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Dáil Éireann debate -
Tuesday, 15 Dec 1998

Vol. 498 No. 4

Private Members' Business. - Building Societies (Amendment) Bill, 1998: Second Stage.

(Carlow-Kilkenny): I move: “That the Bill be now read a Second Time.” Tá áthas orm go bhfuil an leasú seo os comhair na Dála mar ba chóir go mbeadh sé ann roimhe seo. Deineadh éagóir i 1989 nuair a tháinig an Bille seo isteach agus tá súil agam go nglacfaidh an rialtas leis an leasú atá á mholadh agam.

I wish to share my time with Deputies Barnes and Enright.

(Carlow-Kilkenny): I decided to introduce this amending legislation when I became aware of difficulties people were experiencing, of which many other Members may also be aware. A person, whose husband has left the family home and did not make a contribution towards mortgage repayments, told me that she had been making mortgage repayments to a building society for almost eight years. She applied for her shares when the building society went public but was told she was not entitled to any shares. She thought that was absurd, as did I. When I asked questions of people who should know the answers, I learned that the building society was perfectly in order in giving the shares to that woman's husband simply because he was the official recognised joint holder of the joint mortgage account. He was recognised as the person to whom the society wrote.

We will recall that Humpty Dumpty said, in a scornful tone, that "When I use a word, it means just what I choose it to mean, neither more nor less." When the Building Societies Act was passed in 1989 somebody decided that a joint account was not what most people would consider it to be, but what the Minister of the day thought it was, which was not a joint account. When I heard on a radio programme last night that a judge was quoted as saying that all citizens in this State are equal before the law, I thought back to what happened in 1989 when the two holders of a joint account were not treated as equals. One was treated as the important person, was sent all the literature and given all the rights associated with the account, while the other account holder was treated as a non-person. In nine out of ten cases, the account holder who was treated as a non-person was a woman because invariably the man signed the documents and the woman was tolerated and eventually allowed to sign documents.

It is incredible it is only nine years since the Building Societies Act came into force. The Family Home Protection Bill and equal rights legislation were introduced and matters seemed to have advanced a good deal by 1989, yet this Bill was introduced, which blew out of the water concepts of justice and equality. I do not understand why certain provisions were included in that legislation. It may have suited the building societies, but why did they get their way? They must have asked for something. I discovered today that this Bill went through both Houses at election time and it was proposed that it and the Central Bank Bill be put through the Seanad on the same day. However, the then Opposition did not tolerate that and Senators Manning and O'Toole led the Opposition out of the Seanad, but those two Bills were passed on that day.

There is a lesson to be learned in that. It may be as well to allow legislation go through the Seanad in the normal way rather than treating the Seanad as a rubber stamp exercise. There are sharp brains in the Seanad and I find it incredible that they would tolerate some of the provisions in this Bill in 1989. That rushing of that Bill through the Seanad might explain some of the reasons this Bill became an Act of parliament under which the building societies operate and deliver a service. A provision which required the building societies to send out a notice to only one holder of a joint account may have suited the building societies, but it did not suit the women of Ireland. That may not be an issue if a couple are living in harmony and perfectly happy when one letter may suffice. However, we live in an era when there has been an increase in marital breakdown and communications between some partners are not what they should be, and in those circumstances one letter can be damning.

Section 16(6) of the Act states that where two or more persons jointly hold shares in a society the following provision shall apply: (a) the person whose name first appears on the records of the society in relation to shares jointly held shall be the representative joint holder. That provision takes beating. The person whose name appears second on the records is treated as a non-person. I suppose they are only there for the beer. A standard is not set in regard to that provision. It is not the person with pink eyes and green ears, blue eyes and black ears, the person with the most money or the person who is six foot tall or five foot tall who shall be the representative joint holder, but the person whose name first appears on the records of the society.

