Céisteanna—Questions. Oral Answers. - Access to Banking Market.

Charlie McCreevy


18 Mr. McCreevy asked the Minister for Finance the plans or proposals, if any, which will be put in place in order that the banking market in Ireland may be made more accessible to the unemployed and those people on low incomes; and if he will make a statement on the matter. [20322/96]

Over recent years, there have been major changes in the methods of delivering retail financial services, particularly in the use of increasingly sophisticated information technology based systems. The emergence of telephone banking and plastic money along with the future potential of the electronic purse and the Internet are major factors in this changing environment. It would be unacceptable if those already disadvantaged were to be precluded from availing of the widespread benefits and convenience of existing retail banking services which many of us take for granted. Improving access to these services for the whole community is one of the objectives of the Government's policy of creating a more vibrant and competitive retail banking market and the restructuring of the State banking sector.

Increasing competition in the retail banking services market will help to improve access by reducing the costs of banking services to the consumer. The initiatives taken by the Government in this regard include the Consumer Credit Act, 1995, the Competition (Amendment) Act, 1996, the recently published Central Bank Bill, 1996 and the Credit Union Bill which is currently at an advanced stage of drafting. These changes which, I appreciate, will take time to work through the system, should help to improve the access of the disadvantaged to banking services, by making the system more competitive and responsive to consumer needs. However, allied to changes in the market and the regulatory environment is the increasing pace of change in the technology itself.

The ability of today's more sophisticated technology-based systems to deliver a complex range of services to a mass audience at low cost, has the potential to change the face of banking as we know it and to bring many other players into the market without the need for costly branch networks. These changes will contribute to an environment where banks, building societies and other financial services providers will be seeking to maximise their transaction volumes so as to generate scale economies across their networks. This will result in much wider access and availability of these services without reference to the nature or circumstances of the person seeking to use the service. The Government will continue to take into account the pace at which retail banking services become available to the disadvantaged and to examine ways in which it can be accelerated.

The Government's programme included a proposal to establish a third banking force. As it is two years since that programme was introduced, will the Minister indicate what decisions were made in that regard and if a decision was made in the recent past?

It is four years since that proposal appeared in a programme for Government and an extraordinary amount of change has taken place since that policy was formulated. Because of that change we have been retarded in making a decision. No definitive decisions have been made because of the reasons outlined.

I praise the Minister for his ingenuity and use of the English language. On a number of occasions since he became Minister for Finance he assured Members that a decision was imminent. Can I take it that no decision will be made during the lifetime of this Government and that the idea has been abandoned?

No, that is not the case.

In the light of recent reports that the Minister was to seek clearance from his parliamentary party on the disposal of the TSB, did he get such clearance or have the Labour Members of the Oireachtas stymied him in that regard? Has the idea of selling the TSB been abandoned also?

The discussions within the Government parties have not yet been completed.

Is it the case that there will be further meetings of the Labour Parliamentary Party, that when it makes up its mind the Minister will inform us and the other partners in Government and a decision will then be made?

The discussions within the parliamentary party and between the three political parties in Government have not yet been completed.

Will they ever be completed?

What issue of public importance and vital economic interest to the country does not change over four years if nothing is done about it? Is blaming a change in circumstances for failure to implement left wing ideology over four years a very thin disguise for a simple U-turn? Will the Minister indicate that he will persuade his colleagues in the Labour Parliamentary Party to face up to the position in the Trustee Savings Bank and put that business where it ought to be, in the commercial world and out of the Government's oppressive ownership?

I am saddened by the blinkered ideological observations. For Deputy McDowell, an eminent senior counsel who is respected in this House and a regular columnist — paid, I hope — of the largest newspaper in the country, to suggest that the TSB is in the oppressive ownership of the State is a faux pas of ignorance beyond all previous quality in this House. He clearly either knows nothing about the subject upon which he has just pronounced or he is trying to be highly ideological. Nobody owns the TSB.

The Minister can sell it.

To suggest that it is in the oppressive ownership of the State is——

Who owns it?

That is a matter of great legal dispute. If the Deputy had participated in the debate in this House prior to 1989 he would realise there is no formal owner of TSB. There is an owner of the proceeds in the event that it is disposed of but as regards control——

Can the Minister sell it?

The Minister may provide that its proceeds can be sold. That is my definition of an owner.

This question is about making banking more accessible to the unemployed and those on low incomes. When the Minister was in the Department of Enterprise and Employment much work was done on the credit union Bill. There is great indecision and turmoil in the Labour Party on this issue, with some backbenchers suggesting that the credit unions should be amalgamated into the third banking force. We are all lobbied by the credit union movement and I am concerned about the Bill. Will the Minister admit that the confusion on the third banking force is causing a delay on the credit union Bill? Are the rumours true that we will get a half-baked credit union Bill, with some proposed sections dropped? Will the Minister move away from the ideological issue so that it does not mess up the credit union movement?

