I move: "That the Bill be now read a Second Time."
The Central Bank Bill provides for a range of new measures relating to the powers and obligations of the bank. The main Acts relating to the Central Bank are the Central Bank Acts, 1942, 1971 and 1989. The last major revision of Central Bank legislation was the 1989 Act which, as well as updating the charter of the bank itself, also extended considerably the powers of the bank to supervise banks and other financial institutions and introduced a deposit protection scheme for depositors.
The present Bill includes provisions relating to payment systems and cross-border credit transfers, as well as dealing with a number of other matters in Central Bank legislation which require updating and amendment. These include provision for the accountability of the Governor of the bank, extension of the bank's supervision and enforcement powers, including new provisions for the supervision ofbureaux de change, and a number of miscellaneous technical provisions.
A limited number of amendments are included to ensure compatibility with certain defined provisions of the Treaty on European Union, which took effect with the start of the second stage of European Monetary Union on 1 January 1994. However, the Bill does not address the legal issues arising from the move to stage 3 of European Monetary Union. Although extensive preparatory work has been done on the legislation required in connection with the move to stage 3 of European Monetary Union it would be premature to finalise it at this stage.
Article 108 of the Treaty requires each member state to ensure, at the latest by the date of the establishment of the European System of Central Banks, that their central bank legislation is compatible with the Treaty and the Statute of the ESCB. With stage 3 of European Monetary Union commencing on 1 January 1999, this will be early 1998. The legal division of the European Monetary Institute is currently drafting guidelines for the adaptation of central bank legislation in all member states to Treaty provisions. It is not yet clear when these guidelines will be finalised. It has been decided to wait until these guidelines are available before legislating for stage 3 of European Monetary Union. The EMI has been consulted and they have agreed with this approach. Therefore, the Bill now before the House is largely a technical one.
As the volume and speed of large-value payments messages has been increasing, their speedy settlement at central banks has become more and more important. This has led to an increasing concern world-wide about the settlement process for these payments and the systemic risk implications resulting from the possible inability of a bank to settle its payments obligations at a central bank. This concern led to a group of payments and settlements experts, representing EU central banks, producing a report which recommended a set of standards for the settlement of large-value payments.
There is a major drive in Europe to standardise and co-ordinate national initiatives in this area. The Central Bank has been involved in this process and has committed itself to installing a real time gross settlement system in Ireland by the end of 1996. The essential feature of RTGS is that the settlement of a payment instruction and its transmission to the receiving bank are simultaneous. Currently, seven of our EU partners operate RTGS and all but two of the rest have committed themselves to having it in operation by the end of 1996. The other two will have RTGS in 1997.
From a competitiveness point of view, it is important that the processing of Irish large-value payments is at least equal to that of the other EU member states. Also, from a purely prudential point of view, RTGS would reduce substantially the systemic risk associated with the system of end-of-day settlements currently operating in Ireland.
The powers of the Central Bank to oversee the collection of cheques and other payable orders by licensed banks are contained in section 26 of the Central Bank Act, 1971. While these powers have been of service, they are limited in scope to three licensed banks and to the terms and conditions and rates of charges applied to the collection of such cheques and instruments. The Central Bank has no role in the approval of payment systems nor a direct right of supervision and intervention. The growth of international trade, the size of daily settlements, the increased use of electronic payments and the volatility of trade flows have caused individual central banks to take steps to address the various risks arising in their own domestic payment systems, in particular the risk of default, breakdown and liquidity shortage which would have grave implications for the security and stability of the banking system.
Similar steps are now required in Ireland, particularly for large-value transactions. The current payments system which has served well to date is not properly equipped to respond adequately to the increasing pace of change in money transmission services. Discussions on the restructuring of the current system have been ongoing for some time and are at an advanced stage. The Government is particularly concerned to ensure that payment systems in the State are effective, efficient and open and that the systems themselves do not add to, or cause, instability in the operation of financial markets. To this end, in addition to facilitating the introduction of RTGS, the Bill provides for a significant change in the area of payment systems generally. In brief, the bank will be given the power, for the first time, to approve the establishment of payment systems and vet their rules. These powers will also apply in the case of existing payment systems.