At that time usually men were the first to sign a document and invariably women were the second to sign it. One can imagine a person, who was well reared and mannerly, when called to sign that document in a building society, stepping back and saying "darling, you sign it" not realising that he or she was signing away his or her rights to shares in the future. The more I read this Act the more I find it incredible that it was passed by this House, but it was rushed through the Seanad. It would not be passed now because it does not respect the legal or constitutional rights of individuals.

When an Opposition Member introduces a Bill, invariably the Government points out the constitutional grounds on which it can be challenged and if it infringes an individual's legal rights. Given that some Government Deputies must have been aware from representations by some of their constituents that this Act infringed the legal rights of account holders, it is amazing that in the nine years since this Act was passed none of them raised the issue of account holders' constitutional rights. I gather at this stage that the Government is concerned about the constitutional rights of account holders about whom they were not concerned before. If this Bill had been challenged on constitutional grounds in the Supreme Court, the case would not continue for more than a half hour under a sensible judge because the Act disregards the concept of legal rights. How could it be decided that the rights of one party to a joint account do not count? If that is the mentality of legislators, we need to change the system, the legislators or advisers because that provision does not make sense and other provisions follow on from that.

Section 16(b) of that Act states that except where the rules of the society otherwise provide, any notice or other document required by this Act to be sent by a society to the holders of shares in the society, shall be deemed to have been sent to the joint holders if it is sent to the representative joint holder. They have decided that they will cover themselves simply by sending the documentation to one account holder. That may be fine when everything is going well in the relationship. Suppose they recognised representative joint holders and one of these — I presume it is the man — is a gambler, drinker or womaniser who wastes money which should be spent in the home.

Or all three.

(Carlow-Kilkenny): The other person thinks their mortgage is being paid, although the defaulter may have got several letters stating that if he does not catch up on his repayments, the house will be confiscated. The other person does not know anything about this because the correspondence is not passed on to them. The second person's name may be on the letter but that does not mean they will see it. It depends on the type of relationship.

The fact that building societies can send out one notice to joint holders is another form of madness. The situation was daft in 1989 and it is still daft. I hope we will not hear any nonsense from the Government side about the constitutional and legal rights of individuals. There are no rights in the 1989 Act as far as individuals are concerned. One out of every two is treated with contempt and told they are a nobody. It reminds me of boarding school where we used to grab as many potatoes as we could from the big bowl in the middle of the table before the dean told us to put them back and have manners. The first one to rush to the table gets the goodies and they are set up for life. They pay nothing on the mortgage, but when the company goes public they will get their shares. If that is treating people equally, then I am a Dutch man.

Section 2(c) deals with the right to vote. There may be worries about two people voting at an annual general meeting. It would make more sense to allow two people who are joint shareholders to vote than giving one person the right to vote for two. Perhaps that would make sense if one partner had legal or business expertise, but it is stupid to give that right to a person because they were the first to sign a document. The Minister will probably talk about the rights of shareholders and building societies, but we should deal with this glaring injustice.

Why were we not concerned with what happened over the past nine years? Nobody accepts it was right. I have explained to Government advisers and the Independents that this is a simple Bill which should be accepted. Section 2 states:

(6) Where two or more persons jointly hold shares in a society, the following provisions shall apply——

(a) the persons whose names appear in the records of the society in relation to shares jointly held, shall share equally those shares except in relation to the ownership of such shares where——

(i) a legal agreement concluded by such persons prescribes differently, or

(ii) where court orders are in being specifying a different ownership.

We should treat joint ownership as joint ownership and ensure that shares are shared equally, except in the case of a marriage breakdown where there may be a legal agreement or court order. I do not understand how anyone could oppose that today, let alone 100 years ago.

Section 2 also states that "except where an agreement or a court order such as those specified in paragraph (a) exist, and the provisions thereunder have been properly furnished to a society, any notice or other document required by this Act to be sent to the holders of shares in the society should be sent to each of the joint holders". Why can that not be supported by all Members? Building societies should notify joint holders, not one holder. If relationships are not good, one person could be given the information and keep it from their partner so that they do not know the roof is disappearing over their head. The building societies will not go bankrupt if they have to notify joint holders. If they lose money, they will find a simple way to rectify it, such as increasing their rates.

