before this section comes into effect may stand authorised, as an authorised investment business firm, from the date the section comes into operation. However, the relevant person must apply for authorisation within three months of its coming into being.

Section 13 (2) provides that, pending the supervisory authority's decision to authorise an investment business firm, it may impose conditions, requirements or directions on that investment business firm or on any associated or related undertaking.

Section 13 (3) provides that an investment business firm may appeal to the High Court against any condition or requirement imposed on it under this subsection. Section 13 (4) provides that the court may confirm, vary or rescind any condition or requirement which the supervisory authority has imposed under this section. Section 13 (5) provides that, pending implementation of the Investment Services Directive in each member state, a firm based in another member state may be authorised to conduct business in Ireland where it is adequately supervised in that member state. This is necessary only as a transitional provision until all member states have implemented the directive. When all the member states have implemented the directive in full there will be no need for, say, a French firm to have a separate Irish authorisation.

This is a particularly complicated Bill which has received broad welcome throughout the industry, apart from one observation I will make later, various sections affording rights of appeal to the courts, for example, sections 45, 66, 74, 75 and the one about which we are now speaking. Will this elaborate procedure have any effect on protecting the investor who loses money? I heard the Minister for Enterprise and Employment say recently — and I am sure the advice given to him is correct — that one of the reasons he was not considering using the courts procedure vis-à-vis the problems with the Irish Press was that it would take two years and the problems there need to be solved quickly.

Various sections of the Bill provide for the right to go to the courts to resolve disputes in this area. However, the rogue intermediary will be long gone by the time such a case is heard in the courts. What is the value in having these particular sections? Not only will the horse have bolted by the time cases can be heard in the courts but the stable will probably have gone also. Perhaps the Minister would give us his own views on this particular area.

The procedures that allow for appeals to be made to the High Court will apply in extreme and rare circumstances but, in natural justice, they must be provided. If we did not provide them in the Bill they would probably be provided under the Constitution. There must be some appeals mechanism in place. If a firm is authorised under certain terms and conditions and for whatever reason it feels some of those conditions are too onerous, there must be an independent authority to which they can appeal and the High Court is seen as the place where natural justice is protected. That does not have a great deal of implication for the person whose money is at risk. The regulations will stand and if somebody proffering services does not like the regulations and appeals to the court, those regulations will apply until the appeal is determined. Therefore, the person investing their money is protected in the meantime. It is not valid to draw the conclusion that because the High Court appeals procedure is lengthy it would put a person's money at risk.

There is little point in setting up these supervisory and regulatory mechanisms unless the Department whose responsibility they will be or the supervisory authorities embark on a publicity campaign to make people aware of what they should look for before they go to an investment intermediary.

There has been a plethora of legislation in many areas over a long number of years. One of the difficulties is that we have legislation covering many areas. Speaking as someone who has had to make his living at the fringes of legislation through my work as an accountant, it strikes me that the more legislation that is enacted, the more loopholes are created. With due deference to my colleague, Deputy Michael McDowell, certain members of his profession would not be as wealthy if all that legislation was not in place. With EU law going in that direction, there will be increasing opportunities for people in the legal profession.

I realise we have all become very conscious of the environment in the past few years but if we implemented many of the laws on our Statute Book there would not be any need for additional laws. We are talking about setting up supervisory authorities which will come into play when an unfortunate investor has lost money. Instead of giving 50 civil servants in a Department the responsibility for dealing with the effects of this and other Bills, including the Stock Exchange Bill, it would be preferable to make people aware, through publicity campaigns run by the supervisory authorities or the relevant Department, of the pitfalls in going to an investment intermediary. That would be far more beneficial to the people we want to protect and the purpose of the original EU directives. Many of our laws come into effect when it is too late. I realise the supervisory authorities will have ongoing responsibilities in regard to auditing, etc., but I ask the Minister to take account of my views in regard to their more important role.

Some of what the Deputy suggests will be carried out. There will be additional requirements for investment houses and so on to let it be known to potential investors that they are working within a regulatory system. For example, intermediaries must have written authority to act in that capacity and if they accept money on behalf of an institution and do not give that money to it the institution is responsible. In addition to what is contained in the Bill it would be worth while for the regulatory authorities, in other words, the Central Bank and the Department of Enterprise and Employment to consider publishing information to make investors aware of the position. That is a good suggestion by the Deputy and I take it on board.

Question put and agreed to.
Notice taken that 20 Members were not present; House counted and 20 Members being present,
Section 14 agreed to.
Question proposed: "That section 15 stand part of the Bill."

Is the supervisory authority empowered to look at the memorandum and articles of association of the particular company and if there is something in them it does not like can it insist on it being taken out?

That is correct.

I may have missed it but I presume there is not provision in this Bill for partnerships or sole operators to act as investment intermediaries? Is the section concerned only with limited companies?

There is provision elsewhere in the Bill for sole traders. Section 15 empowers the supervisory authority to refuse to consent to a proposed change in the memorandum and articles of association of an authorised investment business firm. If it does it must notify the firm and give its reasons and the firm may appeal its refusal to the High Court — I am sorry about that part Deputy.

Deputy Michael McDowell is very happy with it.

Question put and agreed to.
Question proposed: "That section 16 stand part of the Bill."

Section 16 deals with the revocation of authorisation. Does it set out the grounds for revocation of authorisation?

Section 16 sets out the cases in which the supervisory authority can revoke the authorisation of an authorised investment business firm and those in which I can apply to the High Court for such revocation. It sets out also the obligations of an investment business firm whose authorisation has been revoked both where the firm is being wound up and where it is not and the powers of the supervisory authority in each case. Subsection (1) enables the supervisory authority to revoke the authorisation of an authorised investment business firm where the firm so requests; where it has failed to operate within 12 months of receiving authorisation; has failed to operate for more than six months or where it is being wound up. The supervisory authority is empowered to revoke authorisation in these cases because the need for revocation is objective and clearcut. This basically mirrors the provision in the Stock Exchange Bill. Where it is absolutely clearcut that it should be revoked, including where there is a request from the firm and so on, it is an automatic procedure but where an opinion is involved it is more complicated and the firm would have certain rights of appeal to the High Court.