The Deputy has raised a very pertinent question and I will try to answer it as briefly as I can. The credit union Bill has been a long time in gestation and I regret the delay, part of which has been due to factors beyond most people's control. It is a very large Bill dealing with more than 1.6 million individual members of credit unions, with assets in excess of £2 billion. We want to ensure that the credit union movement, which for many people is a real alternative banking system, is given the best possible legal basis on which it can operate. No concerns relating to the so-called ideological issues to which the Deputy referred have altered or interfered with the design or bringing forward of the legislation.

It was ready three years ago.

I regret that for a variety of internal reasons within the relevant Department, with which the Deputy may be familiar, progress on this Bill has not been as satisfactory as we would like. I am assured, however, that a final draft is nearly ready and I think I am correct in quoting the Taoiseach as saying that it will be published either immediately before Christmas or very soon afterwards.

That Bill will, inter alia, give to the credit union movement powers to do things it is currently prevented from doing. That is one of the reasons we want to provide for the credit union movement within the framework of an overall third banking force. Another factor since this idea was first promoted is the computerisation of the existing 600 post office branches, with a further 529 branches to be computerised, which provide electronic money services, household budgeting and other services that are essential for a section of the community who in the past have been victims of moneylending and have not had the resources to defend themselves. The intention is to provide access to a range of services they can afford.

It is not a million years since State employees, officials in the Office of Public Works, were refused permission to cash their cheques in mainstream banks a couple of hundred metres from their place of work in Lad Lane. In order to avoid that kind of monetary apartheid we want to introduce a system that will, with the use of new technology, which is moving at an incredible pace, enable everybody in society to participate equally. In introducing such a system consideration will be given to the necessary additional changes the credit union movement will need on top of those it sought when the Bill was first proposed.

I was responsible for this matter for two years and I regret, as does the present Minister in that Department, the slowness of progress with the legislation, but notwithstanding the internal problems we are now in a position to bring forward the Bill, publication and design of which have nothing to do with any extraneous factors to which the Deputy referred.

Has the legislation been watered down?

To the best of my knowledge it has not been watered down. I assure the House I have not intervened in any way — I am the person who would have made such an intervention — to dilute, alter or distort the Bill.

The Minister said that the speed of change in the past four years has made it virtually impossible to make a decision on the third banking force. Could I put it to the Minister that the dead hand of Government in that time has significantly affected the TSB's opportunities for expansion in the banking world, has had a serious effect on the morale of staff etc. and that it is very unfair, nearly dishonest at this stage, of Government to have made no decision about a bank that has had opportunities but has been prevented from moving in any direction because of Government indecision?

That observation can be made and it concerns me.

I put it to the Minister that, as he sees some validity in that, he should either make public his decision not to proceed as outlined in the lifetime of this Government or do something about the TSB. To leave it in limbo at the end of 1996 is unacceptable on the basis of the argument I have put forward to him and he should not do so.

My career in politics has been characterised at all times by taking action and making decisions and I do not propose to alter that career pattern.

In response to my colleague, Deputy Michael Ahern, on 25 September 1996 regarding the possible sale of the TSB, the Minister said that this is a delicate and complex matter. Did he have in mind the delicacy of the matter as it relates to the reported difficulties between himself and the Tánaiste regarding his proposals and the Tánaiste's objections to them?

On the contrary, I had in mind the very delicate and complex matter that while the State is the beneficiary of the proceeds we cannot in any way legally write the conditions under which it is sold, nor can we write conditions into the clause that protects the interests of the customers and staff. Getting an agreement by way of privately arranged sale which was originally proposed when Deputy McCreevy and I shared the same Government benches would, were I to bring that proposal to the floor of this House, leave me open to legitimate criticism from everyone in this House. It could have been said that I had acquiesced to a sale which had not been subject to the normal scrutiny of public tender and had not taken into account the interests of either the staff or the customers.

I must have regard to the legalities of the situation which were put in place by a Government of which Deputy McCreevy's party was part. Legislation was enacted in 1989 which gave the Minister of the day no control over the direction in which that bank could go other than to be the end beneficiary of the proceeds. I am trying to deal with that situation which of its complex nature is highly delicate.

Is the Minister saying that the existing law is inadequate? If it has been inadequate and it has been a problem for him for the past four years, why has he not said so before in this House?

I have always alluded to the legal relationship between the Department of Finance and the Minister for Finance of the day and the statute that currently governs the TSB.