Section 2 also states:

where under this Act a member of a society may vote at a meeting or under a postal ballot by virtue of being a holder of shares in the society and such person is a joint holder of such shares, the person entitled to exercise the rights conferred by sections 68, 69 and 72 to 74 shall, notwithstanding anything in those sections, and unless otherwise specified in an agreement such as that specified in paragraph (a), be each of the joint holders".

One may need a bigger venue if everyone attends an annual general meeting. At present, the number of people interested in annual general meetings is limited. Even if one hired out Croke Park and Lansdowne Road and linked them together by telephone, it would not justify not giving each person their rights. There was no difficulty ignoring the right of the second partner to vote at an annual general meeting when the legislation was enacted.

What does a joint account mean if both people do not have equal rights? We could split hairs on this subject and say there are too many people attending annual general meetings. Why accept joint accounts if two or more people cannot vote? Why not call them superior and inferior accounts? If joint account holders are not treated equally, they should not be called joint accounts. It is incomprehensible that this Act was passed. It was not discussed in the Seanad as the Opposition walked out.

I hope this Bill is accepted because it rectifies a wrong which has existed since 1989. People knew only the first signatory would receive shares, but nobody seemed to be concerned about it. I introduced this Bill because I met someone who was wronged by the 1989 Act. I have no problem if the Government wants to amend it, but I hope it accepts it in the spirit in which I introduced it. I know it will give justice to those who have been wronged.

I congratulate Deputy Browne on introducing this Bill to amend unfair and unjust legislation. The Bill is simple and is based on equal rights. I know Deputy Browne wonders how this came about. It seems extraordinary that this hangover is still contained in the Building Societies Act, 1989. I believe it is part and parcel of the long struggle of legislators and house and non-house owners, particularly women, outside this House.

I am old enough to remember the introduction of the Family Home Protection Bill, 1976. I remember the difficulties, the debates and allegations made then about property owners, financial institutions, unconstitutional matters and the right to private property. In the meantime women found to their huge cost that a valuer or an estate agent could land on their doorsteps to tell them their houses were up for sale because they were in their husbands' names. Many other Members will be aware of this. Young people today, particularly women, find it difficult to believe that was the case in the 1970s.

That legislation is one of the most important milestones in our recent history. For the first time the right of the mother, wife and home maker in the family home was in some way safeguarded. Because of traditional and invidious discrimination against her in the 1937 Constitution, until then she was denied the right to work outside the home or to be a joint owner or contributor to the mortgage. The male was the breadwinner, the house owner, the writer and owner of deeds and the property owner. What we are finding here is a continuation and extension of the mindset which took so long to change.

There were many sound financial reasons for the huge discrimination that only the husband and breadwinner was responsible for paying the mortgage. However, the work practices and financial independence of women have changed so much that, apart from the principle of equality, it throws up all kinds of unfair and unjust circumstances, such as that raised by Deputy Browne where many women struggle when husbands leave or run the house into debt. Many of these women go out to work and contribute to the mortgage, but then find they are not legally recognised as jointly involved even when, as Deputy Browne stated, they are named jointly on the mortgage. We will all be aware of the difficulty of trying to get mortgages transferred into joint ownership but where there is a joint legal entitlement from the beginning, this is incredible and makes no sense. It is a continuation of the other shocking situation which prevailed after the Family Home Protection Act, 1976, came into force, which extended some kind of protection to women, and even after the family home could not be sold without the written consent of the wife. There were many cases in the bad days of recession where, for the sake of her husband or a business which was collapsing, a wife signed over her rights and the banks won court cases because they held a stronger constitutional right to the family home than the wife. This, again, leads us to wonder about the rights of private property in our hallowed Constitution which sanctifies the role of woman as home maker, mother and wife.