How many civil servants will be engaged in the Departments of Enterprise and Employment and Finance to monitor the implementation of this Bill? Will a new section have to be set up in those Departments to deal with the implementation of this Bill?

And the Stock Exchange Bill and other similar Bills.

I do not know the number involved but I will find out.

There is a section in the Central Bank of approximately 12 people specifically involved in the supervision of this and similar legislation. Obviously there will be some involvement by my Department and by the Department of Enterprise and Employment but I do not think it involves a huge bevy of people.

I am not making a point about the numbers involved but the need to have civil servants to monitor the legislation.

Every day the Government is asked to introduce more legislation but that means more supervision and so on.

Section 16 (1) states:

A supervisory authority may revoke the authorisation of an authorised investment business firm where——


(b) an authorised investment business firm——


(ii) has failed to operate as an investment business firm for a period of more than six months,

The company may be dormant for six months while retaining the confidence of previous investors. How many of those firms would be acting as intermediaries and handing on the investment moneys to a third party? Such companies may not be accepting new investments but they would hold the papers of previous investors. What is the justification for winding up such companies?

The firm being wound up is obliged to discharge its obligations.

My point is that the supervisory authority may revoke the authorisation of an authorised investment business firm because the firm was inactive for six months or more but that does not mean he was a rogue or wrong in any way. For one reason or another the firm may not be active.

Would the person simply be retiring?

I do not want to put those words into the Minister's mouth but the firm may be inactive for one reason or another while still being true and fair in its dealings with the public and would still be the vehicle used by investors to withdraw their investment.

He could not continue in business unless he was authorised to do so.

Being inactive for a period of more than six months does not mean one is a rogue.

I accept that. Subsection (6) provides that where an investment business firm's authorisation is revoked but is not being wound up, it will continue to be subject to the duties and obligations imposed by the Bill and to any rules of conduct, client money requirements and other conditions or requirements imposed by the supervisory authority until all its liabilities, duties and obligations have been met to the supervisory authority's satisfaction. In addition it must, as soon as possible, notify the supervisory authority, and such other persons as the supervisory authority indicates are to be notified, of the measures being taken to discharge its liabilities and obligations. If it fails to notify the supervisory authority or others as soon as possible, or if the measures it proposes are inadequate, then the supervisory authority may prohibit it from creating liabilities, disposing of assets, engaging in transactions or making payments without the supervisory authority's prior sanction. The supervisory authority may also require it to submit for approval within two months of such prohibition a scheme for the orderly discharge of its liabilities, duties and obligations.

The definition "inactive" is misleading. A firm may be inactive but it is still the firm through which the investment was made and to whom the person who made the investment will return to redeem his investment. It is hard to justify taking a firm out of the system because it is inactive, although I am aware that there has been much mischief in this area and we must implement the EU directive. However, I would not like to see a firm which is genuinely inactive for one reason or another taken out of the system.

There is no implication that such a firm is doing anything out of the way. It is worth noting that the bank may revoke the firm's authorisation but it does not have to, and in the case of a firm such as the Deputy refers to, there would be no reason to do so.

Question put and agreed to.
Question proposed: "That section 17 stand part of the Bill."

This refers to the keeping of a register by the supervisory authority which will also be available for public inspection. Perhaps the supervisory and regulatory bodies could publicise, for the benefit of the public, what they, the public, should look for in an investment intermediary. You cannot set up shop as a solicitor unless you are a member of the Incorporated Law Society, although I know of one case in my constituency some time ago where somebody who was not a solicitor practised as one. You cannot set up as a medical doctor unless you are a qualified medical doctor, but I know of a celebrated case in Dublin where a person did just that and made a lot of money practising as an orthopaedic expert for many years although he was not qualified — he was a very personable individual whom I knew in other contexts. You cannot set up as a chartered quantity surveyor unless you are a member of the institute. However, you can set up as an accountant without being a member of the Institute of Chartered Accountants or the other recognised institutions.

You cannot use the word "chartered" but you can call yourself an accountant, quantity surveyor or architect.

You can also call yourself an engineer, and people who are members of the professional bodies and have spent many years studying are aggrieved by this. That is not to say that many of those people calling themselves engineers, accountants, architects, surveyors, etc., are not as good as many of the people who are members of the professional bodies. However, many of my colleagues in the accountancy profession are quite aggrieved at some firms. My point is that the supervisory authority is to keep a register and, in the publicity surrounding this Bill, the supervisory authority might, as a means of making the public more aware of their rights, require an investment intermediary to display his annual certificate confirming that he is a recognised investment intermediary. Perhaps this could also be extended to solicitors. As someone who has, on occasions, had the onerous job of auditing solicitors' accounts, which no chartered accountant relishes because it is such an onerous task carrying such heavy responsibilities, I suggest we begin here by requiring a company to have a certificate that it is a recognised investment intermediary and covering the relevant year. That requirement should be extended to other areas also so that the public will know with whom they are dealing.

The people are becoming far more aware of their rights in many areas and are very attuned to any type of investment opportunity. I have learned more about better investment opportunities from fellows sitting on bar stools in pubs than I learned in all my years in college or from talking to my professional colleagues. Perhaps more people read the financial pages of newspapers than before. However, there is always a percentage of the population that is easy prey to the wide boys and no law can guard against that. It would be worth including in the legislation a requirement that investment intermediaries display a certificate. Legislation is of no use when things go wrong. Would it not be better to make people more aware of their rights since the purpose of the directive and of the Bill is to protect the public?

This Bill improves the situation radically and that should be recognised. However, we would be willing to listen to anything that further improves it. The appointment of an investment intermediary will be a formal decision made by the investment company. There will be fewer informal arrangements since the person appointed will act in the name of the company and take responsibility when things go wrong. I am concerned about people who wish to invest redundancy money for example. Such people may be tempted to invest in what they hear in the public house are good investments. We must try to protect against that by educating the public. I take the Deputy's point but an amendment need not be put down on the matter.