Apart from those which form part of a bank's operations,bureaux de change have been effectively outside the scope of any official supervision since the abolition of exchange controls some years ago. The need to introduce a supervisory regime at this point arises from our international commitments in the area of money laundering. The Financial Action Task Force of the OECD, the international body set up to combat money laundering, has strongly recommended that those countries which do not currently supervise bureaux de change should do so because of their potential use in the money laundering chain. While we are not bound to follow the views of the FATF in this matter, failure to do so would undoubtedly leave Ireland open to criticism.
The Government has, therefore, decided to include provisions in the Bill to give the bank the appropriate powers of supervision. These provisions are based very closely on existing provisions relating to the supervision of moneybrokers as set out in Chapter IX of the Central Bank Act 1989 and will requirebureaux de change to be authorised by the Central Bank with the standard provisions regarding appeal to the Minister for Finance where the bank proposes either to withhold or revoke an authorisation. The degree of supervision of the operations of bureaux de change would largely be a matter for the discretion of the Central Bank under a general framework set out in the Bill.
The Trustee (Authorised Investments) Act, 1958, contains a list of investments in which trustees are empowered to invest. It gives to the Minister for Finance power to designate other investments or to delete investments. This is done by ministerial order. Such orders require a motion approving them to be passed by both Houses of the Oireachtas. The list of investments which are currently designated is largely confined to fixed-rate securities, bank or building society deposits and a small number of unit trusts whose investments are restricted to Government securities and bank or building society deposits. The only equities on the list are the shares of the two main banks — Bank of Ireland and AIB. Following a request some time ago for the designation of certain other company shares, the existing approach to the designation of trustee investments was reviewed. It was concluded that the approach adopted to date was no longer appropriate and that a revised approach should be adopted. This would have the following main features: as far as possible designation should be in respect of categories of investments rather than individual investment products to avoid the appearance of giving an official endorsement to individual products; the powers of trustees should be widened to include investment in equities, whether directly or indirectly, through collective investment schemes; the investment powers of trustees should be subject to certain conditions regarding the level of their foreign and equity investments.
While the Trustee (Authorised Investments) Act, 1958, gives the Minister for Finance power to amend the list of investments by order, it does not give him power to impose conditions on the investment powers of trustees. Provisions in this Bill amend the 1958 Act to give the Minister this power. The requirement in the 1958 Act that each order made under it must be approved by both Houses of the Oireachtas is also being removed. Effectively, a legislative procedure is required for what is essentially a regulatory matter. Instead of the requirement for the passing of a motion approving ministerial orders made under the 1958 Act, the normal procedure which is used for orders made under the Central Bank Acts i.e. that they are laid before both Houses of the Oireachtas and become effective unless an annulling resolution is passed within a specified time, is being inserted. These are, essentially, enabling and simplifying provisions.
Several other matters requiring attention are also incorporated in the Bill. The extension of the supervisory and enforcement powers of the bank is proposed to bring them up to date with best current practices. Provision for the accountability of the bank is also included. The Bill also provides for the formation or acquisition by the bank of subsidiary companies. A number of the central banks enjoy such a facility. The provision is an enabling one only, and the exercise of this power by the bank will require the prior permission of the Minister for Finance whose approval will also be necessary for the terms of the memorandum and articles of association of any such company. The Bill also provides for the amendment of certain provisions of a number of Acts.
I will now move on to a more detailed description of the Bill.
Part I contains the usual provisions on citation, interpretation, regulations and repeal clauses. Part II provides for authorising the establishment and supervising the operation of payment systems in the State. Briefly, these provisions will require all payment systems to be approved, and have their rules vetted, by the Central Bank. The bank may impose conditions on approval, revoke approval and issue directions to the system or its members. In circumstances where the bank proposes to refuse or revoke approval, an appeal may be made to the Minister for Finance. This will complement the capacity of the Competition Authority and the European Commission to examine the competitiveness of any proposed arrangements.
Part III gives authority for the formation or acquisition of subsidiary bodies by the bank. The provision is an enabling one only, and the exercise of this power by the bank will require the prior permission of the Minister for Finance, whose approval will be necessary for the terms of the memorandum and articles of association of any such company.