Until the introduction of the Judicial Separation and Family Law Act, 1989, the only protection and acknowledgement a woman had with regard to the family home was that it could not be sold without her written consent. If it was sold, the contents — the furniture, the kitchen equipment and the curtains, which she may even have made — were deemed legally to be those of her husband unless she was earning outside the home and could produce receipts which showed she had paid for them.

When one considers the attitudes and the legislation which laid down that type of second-class citizenship and lack of property rights for women in the home, what we are debating now is an extension of it. Like Deputy Browne and others, I feel this is depressing at a time when we are entering a new millennium. I acknowledge the commitment on all sides to equality of status for women and other groups. That is why I appeal to the Government to take on board the extraordinary injustice and the traditional devaluing discrimination which is encased in this, to allow the amendment to be made to the legislation and to put our money where our mouths are with regard to equality. We should ensure legislation which emerges from this House fulfils the principles of equality. People should not have to find out the hard way or to struggle. The institutions should not be able to state, as they did to Deputy Browne and others who made inquiries, that the legislators and not the institutions are to blame. Recent history shows that, when it comes to initiatives with regard to fair play or equality, banks or building societies are not forthcoming.

Not only is this our responsibility because the legislation emanated from these Houses, but evidently it is also necessary because the financial institutions will not take on board the fair argument made by Deputy Browne when he brought this case to the management concerned. Perhaps it was just as well he did not succeed in that case because we have stumbled on the fact that this is happening in a society where greater numbers of women carry at least half the partnership and half the burden of mortgage repayments. Therefore, they should have at least a joint interest in the shares also.

As Deputy Browne pointed out, in many cases even where the relations are not bad but where there may be a sense of secrecy or financial privacy about the first named person, usually the husband, he may not see it as his wife's business and that there is nothing to be told. Not only must we provide for equality on fair and just financial grounds, but we must endorse it, particularly due to the long history of lack of property rights for women.

The Government should welcome the introduction of this legislation by Deputy Browne. As legislators with commitments to not only Irish equal status legislation but also international agreements, because this could be taken up at other levels, there should be cross-party acceptance that even if it is late it is something we must do urgently.

I remind the House that this and previous Governments have repeatedly made public commitments to true equality. We set up a Department of Equality and Law Reform.

It is half a Department now; it was a full one.

Even half a Department should be able to get across the discrepancy and discrimination involved. If the Government does not accept this Bill and amend the legislation urgently, it will reflect badly on its sincerity. The Government cannot have it both ways. It denied child care resources in the budget because of the concern about women in the home versus women outside the home. This has not been done with regard to men. However, if the Government really cares about homemaking and protecting the role of women in the home, and would curtail and delay child care resources because of the complexity of this issue, the least it can do to make up for that huge deficit is to accept this amendment without demur.

I congratulate Deputy Browne on introducing this Bill which, I hope, the Government will accept. If it has difficulty with any sections or wishes to introduce amendments, Opposition parties will be to the fore in trying to achieve the best possible legislation.

This Bill attempts to ensure that equal rights are given to joint mortgage holders. It seems unusual to have to introduce a Bill to ensure that. The husband and wife should be regularly notified about the state of the mortgage account. All Members, including the Minister of State ——

The Minister of State is a member of the women's rights committee.

——will have come across cases in which the husband squandered money, as a result of which the payments fell into arrears. If the husband and wife had been notified of the state of the account, the wife would have been aware that payments were not being made and would have ensured the matter was dealt with.

This happens quite regularly and it is important to tackle this problem forthwith.

Another problem has arisen with regard to issuing shares. It is manifestly wrong that shares are only given to one named person. Shares should be issued in the joint names of the husband and wife. Problems arose in a number of cases in which the husband had left the family home and the wife had been making payments. When a share windfall occurs the wife finds that, having made all the payments, she does not get any shares. They go to her husband. No system can tolerate such inequity and injustice.