In section 17 (2) it is stated that the registers of investment business firms "shall be open for inspection in a single location". I take it that the location will be in Dublin. I do not object to the payment of a fee but the amount of the fee has not been stated. Most registers are held in Dublin. The registers could be held in the different regions as it is difficult for rural people to come to Dublin. We are talking about small investors. There has been much rogue activity in this area and we all know of cases where people were duped. One does not always receive incorrect information in a pub and I would not frequent the same pubs as Deputy McCreevy. The registers should be held in several locations rather than a single location. I do not mean there should be one at every crossroads but they should be more freely available.

The registers will probably be held in the Central Bank or the Department. There would be no difficulty, with modern communications, in tapping into the registers in a structured way. I take the Deputy's point that people should not have to travel to Dublin to find the answer to a simple question. Just as in the case of the Companies Office where one can be given information over the telephone a similar system will apply in this case. The information will be freely available.

I take the Minister's point but it is not written into the Bill. Will the Minister examine the possibility of amending it to "locations"?

Information on various matters is stored in a single location but it is freely available.

Many people who burned their fingers in the past will be wary and will wish to see the list of intermediaries. They will want to deal with genuine intermediaries. Those who wish to invest may be secretive and may want to tap into the information themselves.

It will be public information. The public can make an inquiry and receive the information but it will be held in a central location.

The potential investor may be secretive. If one wants information from the Register of Friendly Societies one must go to Dublin. Everything is registered in Dublin.

I understand the motivation for that comment.

Except the Central Statistics Office.

Question put and agreed to.
Sections 18 and 19 agreed to.
Question proposed: "That section 20 stand part of the Bill."

This section provides that supervisory authorities will administer a system of administration and supervision of investment business firms in the interests of investor protection and of the orderly and proper regulation of investment business firms and financial markets and subject to guidelines which may be issued by the Minister. Any such guidelines will be published in Iris Oifigiúil. When I became a Member of the House, unless my memory is failing, I received a copy of Iris Oifigiúil but public representatives do not receive it now. Many items are published in Iris Oifigiúil but it seems to have become part of the Official Secrets Act. Ordinary people do not receive it — they probably would not be interested in it. Perhaps one of the Minister's able officials will check the matter for me.

We will endeavour to find out for the Deputy.

Question put and agreed to.
Section 21 agreed to.
Question proposed: "That section 22 stand part of the Bill."

Section 22 deals with the supervisory authority applying to the court. I know there must be the right of appeal to the courts but processing matters through the courts is a slow procedure. Perhaps I should address this more correctly to the Minister for Justice. A civil action can take up to two-and-a-half years to process through the courts. If the courts are to deal with these extra matters I do not see how they will work effectively.

In circumstances where a supervisory authority has great concern about the financial stability of a company the courts will move quickly.

Question put and agreed to.
Question proposed: "That section 23 stand part of the Bill."

This important section deals with restrictions on advertising. Advertising is the means by which people usually make their first contact with an investment intermediary. Under this section it will be an offence for a company to hold itself up as an investment intermediary unless it is a proper investment intermediary. Over the past ten years so-called investment intermediaries have made extraordinary and exaggerated claims on the returns which could be received on an investment of £5,000 or £10,000. I am not saying companies should not be allowed to advertise but I am glad that under this section it will be an offence for a company which is not a proper investment intermediary to hold itself up as an investment intermediary.

I qualified as an accountant at a time when chartered accountants and solicitors could not advertise. When I placed advertisements in local magazines etc. before I became a Deputy I always used my own name. I did not use the name of the company as I was afraid that the Institute of Chartered Accountants would come down on me like a ton of bricks. Most chartered accountants operated on the same principle. Over the years the institute changed its rules on advertising. The rules governing advertising by solicitors have also been changed. I am not sure whether all these changes have been for the better.

Neither am I.

On the south side of the city there is a hoarding on a wall advising people with claims to contact a certain company. I have also heard advertisements on radio where solicitors advise people who have been involved in accidents etc. to get in touch with their firms. I do not blame these firms for doing this as the industry has become very competitive. However, this practice has not led to a better order in society. As someone who believes in the concept of free trade and the free availability of services, I am not sure that the changes in these areas have ensured the delivery of better and more professional services by accountants, solicitors and investment intermediaries.

I welcome the provisions which will regulate advertising. The strict laws governing solicitors and chartered accountants were relaxed by the industries to allow competition. However, some of these changes have not been for the better. We have gone too far in changing the rules governing some professions and I am not sure how we can reverse this process. Those rules might have been too strict but they were better than those in place now. I do not know if this is the case in the Minister's previous profession but the changes in my profession and the legal profession have not been for the better.

I am disappointed by the speed with which this Bill is going through. We know from experience that some legislation which has been rushed through has later proved very contentious. The people who are usually caught by rogue investors are small investors or people who have availed of redundancy or severance packages. The regulation of advertising is welcome as it will ensure that advertisements are genuine. Some of the advertisements I have seen have referred to returns on investments beyond anyone's wildest dreams and people have suffered much pain and anguish when they have received a lesser return. I agree with the points made by Deputy McCreevy and I have no doubt that the Minister in his wisdom holds the same views. This is probably the most important section in the Bill.

I agree this is one of the most important sections in the Bill. From time to time outrageous claims have been made about the returns on investments, etc. I grew up at a time when advertising by a professional body was anathema to both the public and practitioners. We have all been diminished to some extent by this advertising. It is not always the person who provides the best service who is successful, sometimes it is the person who can package and sell himself the best. This diminishes professional services to some extent. I agree that it will be hard to reverse this practice which has not served the public very well.