Part IV deals with the accountability of the Governor of the Central Bank, while having due regard to the independence of the bank. It provides for the attendance by the Governor of the Central Bank, if so requested, before the Select Committee on Finance and General Affairs and the furnishing to that committee with such information as it may request. Provisions are also included in relation to the provision of advice and assistance to the Central Statistics Office in relation to the compilation of balance of payments statistics as well as minor amendments concerning the terms and tenure of office of the Governor of the Central Bank.
Part V provides for the supervision, by the bank, ofbureaux de change. Part VI amends a number of provisions of the Central Bank Acts, 1942 to 1989, the Cheques Act, 1959, the Building Societies Act, 1989, the Bills of Exchange Act, 1882, and a number of other enactments. I will now turn to the detail of these changes.
Sections 1 and 2 are the usual short title and interpretation provisions. Whereas these usually do not call for any special comment I would like to make particular mention of section 2 (2) which defines "deposit". "Banking business" is defined essentially as the taking of deposits. There is, however, no Irish legal definition of what constitutes a deposit. It seems incredible that we have come this far without a definition. As the savings market becomes more competitive, the distinction between deposits and other forms of investment is becoming blurred and the lack of a legal definition of a deposit is causing concern. This anomaly caused particular concern during a recent successful prosecution of a finance company by the Central Bank. Section 2 (2) provides for such a definition to be incorporated in Irish law by means of an amendment to section 27 of the 1971 Act.
Section 3 deals with the laying of regulations before the Houses of the Oireachtas. Section 4 sets out the legislation being repealed by this Bill. In particular the section provides for the repeal of sections 12, 13 and 14 of the Central Bank Act, 1942. These sections deal with "associated Banks" and as this term no longer applies these sections are not required.
Section 5 defines "payment system" and "rules" for the purposes of this Bill. Section 6 allows the bank to become a member of, or be a party to the establishment or operation of a payment system. Section 7 provides that no new payment system can be established without the prior agreement of the bank. Section 8 deals with existing payment systems and provides that, within three months of the passing of this Act, the rules of existing payment systems must be approved by the bank or the system will be deemed to be disestablished.
Section 9 provides that the Central Bank may approve the rules of a payment system subject to conditions or requirements and that the application for approval may be in such form as the Central Bank may determine. It also provides that the approval by the Central Bank of the rules of a payment system does not constitute a warranty of the solvency of the system.
Section 10 outlines the procedure where the bank proposes to refuse to approve of the rules of a payment system. Section 11 provides that the provisions of section 17 of the Act of 1971, which relates to the keeping of books and records, shall apply to payment systems and members of payments systems as if they were holders of a banking licence. Section 12 empowers the bank to direct a system, or any member of a system, to cease activity, or to cease operating as a member as the case may be, in certain circumstances. The section provides for an application to the courts, by the bank — for confirmation of a direction under this section — or by a payment system, or members thereof, for the setting aside of a direction.
Section 13 provides for the revocation of approval by the bank of the rules of a system in certain circumstances, subject to the agreement of the Minister. It also sets out the procedure to be followed by the system in these circumstances. Section 14 is an offences and penalties provision. Section 15 allows the bank to impose certain requirements for membership of a payments system. Section 16 amends section 26 of the Central Bank Act, 1971, which deals with the collection of cheques. The powers of the Central Bank to oversee the collection of cheques and other payable orders by licensed banks are contained in that section. While these powers have been of service, they are limited in scope to licensed banks and to the terms and conditions and rates of charges applied to the collection of such cheques and instruments. This amendment allows the bank to extend the scope of section 26 to other parties or instruments and extends the meaning of licence holder to include a credit institution within the meaning of Regulation 2 of the European Communities (Licensing and Supervision of Credit Institutions) Regulations, 1992, Sl No. 395 of 1992, i.e. any undertaking, other than a credit union or friendly society, whose business it is to receive deposits or other repayable funds from the public and to grant credit on its own account.
Section 17 provides that the Minister may, after consulting with the bank, prescribe fees to be paid by all entities supervised by the bank under any enactment.