I would like to extend the remit of this Bill. I call for the appointment of a totally independent ombudsman to ensure fair play for families who take out loans from building societies. There is an ombudsman for credit institutions financed by building societies. A similar situation existed with regard to an insurance ombudsman financed by insurance companies. It is hard to be totally independent when one's salaries are being paid by institutions with which one is dealing regularly. It is essential to appoint a totally independent ombudsman.

The Irish Times of November 13 carried an article by Colm Keenan relating to a case in which the Irish Permanent tried to evict a couple it had overcharged. It admitted in court that it had overcharged them for two years and blamed a systems failure due to human error. This couple, Mr. and Mrs. Eustace, were threatened with eviction because the building society had made serious errors in overcharging. As it turned out, this was not an isolated case. There were many other such cases.

I am concerned about this issue. The details of the overcharging emerged during the case and I am glad that situation was remedied. However, it was only remedied after this couple had put everything they had at risk by going to court and taking on a large building society with a panoply of the best legal and financial advice available to it.

I compliment Mr. Justice Groarke on his judgment. He stated that the company had grossly miscalculated interest charges on sums due and that demands were made and proceedings instituted for sums of money which were in doubt. If the couple had lost they would have been evicted. That should not be allowed to happen.

Another sad case involved Eileen Malone whose husband died. The Irish Nationwide attempted to evict Mrs. Malone and her four children. This was a sad situation involving a nine-year battle in which this woman must have gone through much trauma, worry and upset. One can only imagine what it must be like to be evicted and put on the side of the road in 1998. This woman's husband died suddenly before a mortgage protection policy was taken out. The Irish Nationwide took this family to court to try to obtain possession of the premises — a public house.

In his judgment, Mr. Justice Lynch stated that the society was manifestly negligent with regard to the handling of the Malones' insurance application. How can this happen? Counsel for the Malones argued that they had not been free to look for their own insurance cover. They should have been entitled to look for their own insurance cover. This woman was trying to carry on a business in a supermarket-licensed premises and she was almost evicted.

I have corresponded with Mr. Gerry Murphy, the ombudsman for the credit institutions. I received an exceptionally courteous reply. However, with the greatest respect to Mr. Murphy, my efforts were a waste of time and I was disappointed with the attitude and the reply on behalf of a constituent. This constituent was in dispute with the Irish Nationwide and the society had to be paid in full. However, the file on this case includes references to costs such as: interest charged; legal charges, adjustment charges; further advances and so on.

Anyone can suffer ill health and fall into arrears. However, at such a time, instead of being helpful, building societies come down on people and pursue them with vigour. If people are not able to make their repayments, building societies will attempt to evict them. This is 1998, not 1898 or 1798 and what is happening is wrong. I appeal to the Minister of State to appoint an ombudsman to ensure fair play for the ordinary borrower trying to build a family home. Such people need protection. It is not a case of equals. Building societies are very strong, unlike ordinary families. People do not have the ability to stand up to these organisations.

Deputy Browne is to be commended for putting this matter back on the political agenda. In responding to this Bill on behalf of the Government, I would first like to make clear to the House that I and the Government have sympathy with the broad objective underlying the Bill, which I understand to be that a party to a joint account in a building society should receive his or her fair division of any rights or entitlements that are due to that account. That objective is commendable and I am sure is supported by everyone in this House.

The key issue, however, is how this is best secured. It is necessary, in particular, to ensure that the principle of equality and fairness of treatment is upheld for all members of a building society and that any measure designed to improve the position of joint account holders does not adversely affect the rights of other members, such as single account holders, or indeed have wider adverse implications.

Unfortunately, the Bill now before the House does not satisfy these essential requirements. Its fundamental approach appears seriously defective from a legal standpoint and, because of that, is not capable of being amended to provide a workable solution. For these reasons, which I will elaborate further, the Government will not accept this Bill.

Will the Government bring in its own Bill?

Allow the Minister to continue without interruption.

I did not interrupt the Deputies.

(Carlow-Kilkenny): The Minister of State must realise how aggravated we are.