Will this section cover life assurance companies which advertise their products in certain areas? In recent years there has been much controversy about quotations given by insurance companies for pension, life assurance or investment policies. These policies are based on a return of 8 per cent — it was 10 per cent some years ago. There is little point in people who want a quick return investing in such policies. Will this section cover advertisements given to clients?

They are covered under the Insurance Act, 1989. Insurance companies are belatedly modifying their procedures in this area.

Between an investor who invests in the stock market and an investor who invests in the insurance area we are talking about deposits. In recent times, we have had the advent of tracker bonds which can be misleading for investors. The growth rate on such bonds is so much but they may have to wait five years. I am glad I do not belong to a professional body like that of my two colleagues on either side. The professional body I represent does not have to advertise our wares.

Question put and agreed to.
Section 24 agreed to.
Question proposed: "That section 25 stand part of the Bill."

What is an investment product intermediary? It was referred to on Second Stage but it is a little complicated.

Section 25 defines an "investment product intermediary" as an investment business firm or a solicitor which provides the service of receiving and transmitting orders in the instruments referred to. There are many financial instruments: units of shares, units in a unit trust or other collective scheme etc. or taking and passing on orders for shares in a company or bonds which are listed on a stock exchange or prize bonds or acting as a tied agent for a credit institution and taking deposits on its behalf.

It refers to the bonds I mentioned and the new type of investment such as the tracker bonds where an imaginary growth can be earned after five years. People can be sucked into it. This Bill will not protect those people by and large because of the speculative nature of what they are doing.

People will be better protected as the intermediary or the firm will not be allowed to advertise a totally exaggerated performance without at least indicating the risks. There will be a much tighter regime in that area which will help but we will never have a system that will save everybody from making fools of themselves.

The way I see this Bill working is that we should not have a Shanahan stamp type situation. That is the area we are proposing to protect. You cannot protect a person who has £5,000 invested in something which is based on an historic valuation and might not work for the next five years——


——especially with a Government that is moving towards high inflation.

Question put and agreed to.
Section 26 agreed to.

I move amendment No. 7:

In page 42, lines 19 and 20, to delete "in a form prescribed by the Minister for Enterprise and Employment," and substitute "in a form specified by the Minister for Enterprise and Employment (and different forms may be specified for different classes of person),".

This is a minor drafting amendment. It has been represented to us that it would be preferable if the Minister for Enterprise and Employment, in prescribing the form of professional indemnity insurance which should apply for investment product intermediaries, could set out different forms for different types of firm. While we did not think it was absolutely essential we thought it might be sensible to make this minor adjustment.

Is it necessary to have a letter of appointment?

Will the letter of appointment be open ended or for a stated period? It is important that it would not be open ended. If it is open ended it may not be subject to review. There is no point in trying to divide the House because we would lose in any event as we do not have the numbers. I ask the Minister, who is a pragmatic man and a person whom I have always admired, to ensure that it is for a stated period.

Is the Deputy referring specifically to the amendment?

No, the appointment letter.

Can we dispose of the amendment first and then we will come to the section?

Amendment agreed to.
Question proposed: "That section 27, as amended, stand part of the Bill."

The section provides that a person shall not act as or hold himself out to be an investment product intermediary unless he holds an appointment in writing from each product producer for which he is an intermediary. Is the Deputy saying that the letter of appointment should not be permanent?

It should be for a specific period rather than being open ended.

That will be the case. No company would give an open ended appointment to a person. That is and will be the case under this Bill.

Question put and agreed to.
Question proposed: "That section 28 stand part of the Bill."

A short while ago as I was returning from Wicklow-East Kildare, I was requested by people in the industry to make representations in regard to section 28 (4). An industry working group was established to advise on the regulation of intermediaries. They are in favour of the Bill but late yesterday they discovered what they consider to be an error in subsection (4) of this section. Rather than me giving the details they relayed to me perhaps the Minister will comment on the subsection. This group considered that section 28 (4), as drafted, would not fulfil the intention of creating a level playing pitch which was the purpose of the Bill.

Subsection (4) specifies that where a payment is made through an intermediary it is treated as having been made to the product producer concerned at the time it is made to the intermediary, thus protecting the client in the event of default by the intermediary. What happened yesterday was completely astonishing from the point of view of my Department. The people who raised it and who are in extremely good standing and were extremely co-operative seem to be unaware of something which was so fundamental to this Bill and was stated to be the case from the beginning. We were perplexed that this should come, literally at the eleventh hour.

This issue is one on which industry bodies have been widely consulted. A document in regard to the Investment Intermediaries Bill which was circulated to the relevant industry bodies, including the group who have raised it now, on 20 January stated:

Every intermediary in these circumstances, that is where there is a written appointment, is acting as an agent for another institution and the institution must, therefore, take responsibility for actions of the intermediary on its behalf. In the event of a failure, if a client can show by means of a receipt, for example, that funds were intended for a particular institution, the institution concerned will have to honour any liabilities created in that regard by the intermediary. It will be an offence for an intermediary not to give a receipt.

Similarly, at the time of the publication of the Bill the Minister for Finance issued a press release which stated:

Once an institution has given an intermediary a written appointment the institution becomes responsible for payments received by the intermediary on its behalf. Therefore, clients are protected if an intermediary absconds or misappropriates a payment provided there is evidence that the transaction took place. For that reason it will be an offence for an intermediary not to give a receipt detailing a payment and its purpose. The Government's clear intention is and has been that the written appointments regime should provide a substantial measure of protection for the clients of investment intermediaries and that, having given a written appointment, the institution concerned should be required to stand behind the intermediary concerned.

This is an important protection for clients and there was no indication of any opposition to it from any area of the investment industry until up to the last 24 hours. I would not be happy to see this protection removed. It is fundamental to the Bill. The opposition to it is surprising as the people in question, for whom we have the highest regard, could not but have known about it considering the documents I saw this morning. Because protection of the investor forms an important element we are not prepared to change the Bill.