Section 18 provides that once payments have been debited from a credit institution's account in the Central Bank on the instructions of the credit institution concerned, the payment becomes final. This is to ensure that once payments have entered a payment system they cannot be revoked. Revocation of a large value payment could result in the unwinding of a number of other related payments within the system and this could have serious consequences for the system as a whole.
Section 19 allows payment instructions and authorisations to and from the Central Bank to be of a form other than in writing. This allows for electronic, or other, transmission of instructions.
Section 20 substitutes a new section for section 7 of the Central Bank Act, 1942, which provides for certain particular powers of the Central Bank. It is necessary to provide the bank with specific powers relating to its increased involvement with payment systems. The opportunity is also being taken to express other specific powers of the bank in a clearer fashion to better reflect modern practice and conditions.
Section 21 is a technical provision to allow the Minister transpose into Irish law the proposed EU directive on cross-border credit transfers.
Section 22 gives authority for the formation or acquisition of subsidiary bodies by the bank subject to the consent of the Minister. This provision is an enabling one only, and the exercise of this power by the bank will require the prior permission of the Minister for Finance. Approval will also be necessary for the terms of the memorandum and articles of association of any such company. The functions of any subsidiary company established or acquired under the terms of this section will be restricted to those of the bank, and any guidelines or obligations applicable to the bank will also apply to such companies.
Section 23 provides that the Governor shall attend before a Select Committee of Dáil Éireann — currently the Finance and General Affairs Committee — and furnish that committee with any information requested, having due regard to the independence of the bank and subject to any restrictions imposed on the Governor under the Central Bank Acts, for example, the confidentiality provisions of section 16 of the Central Bank Act, 1989. This statutory obligation on the Governor to attend before the committee will replace the informal arrangement which is currently in place and the terms of reference of the committee will have to be amended accordingly.
Section 24 empowers the bank to assist the Central Statistics Office in the collection, compilation, analysis or interpretation of balance of payments, national accounts or any other financial statistics including, where appropriate, the actual collection of data for this purpose.
Section 25 amends section 19 of the Central Bank Act, 1942, which deals with the appointment and tenure of office of the Governor of the Central Bank and extends the prohibition on the Governor from being a director of a licensed bank to all commercial credit institutions, financial institutions or insurance undertakings. This is in view of the bank's new role in supervising a wide range of other financial institutions under recent legislation, for example, the building societies, TSB, ACC, and ICC Acts, as well as the Stock Exchange and Investment Intermediaries Acts. The section makes it clear that the prohibition does not apply to the Governor being a member of the European Monetary Institute. Furthermore, the prohibition does not apply to shares held by the Governor in any commercial credit or financial institution by means of an insurance policy, ordinary savings account with a building society, or units in other collective investment schemes purchased by him or her, although we will be waiting for that.
Section 26 amends section 20 of the Central Bank Act, 1942, which prohibits the holding of shares by the Governor in a bank, and extends that prohibition to credit institutions, financial institutions or insurance undertakings. Section 27 is an interpretation and definition section.
Section 28 makes it illegal to carry on the business of abureau de change without authorisation from the Central Bank and sets out the procedure involved in the grant or refusal of an authorisation by the Central Bank. This section also provides that existing operations will have a period of six months after this section comes into operation to obtain authorisation from the bank.
Section 29 requiresbureau de change businesses to comply with any requirement laid down by the Central Bank. Section 30 applies the provisions of section 17 of the Central Bank Act, 1971, to bureaux de change in relation to the keeping of books and records.
Section 31 outlines the powers of the court to deal with failure by abureau de change to comply with a requirement or condition of the Central Bank. Proceedings may be held otherwise than in public if the court consents. Section 32 requires the Central Bank to publish a list of bureaux de change once a year and to publish notice of any revocation of an authorisation as soon as possible.
Section 33 is an offences and penalties provision. Section 34 relates to the revocation of authorisation of abureau de change by the Central Bank. The Central Bank must seek the consent of the Minister to the revocation unless the revocation has been requested by the person who was authorised or where the revocation is as a consequence of the withdrawal of authorisation by another member state of the Community in which the bureau has its head office.