As I understand it, the main objective of the Bill appears to be to ensure that, where there is a distribution of free shares on conversion of a building society to plc status, the free shares to be allocated in the case of a joint account will be divided equally among each of the parties to the joint account, instead of being allocated to the first named person on the account, as happens at present under the Building Societies Act, I989. However, the way in which this matter is approached would, in fact, give rise to much wider implications to which I will refer presently. It may, however, be useful if I first outline briefly to the House the context in which the issues concerned arise.

On a point of order, will the Minister of State circulate a copy of his contribution? It would be helpful.

Yes. The legal provisions relating to building societies are contained mainly in the Building Societies Act, I989, which provided a comprehensive modernisation of building society law, taking account particularly of changes in the mortgage market and developments in relation to company and banking legislation. The I989 Act has provided a sound and successful framework for the orderly operation of building societies, helping them to develop and compete in a changing market, and allowing them to offer a wider range of services. The success of the framework set down in the 1989 Act is reflected in the fact that for several years now we have had a plentiful supply of mortgage finance at very competitive rates.

The I989 Act also contained a provision totally new to Irish building society legislation, enabling societies to convert to public limited companies, in effect becoming banks. As Deputies will be aware, two societies have availed of this facility, Irish Permanent and First National, or, as it is now known, First Active. This leaves us with only three building societies with the legal status of mutual societies. It is in the context of the process of conversion that, it seems, the issues relating to the present Bill mainly lie.

The decision to convert rests ultimately with the shareholders and borrowing members of the society who must approve a conversion resolution on the basis of one person one vote. The conversion must be confirmed by the Central Bank, which is the regulatory authority for building societies under the I989 Act.

In common with other relevant legislative codes, including those governing building societies and companies, building society legislation has, since its beginning, made special provision in relation to joint accounts, in order to ensure clear-cut and effective procedures and fair and equal treatment between sole account holders and joint holders. The I989 Act continued these provisions by, in effect, deeming the person whose name appears first in the records of the society to be the member of the society for various purposes under the Act, including voting, distribution of shares, issue of various documents, etc. This procedure has a number of advantages. For example, it ensures that a joint account carries the same voting strength as a sole account, it helps to prevent duplicate share issues and minimises costs to societies and their members.

That is what it is about.

It is important to emphasise that a similar procedure currently applies under the Companies Acts and is, as I have said, a long-standing principle dating back to much earlier legislation relating to friendly societies.

Legislation on the lines now proposed would fundamentally alter this long-standing and widely applied principle. This could have serious implications, not only for building societies, but also for companies, credit unions, and other types of organisations where the principle applies. Any legislative change on the lines proposed should not be taken in isolation but needs to have regard to the broader implications for relevant legislative codes——

That is very principled, I must say.

——not least the Companies Acts. As well as changing the procedure in relation to share entitlements in the event of conversion to plc status, the Bill would also change the procedure in relation to other entitlements under the building societies legislation including rights to receive communications from the society and, most importantly, voting rights. Every individual named in a joint account would be deemed a member of the society having equal status with single account holders for such purposes. In effect, a joint account with four named parties would have four times the voting weight of one single account. I understand that currently anything up to 50 per cent of accounts in building societies are held jointly. As with a sole account, the holders of a joint account are entitled to a total of one vote and the first named account holder is the member of the society for that purpose. It is, of course, entirely a matter for the persons opening the account to decide who should be the first named account holder.

(Carlow-Kilkenny): Are they given a choice?

They are when they are opening the account.

They are not informed.

The granting of voting rights and membership status to each joint account holder would represent a redistribution of benefits. In other words, the rights and benefits currently held by sole account holders would be diluted. The relative value of one vote would diminish and, in the conversion scenario, the relative value of shares allocated to a sole account could be less than under existing practice. The introduction of such a fundamental change to the established rights of an account holder raises serious questions in relation to that person's property rights under the Constitution. It could also, in the view of the office of the Attorney General, infringe equality provisions of the Constitution by effectively giving more favourable voting rights to joint account holders than single account holders.

And the family home.