What the Minister of State says makes sense to me. It may be summarised by the following example: if an insurance company or financial institution appoints Deputy Ned O'Keeffe's company as an investment intermediary to sell its products and Deputy McDowell asks Deputy O'Keeffe's company to invest £10,000 with Irish Life and Deputy O'Keeffe absconds, Irish Life, having appointed his company as an intermediary, will have to repay the money. That is the purpose of this section of the Bill.

Provided he is appointed in writing. Legally, he will also have to give a receipt.

I am not trying to promote or knock Irish Life but I cite it as an example as it has been a State company for a long time. If that is the purpose of section 28 I welcome it. The important point is that Irish Life, should it be the company concerned, should not appoint a company or individual as an investment intermediary unless it was satisfied as to its meeting the necessary criteria. The financial institution should be the one to take the brunt. I agree with the Minister of State that this principle should not be disturbed.

The working group which, as the Minister of State rightly said, was very helpful in the preparation of this Bill makes the point, in regard to section 28 (4), that both life and non-life companies market single premium products. While intermediaries selling life company investment products are regulated under the Insurance Act, 1989 intermediaries selling non-life company investment products will be regulated under this Bill. In most, if not all cases the same intermediary will sell life and non-life investment products.

While the working party accepts that the Bill will provide a level playing field it states that, under section 28 (4), a non-life company will be fully liable for non-negotiable cheques or cash paid to an intermediary to whom the company has given a letter of appointment. The net result will be that if such an intermediary defrauds an investor in respect of moneys destined for a non-life company the company will have to repay the investor in full. However, if the same intermediary defrauds an investor in respect of moneys destined for a life company no such liability applies, but for two minor exceptions.

As I understand it, the working group is making the case that intermediaries selling life company investment products are regulated under the Insurance Act, 1989 while intermediaries selling non-life company investment products, the once off investment to which Deputy O'Keeffe so eloquently referred, will be regulated under this Bill. In the latter case the intermediary is approached by the person who, say, has been made redundant after 20 or 30 years service and wishes to invest the £10,000 he has received in redundancy payments. There is no life insurance element.

Although one does not pay much attention to many of the representations one receives — I am sure the Department feels the same way — I take the point being made by the working group seriously as it knows what it is talking about. The two people I met are experts in the field and I am aware of their reputation — I had met one of them previously when Minister in another Department. It makes the case that there will be different sets of rules; as I understand it, non-life companies will have to repay in full.

It may be the case that the working group and the Department — I am sure the officials advising the Minister of State are also experts in this area — are at cross purposes. It strikes me that the Minister of State has made a fundamental point in regard to section 28 which I support but I understand from the people to whom I have spoken that the two types of company will be treated differently.

The Deputy has articulated their case fairly. Section 28, which the Deputy supports, is fundamental to the Bill. The Deputy stated that it does not match the provisions in an earlier Act dealing with insurance. This, however, is not a logical argument for changing our position; it may be a logical argument for introducing an amendment to the Insurance Act to ensure there is a level playing field. As this section is fundamental to the Bill, it has been the subject of consultations over a long period. It is therefore surprising that the eminent group to which the Deputy referred only begun to realise that it was of such fundamental importance 24 hours before it was due to be enacted. I referred to it at length last week during the course of the Second Stage debate. There would be no justification for considering an amendment.

This legislation will be implemented over time. There will be time for consultations on how the provisions relating to the appointment of intermediaries should be implemented. We will be as co-operative as possible in introducing the regulations. We are not disposed to accepting an amendment.

As I understand it, if a person asks an investment intermediary appointed by a non-life company, such as a bank, to invest £10,000 and something goes wrong the bank will have to repay the money. If the investment intermediary represents a life assurance company such as Irish Life — the relevant Act in that case is the Insurance Act, 1989 — Irish Life would not be legally obliged to refund the money in the event that the investment intermediary does not pay it. Is that the gist of the complaint?

I am not familiar with the details of the Insurance Act but I think the investor under this legislation will be better protected in that there is a certainty that if he invests his money with an investment intermediary who has been officially appointed in writing by an institution and who furnishes a receipt, the company will stand over that investment. I think the protection is not as strong in the Insurance Act. To that extent the position is different.

If the money invested in Irish Life does not relate to life cover — Irish Life has many products on the market and one does not necessarily have to take out life cover to be involved with the company — is there protection under the Insurance Act, 1989, or under this Bill?

In the case of investment products provided by a company that also supplies insurance, the investment product is covered under this Bill while the insurance product is not. There is protection under the 1989 Act but it is not as comprehensive as the protection under this Bill. Perhaps an amendment to the 1989 Act should be considered to bring it into line with this legislation rather than the reverse, which would not be acceptable.

The Minister is making a good case for amendment of the Insurance Act, 1989, which is not his responsibility. The case made by the people in this instance is that the pitch is distorted and in that respect I have sympathy with them. The pitch should be levelled.

It may be levelled upwards or downwards.

It should be levelled upwards. Since protection under the Insurance Act, 1989, is not as strong as that under this Bill we should not minimise the requirements of this legislation. I see no reason for proceeding in that direction, rather we should amend the Insurance Act, 1989. Perhaps the Minister or his officials will meet in the next few days with the industry working group who did much background work in preparation for this Bill. Perhaps regulations could be made or some commitment given to ensure a level playing pitch because the people involved have very strong views in this regard. I do not have the time or the expertise to go into the matter further but I welcome the fact that the Minister is giving the institution responsibility for the investor. Perhaps the Insurance Act could be amended in that regard.

Investment intermediaries are broadly based investment people who take small investments, including life insurance. From the position I hold, I have an interest in the Bill and I believed that aspect would be covered. If I pay £1,000 to an investment intermediary for a life policy or product and the money goes astray, that is not covered in the Bill. Is there a law that will protect me in those circumstances? In the past most insurance companies have protected their policyholders, but that matter is not covered here. I am not blaming the Minister but that is a weakness in the Bill and some such protection should be put in place. As the Minister knows, in the county and city of Cork there are many genuine small operators who provide a fine service in the investment area, whether as insurance brokers or retailers, but on occasion a person may for one reason or other take the wrong road, thereby messing up the investors. There is no protection under the the Bill to cover those circumstances.