Part VI deals with various miscellaneous provisions. Sections 35 and 36 amend the Bills of Exchange Act, 1882, and the Cheques Act, 1959, to confer legal status on cheques marked "account payee only". This will help to counteract fraud and should also ensure more speedy transfer of cheques to recipients. Section 35 also provides an indemnity to banks arising from any refusal to cash the cheque or to transfer the cheque to another in pursuance of an endorsement on the cheque to that effect.
These provisions have been requested by the Insurance Industry Federation, the IIF. The IIF wishes to ensure that cheques made out to policyholders and transmitted via insurance brokers etc. must be handed on to the client and cannot be converted in any way to the use of the intermediary. The federation believes that this is a basic safeguard for the ordinary investor and will reduce considerably the fraudulent conversion of clients' money.
Section 37 provides that a uniform term of office of five years from date of appointment will apply to all directors of the bank, other than service directors. At present, section 24 of the Central Bank Act, 1942, prescribes a term of office of five years from the expiry of the term of office of the previous incumbent. Where a new director is appointed during the term of office of his predecessor the term lasts only until the term of office of his predecessor would have expired. These provisions are unnecessarily cumbersome and have led to difficulties and uncertainty in practice if there has been a delay in filling a vacancy.
The section, therefore, provides that a uniform term of office of five years from date of appointment will apply to all directors including the current directors. In the case of a service director on the board, that director will have no set period of office but will hold office at the pleasure of the Minister and may be removed at any time. The only current service director is the Secretary of the Department of Finance.
Section 38 amends section 28(2) of the Central Bank Act, 1942, transferring responsibility for notifying the Minister of vacancies on the board from the board to the secretary of the bank.
Section 39 extends the provisions of section 16 of the Central Bank Act, 1989, which relates to non-disclosure of information by the bank. Various amendments facilitate the disclosure of information in relation to the conveyance of statistical information to the Central Statistics Office, the disclosure by the bank of information received from another regulatory authority where that authority has given permission, the ability of the bank to request information from entities it supervises in response to requests for such information from regulatory authorities outside the State, the bank's obligations under the money laundering provisions of the Criminal Justice Act, 1994, and the conveyance of information to the European Monetary Institute in accordance with the Maastricht Treaty.
Section 40 applies the duties of auditors, as set out in section 47 of the 1989 Act, to all entities, financial institutions, exchanges and moneybroking businesses supervised by the bank. The effect of this amendment is such that auditors of entities supervised by the bank will be required to furnish information to the bank in certain specified circumstances, namely, where the auditor comes across matters likely to affect the solvency of the entity; where there are material deficiencies in the financial systems of control; where there are material inaccuracies or omissions in returns to the bank, or where the auditor proposes to qualify his or her certificate. The auditor must also notify the bank if he or she proposes to resign as auditor. The bank may also seek specific information from the auditor in relation to the affairs of the entity.
Section 41 facilitates the protection of the payment system in the event of a liquidation by requiring that the Central Bank be notified of any petition for winding-up before the petition is presented. In a number of countries there exists a provision in law called the "zero-hour rule" whereby a liquidator of a defaulting bank can ask the courts to set aside all financial transactions and payments made by the bank between the time the liquidator was appointed and the previous midnight, zero hour. Among EU authorities there is a general concern to involve the central bank at an early stage so as to limit the potential damage to payment systems of any such rulings. There is no precedent for such a ruling in Ireland but it is not precluded. The requirement that the bank be notified of any petition for winding-up before the petition is presented should ensure the protection of the payments system in such cases.
Section 42 extends the provisions of section 75 (2) of the Central Bank Act, 1989, which sets out the application of Chapter VI of that Act dealing with acquiring transactions, to include acquiring transactions entered into with the prior approval of the Central Bank, Section 43 amends section 76 of that Act, which sets out the limitations on the validity of acquiring transactions. This provides that in all cases a person can apply to the High Court to seek relief from the null and void provision where the failure to get the bank's prior approval for an acquisition arose from inadvertence or oversight and where the circumstances are such that, had the Central Bank been notified in time, it would have given its approval. These sections of the 1989 Act require that any person proposing to acquire 10 per cent or more of the shares of an Irish bank must obtain the prior approval of the Central Bank. If no such approval is sought or obtained, any acquisition is null and void and title to the shares involved does not pass to the new holder.
Section 44 amends section 90 of the 1989 Act, which relates to the supervision by the Central Bank of firms established in the International Financial Services Centre to allow the bank to enforce its supervision from an earlier date specified by the bank. Under the existing legislation, Central Bank supervision commences when the tax certificate is issued by the Minister. However, several firms operate in the centre in advance of receiving the certificate. This section allows the bank to enforce its supervision from an earlier date specified by the bank, for example, the date on which a firm's application to set up in the centre is accepted. The practice whereby firms are approved in principle and start operations prior to certification has become well established and the supervisory law must recognise this.
Section 45 provides that the Minister may, by order, exempt certain firms or services in the IFSC from supervision by the bank. Section 46 allows the bank to exempt certain firms or services from the application of supervisory requirements in part or in full where the application of such requirements is not practicable or necessary to safeguard the public or the reputation of the IFSC.
Section 47 provides that where a firm in the IFSC has had its certificate withdrawn it will, nonetheless, remain subject to supervision and direction by the Central Bank until it has discharged its liabilities in whole or in part to the satisfaction of the bank. This will ensure that the bank retains supervisory control over these firms during the winding-up process.
Section 48 amends section 104 of the Central Bank Act, 1989, which relates to the publication of prospectuses by the promoters of any new financial futures or options exchange in the State. The amendment empowers the bank to require any such promoter to put a "health warning" on the prospectus to the effect that, if such be the case, the exchange has not yet been approved by the bank and that such approval should not be taken for granted. Section 49 amends section 139 of the Central Bank Act, 1989, to enable the Central Bank to engage in the provision of settlement facilities for the buying and selling of securities and other instruments by financial institutions and to act as a depository or custodian of such securities and instruments.
Sections 50 to 54 delete provisions in Irish law which conflict with Article 104 of the Treaty on European Union which prohibits monetary financing of the public sector by central banks. Section 55 provides that no employee or member of the board of the bank will be liable for damages for anything done or omitted in the discharge of duty unless it is shown that the omission or act was in bad faith. This provision is similar to ones incorporated in the recent Stock Exchange and Investment Intermediaries Acts and is designed to bring the Central Bank Acts into line with those enactments. Section 56 is consequential on section 2(2) and provides for an adjustment of the definition of "Banking Business" contained in section 29 of the 1989 Act.
Section 57 amends section 11 of the Central Bank Act, 1971, to allow the Central Bank to revoke a banker's licence if the bank organises its business or corporate structure in such a way as to avoid or escape effective supervision by the bank. This amendment caters for the lacuna in prudential supervision shown up by the BCCI affair in the UK. In this case the BCCI organised its operations so as to divide them among a number of states and thus avoid and confound effective financial supervision by any one state.
Section 58 amends section 48 of the Central Bank Act, 1971, which allows the Central Bank to issue bonds to licence holders by extending the facility to issue bonds to all credit institutions which, of course, includes building societies. It is desirable to extend this definition in the interests of consistency with the wider supervisory role of the bank. Section 59 provides relief to the Bank of Ireland, at its request, from certain restrictions imposed by its charter and by legislation. Section 60 provides for the conferring on the Central Bank of a statutory power to apply to the civil courts for an injunction in respect of the taking of, or advertising for, deposits by a person not licensed or authorised to do so under the Central Bank, building societies, TSB, ACC or ICC Acts. A recent prosecution by the bank against a finance company, although successful, highlighted a weakness in the bank's powers. The offence related to the advertising for deposits by a company which had no authorisation to do so. A substantial delay occurred between the date on which the advertisement was first noted by the bank and the final hearing of the prosecution, during which time the bank had no power to prohibit the company from accepting deposits. This section seeks to overcome this delay by way of the injunction procedure.