The insurance area is substantially regulated under the Insurance Act, 1989. This Bill which arose as a result of EU directives is designed to fill a gap that existed in other investment areas. The Deputy's criticism of the Bill is not valid because the Bill was not designed to deal with the subject matter of the 1989 Act. If an amendment to that Act is warranted — I cannot give a guarantee in that regard because it is not my responsibility — that will be noted. On Deputy McCreevy's request that we meet the groups who raised this issue, my officials meet regularly with these groups. We will be prudent and sensitive about the timing of the introduction of regulations.

Question put and agreed to.
Sections 29 to 32, inclusive, agreed to.
Question proposed: "That section 33 stand part of the Bill."

This section gives greater responsibility to auditors to notify supervisory and regulatory authorities and we have no complaints about that. It deals with auditors for investment business firms which are not incorporated bodies and duties of auditors. I referred earlier to the sole operator, the non-incorporated entity or partnership. In that regard, the duties of the auditor are clearly set out. As the Minister is aware, audits are not carried out simply by individuals submitting their tax returns. Many people consider they have completed an audit when they have submitted their tax returns, but such a submission is not the same as a statutory company audit — unless individuals want to pay their accountants a fortune to ensure everything is in order. Are there special rules and regulations set out in this section to cover the unincorporated entity?

I assume this section dealing with auditors is regularising matters in line with the Companies Act. Many people involved in intermediate investment are small operators working on commission who have small turnovers. If they are required to have a statutory audit carried out by a reputable company — and all companies are required to be reputable now — it will impose a substantial expense. I note there is a provision for re-audit which does not apply to other limited liability companies and that has far-reaching implications, but I assume it is in line with the Companies Act. Perhaps the Minister would comment on the cost involved in the carrying out of a statutory audit.

Section 33 obliges investment business firms, which are partnerships or sole traders, to appoint an auditor who will act in a manner analogous to the auditor of a company. The section also imposes obligations on auditors to report to the supervisory authority if certain circumstances exist in the investment business firm they are auditing, for example, if it may be unable to meet its obligations or if there are material defects in its accounting system. The supervisory authority may require an auditor to make a report to it about an investment business firm's compliance with certain supervisory authority requirements. An auditor is obliged to report to the supervisory authority if matters come to his or her attention which he or she believes are significant for deciding on, say, the competence or probity of a director of an investment business firm. The section also gives the supervisory authority power to lay down requirements in respect of the audit of authorised investment business firms.

I accept Deputy O'Keeffe's point that sole traders in small towns may act as intermediaries but I do not know how we can protect investors by excluding that category. While 99 per cent of those that fall into that category are the salt of the earth, there is often the odd rogue. We would be culpable if we excluded small sole traders from this type of requirement. Small auditing firms are perfectly competent to carry out such audits and they are not charging the level of fees charged by the big five. The position may not be as bad as indicated by the Deputy.

Question put and agreed to.
Section 34 to 46, inclusive, agreed to.
Question proposed: "That section 47 stand part of the Bill."

Is there an obligation to inform a supervisory authority of shareholdings? As the Minister is aware, some grandiose schemes have been designed to cover up the shareholdings of a company. All types of ingenious devices have been used in the past and, I am sure, will continue to be used. How is it intended to ascertain information on the shareholdings of a company? I am sure the purpose of the Bill is to ensure that certain individuals who would normally be disqualified as investment intermediaries are not involved as investment intermediaries. How will this Bill be able to deal with shareholding companies when it has not been possible to deal with them under sections of the Companies Act? I hope this section will be able to deal with them, but I do not believe it will be more successful than sections in other Acts.

We are dealing with investment business firms. Under section 47 investment business firms are obliged to inform the supervisory authority of the identities of their shareholders. The type of situations to which the Deputy referred would not normally occur within an investment business firm, though it might apply to some esoteric overseas product. I do not believe this section will pose any great difficulty.

Subsection (1) provides that at least once a year authorised investment business firms must inform the supervisory authority of the names of persons having direct shareholdings in them or possessing qualifying shareholdings and the size of such holdings.

Subsection (2) requires an investment business firm to make the best efforts to identify any indirect shareholders and to notify the supervisory authority of their names at least once a year. The provisions are not watertight, but they are about as far as we can go. I agree with the Deputy that it is difficult to get to the bottom of everything, and perhaps we should not.

I have been inclined to agree with that view on many occasions.

Question put and agreed to.
Sections 48 to 50, inclusive, agreed to.
Question proposed: "That section 51 stand part of the Bill."

I presume that all these investment intermediary companies will have to acquire a bond.

Of £50,000.

Question put and agreed to.
Section 52 agreed to.
Question proposed: "That section 53 stand part of the Bill."

Section 53 exempts a supervisory authority from damages in respect of a case brought by an investor. Is the purpose of the section that a supervisory authority will not be liable to a claim for damages brought by an aggrieved investor?

This matter arose during the debate on the Stock Exchange Bill. We want to be careful that we do not make the Central Bank or a Department of State accountable for the fraudulent acts of people selling investments in the open market. We do not want that obligation to fall automatically on the taxpayer. If a person is let down, we want them to take an action against the person who owes them the money, not against the State. While the regulatory authorities must act in good faith, the State should not open itself up to a raft of claims from disappointed investors. It would not be fair to put that obligation on the taxpayer.

If, say, a committee found that a professional body was lax in authorising a firm's operations, surely that body could be liable for damages or is it exempt under the section?

Section 2 provides that in carrying out its duty to supervise approved professional bodies, the supervisory authority is not providing a warranty as to their solvency or performance. We are not protecting the professional body. This provision protects the State and the Central Bank. The State regulatory apparatus will not be open to claims for all and sundry in the event of an investment going wrong.

If a professional body was found to be lax, could it be made liable for damages?

It does not arise in the case of the Incorporated Law Society who operate a compensation fund and a strong regulatory regime. The accountancy profession does not operate a compensation fund. The Bill exempts only State regulatory bodies, it does not refer to professional bodies in that regard. If a person believes a professional body is negligent in its role, this section would not prohibit an investor from taking action.

The setting up of supervisory bodies and regulatory authorities means that officials will monitor organisations. I am sure the position of the PMPA, which collapsed when my party was in Government, had exercised the minds of various civil servants and Ministers for many years before it crumbled. As some cases regarding that company may not yet be disposed of, I am restrained in what I can say, but I am sure many officials in the former Department of Industry and Commerce were aware for some time of the position at the company. Many people had deposited money with the PMPS but the Government at that time was firmly against reimbursing them and I recall the then Minister. Deputy O'Malley, stating his decision was justified. Perhaps if this Bill had been enacted then, he might have adopted a different position.

Eminent civil servants in the Department of Industry and Commerce — the regulatory authority for the insurance industry at that time — who monitored the position in the PMPA for some time were somewhat slipshod in their actions. I am not blaming the former Minister, Deputy O'Malley, because if I had been Minister at that time. I would probably have been advised to take a similar decision to protect the State against the payment of a large number of claims.

Under the Bill civil servants or officials of public bodies who have monitored the transactions of a company for some time may inform the Minister or the Governor of the Central Bank that the company is in trouble but then walk away without having to provide for compensation. Is this fair? The PMPS depositors are a good example of the inequity involved. However, I am sure Governments since the foundation of the State would have adopted a similar position. It is unfair that the regulatory bodies, having monitored the position of a company for some time, do not have to take responsibility for compensation. It is an easy way out.

The answer to the Deputy's difficulty would be a compensation scheme. This Bill provides for bonding and the legislation that will be introduced following the implementation of an EU directive will provide for compensation. It would not be acceptable to blame the regulatory body and make the taxpayer pay, particularly as bonding and compensation schemes will be provided for shortly.

I would not like the taxpayer to be the funder of compensation as a last resort. Industry and professions should cover their members through compensation or bonding schemes. However, I wonder if we have been somewhat glic by half in the past in dealing with such matters and I cited the PMPS depositors as an example.

Question put and agreed to.
Sections 54 to 62, inclusive, agreed to.
Question proposed: "That section 63 stand part of the Bill."

Who is included under authorisation of certified persons? Does it include the officers of approved professional bodies?

This section ensures that a certified person, for example, an accountant, doing business in an incidental manner, may be deemed to have an authorisation to engage in investment business services equivalent to an authorisation granted by a supervisory authority. However, this implicit authorisation would not allow such a firm to conduct business in another European Union member state or to conduct investment business which was not incidental to its professional practice. This is to guard against an excessive regulation of firms not primarily involved in this type of activity but who engage in a small amount.

Question put and agreed to.
Sections 64 to 73, inclusive, agreed to.

I move amendment No. 8:

In page 80, subsection (8), line 34, after "investment business firm" to insert "or professional body".

This is a technical amendment, pertaining to the powers of a committee to be appointed under this section. In certain circumstances the committee may make a determination that there has been a breach by an investment business firm or an approved professional body of a conditional requirement imposed by the supervisory authority under the Act. It is appropriate that there be a right of appeal to the court against a determination of the committee. The present text inadvertently gives such right of appeal to an investment business firm only. The amendment makes it clear that this right of appeal will apply also to an approved professional body.

Amendment agreed to.
Question proposed: "That section 74, as amended, stand part of the Bill."

A large fine of £500,000 is mentioned in the explanatory memorandum. Perhaps the Minister of State would elaborate?

This section sets out the mechanisms for determining whether there has been a breach of a supervisory authority condition or requirement. The supervisory authority may apply to the High Court for a determination that there has been such a breach. Alternatively, the supervisory authority may, if requested to do so by the investment business firm or professional body concerned, appoint a committee to determine the matter. The court or committee may dismiss the supervisory authority's application. Alternatively, it may determine that there has been a breach and may reprimand the investment business firm concerned and direct it to pay a sum not exceeding £500,000 to the supervisory authority. The committee mechanism is aimed at providing an efficient, cost-effective way of dealing with possible breaches of supervisory authority conditions and requirements. The alternative is a High Court action which would almost certainly be both more expensive and protracted. Of course, the investment business firm concerned, can decide to have the matter dealt with by the High Court if it chooses.

Question put and agreed to.
Sections 75 to 78, inclusive, agreed to.

I move amendment No. 9:

In page 83, subsection (4), line 28, after "employee" to insert "or person".

This is a simple drafting amendment.

Amendment agreed to.
Question proposed: "That section 79, as amended, stand part of the Bill."

Section 79 (1) (a) and (b) states that a person who is guilty on summary conviction shall be liable to a fine not exceeding £1,000 and, on conviction on indictment, to a fine not exceeding £1 million or, at the discretion of the court in the case of an individual, for imprisonment for a term not exceeding ten years, or both. I am sure the £1 million fine would be fairly realistic, even today.

The reason a fine of £1 million was stipulated rather than an unlimited one is that the Constitution provides for the High Court and other courts of local and limited jurisdiction. Therefore, when providing for a penalty on indictment, it is necessary to fix an upper limit here if any court other than the High Court is empowered to impose it.

What occurs to me in that context — a point made recently at a European conference in Dublin on the subject of fraud — is that very complex cases, where a £1 million fine might be imposed, are dealt with exclusively in the Circuit Court with burglaries and other cases. As the law stands, the High Court is entitled only to deal with matters such as treason, rape, certain serious sexual offences, murder, piracy, genocide and a few others.

If we are envisaging that the Circuit Court will deal with this kind of prosecution, complex cases of fraud where a fine of up to £1 million could be imposed, the time has come to reconsider our courts structure. Within the context of the forthcoming Court and Court Officers Bill I suggest that the Minister of State draws the attention of the Minister for Justice to the remarks made recently at that conference to which I referred by a member of the High Court to the effect that it is anomalous that a Circuit Court — which deals with burglaries, assaults and the like — is the only court here that can deal with complex financial fraud when it does not have the requisite resources or time to deal with them.