Section 61 confers on the bank the same powers of inspection as provided for in the Investment Intermediaries Act, 1995. That Act conferred on the bank strong powers of inspection of certain investment business firms. This measure was designed as a reaction to the growing number of firms engaging in nonlegitimate investment business. The banking sector does not have comparable regulation of potentially illegal deposit takers and there is a genuine concern that some firms, particularly those which heretofore operated investment business, may turn their attention to the banking area where they may perceive a legislative weakness. This section will remove that weakness.
Section 62 is consequential on section 61 and provides that a judge of the District Court may issue a warrant authorising a member of the Garda Síochána and any others named in the warrant to enter a specified premises to search for and take possession of documents which an officer of the Central Bank of Ireland believes are held on the premises. The warrant will have effect for one month from date of issue and any documents seized may be retained for a period of three months or until the conclusion of criminal proceedings. It will be an offence to obstruct the exercise of the warrant.
Section 63 provides for the bank to be subject to value-for-money audits under the Comptroller and Auditor General (Amendment) Act, 1993. In order to facilitate separate arrangements to make the bank accountable to the Select Committee on Finance and General Affairs an order was made under section 21 of the Comptroller and Auditor General (Amendment) Act, 1993, which had the effect of excluding the bank from examination by the Committee of Public Accounts. This order, in turn, had the unintended effect of removing the bank from the list of bodies subject to the value-for-money audit under the Act. This section provides for the bank to be subject to such audits.
Section 64 amends section 101(a) of the Building Societies Act, 1989, to provide for more equitable treatment of certain joint account holders as respects voting rights and the issue of free shares in the context of future conversions of building societies. The need for this amendment arises from experience with the conversion of the Irish Permanent to a public limited company. There was controversy regarding a number of joint account holders who did not qualify for free shares because of the order of the names on an account or shareholding following death or marriage of a joint account holder, even though the joint account would have otherwise met the relevant qualifying criteria, in particular being a shareholder for two years.
Section 65 imposes a requirement to supply the Minister for the Environment with information and returns for the purposes of his functions in relation to the national housing programme to all credit institutions, which includes banks, and mortgage lenders. This amendment arises as a consequence of the fact that banks now account for a significant share of the mortgage market. The bank is already permitted to disclose this information in relation to building societies.
Section 66 amends the Trustee (Authorised Investments) Act, 1958, to enable the Minister for Finance to impose conditions on the investment powers of trustees and the requirement for positive Oireachtas approval of orders made under the Act will be removed in favour of the standard provision that such orders take effect unless annulled by the Oireachtas.
Section 67 provides for the last stage of the implementation of the European Communities (Deposit Guarantee Schemes) Regulations, 1995. These regulations afford protection to customers in the event of the insolvency of a credit institution by providing that their deposits, up to a maximum of 15,000 ECU, will be refunded. Optional exclusions from the cover of the scheme, contained in Annex 1 to the Deposit Guarantees Directive, require primary legislation and thus could not be implemented by the regulations in July 1995. For example, deposits which will not now be covered by the scheme include those made by financial institutions, insurance companies and collective investment schemes.
Section 68 is a technical amendment to the ICC Act, 1992, and specifies that references to "the Company" in section 3(1) of that, or any regulations made thereunder, are to be construed as including any subsidiary of ICC Bank plc.
Section 69 amends the Stock Transfer Act, 1963, by the substitution for the "Gilts Settlement Office" of "Central Bank of Ireland Securities Settlement Office" and provides that the Minister may change the name of that office by regulation.
Section 70 allows banks from states outside the EU to establish representative offices in the State, subject to certain conditions. Such offices will not be allowed to accept deposits in the State or provide banking services and may only provide advice and information on the services which are provided from outside the State by the banks in question. There is no need to cater for the establishment of representative offices by EU banks as such banks already may do so as a result of the implementation of the relevant banking directives. The existing law is unclear about the status of non-EU representative offices. Such offices are common in other member states and are a feature of all the main international financial centres. Apart from helping to fulfil our GATT obligations, this section will open up the facility of a representative office to major US, Japanese and other non-EU banks wishing to establish a presence in the IFSC but which may not wish to seek a banking licence in the State.
I commend the Bill to the House.