Perhaps the time has come to revisit the question of where complex financial cases should be dealt with, there is a good case for moving them to the High Court. In England the Crown Court, comprised of both High Court and Circuit Court judges and High Court judges sitting in complex cases sent to the Old Bailey are centralised. It is impractical to imagine, for instance, that if a company was carrying on business, say, in Bray, that the Eastern Circuit Court, sitting in Wicklow town, should deal with a £1 million complex financial case. The time has come for us to re-examine that issue because those courts are not equipped in terms of time, space and personnel to deal with such complex issues.

I thank Deputy Michael McDowell for that intervention. I would not have been as aware of the problem he has just described. I understand that the Circuit Courts would not have the requisite general resources to deal with cases of such complexity at the upper level of these fines. I will certainly pass on his suggestion, though I can do no more than that.

Question put and agreed to.
Section 80 agreed to.
First and Second Schedules agreed to.
Title agreed to.
Bill reported with amendments.

Since there are no amendments on Report Stage, we proceed to Fifth Stage.

Question proposed: "That the Bill do now pass".

I thank Members for their contributions on the Bill. Its enactment will mark a further stage in the regulation of the financial sector following on the various Acts affecting that sector in recent years, including the recently passed Stock Exchange Bill on which this Bill is to some extent based.

This Bill will establish a modern system of regulation for investment intermediaries in line with modern international practice and the requirements of EU law. The Bill is part of a wider process under which firms providing certain financial services will be allowed to trade freely throughout the European Union. This will obviously bring challenges as well as opportunities but I feel sure that the Irish financial sector is strong enough to meet those challenges and to avail of the opportunities provided.

I thank the Central Bank, the Department of Enterprise and Employment and the industry bodies who were consulted during the preparation of the Bill for their constructive contributions. I also thank Deputies opposite. This was a daunting task for me so it must be much more daunting without the excellent assistance of the officials in the Department of Finance. Since taking on this seemingly lighter burden in recent weeks, I have had to deal with a plethora of complex Acts covering the Stock Exchange, investment intermediaries, the Office of Public Works, arterial drainage, etc. Without the advice of excellent public servants and the friendly co-operation of my colleagues across the House I could not have attempted this task and, for both, I am very grateful

I agree that the expertise available within the public service is unending and is always professionally given. It is unfortunate we did not have more time to deal with this Bill because the public servants who spent a lot of time drafting it might feel hard done by that it did not receive sufficient attention in the House. I am aware of the expertise and the many long hours that have gone into the preparation of this Bill.

This Bill, in one form or another, has been in Government circles for some time and I am glad to see it before the House. I realise there is a time limit in regard to getting it through the House but I thank the Minister for the co-operative way he has approached this legislation. I know what it feels like to have to deal with a very technical Bill. In my first week as a Minister I was required to pilot the Social Welfare Bill through the House and my knowledge of the technicalities of social welfare was not great.

But the Deputy learned about airports.

I learned a lot in the short time I was there. That was not widely appreciated by many people in this House. It was probably more appreciated by Deputy McDowell, some of my friends and perhaps even the Minister. I recognise the hard work the Minister must have undertaken in trying to become expert in these areas.

There is a passage in Parkinson's Law by Professor C. Northcote Parkinson dealing with the law of delay. He gives an example of a committee of experts who have two tasks, one of which is to decide whether to build a new nuclear reactor and the other to decide whether to build an employees' bicycle shed. He says effectively that the less important issue is the one everyone can understand and, therefore, many hours are spent discussing that. The more complex issue gets shooed through on the basis that nobody is willing to show how ignorant they are.

That is absolutely correct.

I think we have had a slight element of that here. In defence of Deputy McCreevy and myself, we have been co-operative in that this has come upon us rather suddenly and we have taken on trust the excellence of the Bill.

Deputy McCreevy raised the issue of section 28 (4) and I hope the Minister will take on board the views expressed by the working group on the regulation of intermediaries in relation to their misgivings about what they see as inequality in the treatment of certain investment activities. If the Minister sees some merit in the points raised by Deputy McCreevy, the matter could be re-examined in the Seanad and any necessary amendments could be taken at that stage. Having said that, I wish the Minister well with the Bill in the Seanad.

I too compliment the Minister on the Bill. I have known him for a long time and I am glad to say it was not people on this side of the House who removed him from his post as Minister for Defence and Minister for the Marine. Cork has been left much poorer without the benefit of a Cabinet Minister. The people of Cork are lonely without the Minister and there is an obligation on the Taoiseach to ensure that Cork is again honoured with a full Cabinet Minister.

I have known the Minister of State, Deputy Coveney, longer than most people in this House. We worked together in commercial business. At that time we joined hands from the business and the farming sectors in an effort to improve relations between the two. I am sure neither of us ever thought we would see the day when we would be standing in this House and perhaps we should have stayed in the commercial world. We might be much happier and wealthier and we would not be worrying about investment intermediaries. In fact, we might be seeking the advice of investment intermediaries.

This is excellent, well thought out legislation and I compliment the Minister for the way he brought it before the House. It is vital that we protect small investors, many of whom have been adversely affected by bogus investment and skulduggery. I am familiar with many cases of investment where no growth was achieved.

Investment intermediaries are involved a great deal with insurance-type products. That is not included in the Bill and it is an area that should be examined. Perhaps it was not thought worth while to include this area or there may have been some argument in regard to whether the Central Bank or the Department of Enterprise and Employment would have responsibility for this. That is the only weakness I see in the Bill.

The Bill will provide protection for small investors. They are entitled to that protection and I compliment the Minister on the Bill. He was given full co-operation from this side of the House and he was more than helpful in answering questions raised by Deputies. I wish the Minister well.

Question put and agreed to.