Moreover, I understand that there is at least a possibility that the Bill could be held to be in breach of Article 41 of the Constitution——

(Carlow-Kilkenny): Try the I989 Act first.

——in that it could represent an undue intervention by the State in the rights of the family in circumstances where a husband and wife have not made a binding contract in the matter but have an informal family arrangement in relation to the ownership of the shares.

Clearly there are very significant constitutional doubts surrounding the principle of the Bill which make it impossible to accept it or to seek to rectify it by amendment. There are also very significant practical implications which preclude acceptance of the Bill.

(Carlow-Kilkenny): On a point of order, how can the Constitution be cited here when the rights of individuals were completely trampled on under the old system? Why is the Constitution being trundled out now?

It is too early in the Minister's speech for interruptions.

The Deputy was a Member of the House in I989 when the legislation went through.

(Carlow-Kilkenny): I came here in 1989, but this went through the Seanad before I became a Member. The points at issue are not confined to building societies. If the concept of joint account holding were to be altered as proposed, the principle would also need to be considered in the context of the Companies Acts and insurance, banking and mutual society law generally. The overall implications in terms of business costs for companies, credit unions, etc. could be significant. It is not just a question of additional costs to the organisations, because the burden would ultimately fall on their members and on consumers.

That would be terrible.

The extent of benefits that might result would have to be balanced against these considerations, in addition to the significant legal difficulties to which I have referred. It must be emphasised that this Bill would have no effect in relation to the Irish Permanent or First National building society conversions which have already taken place.

(Carlow-Kilkenny): It will not affect Brian Boru either.

Possible benefits in terms of sub-division of share entitlements on joint accounts would only arise in the event that any of the remaining building societies might convert to plc status at some time in the future.

Which is inevitable.

The existing legislation specifically entitles joint account holders or borrowers to decide the order of names in the records. The opening of a joint account is an optional decision for the parties concerned. Where a joint account is established and the order of names determined on a free and voluntary basis, it is not unreasonable to suppose that in the vast majority of cases the parties involved would agree in relation to resultant entitlements in terms of shares, voting rights or access to information. Where disagreements might arise in the context of cases of divorce or judicial separation there is the possibility of settlement, for example, through property adjustment orders under the relevant legislation. Notwithstanding all of these factors, some situations could arise where a party to a joint account could suffer loss or difficulty. It is not my intention to minimise the problem in such cases but it is necessary to get the extent of the issue into proper perspective.

One aspect of building society law which caused real difficulty in the case of the Irish Permanent conversion was addressed in amendments made to the Building Societies Act, 1989, in the context of the Central Bank Act, 1997. This involved a situation whereby some joint account holders lost out because of a technical anomaly. Perhaps the most severe example of this was the case of widows who failed to qualify for shares because their husbands, who were first named on the joint account, died during the two year qualifying period for share entitlements. As a result the account could not meet the two year qualifying requirement either in the name of the husband or the wife.

That was disgraceful. Is that not what we are trying to amend now?

This and other similar problems were rectified by amendments in the 1997 Act. Section 78 of the 1997 Act amended the Building Societies Act, 1989, to ensure that joint shareholders, if otherwise eligible, qualify for free shares, and that the shares are not lost following the death of the first-named holder — to ensure that rights transferred to the second named, on the creation of a joint account, for example, on marriage, on the division of a joint account, for example, on divorce or separation, or where there was a change in the order of names within a joint account.

This is a very technical provision which was designed, in the light of consultation with the Central Bank and the building societies, to ensure that all possible situations which need to be covered are dealt with and to avoid undesired side effects, such as the creation of duplicate entitlement to shares.

Did that not create a precedent?

This provision essentially ensures that a person who held a share account with the building society throughout the period necessary to qualify for entitlements on conversion and was the second or lower named person in a joint account for all or part of that period, will qualify for shares if no other person had priority entitlement to the shares. The concept of priority was necessary to avoid the possibility of duplicate share issues. The present Bill would undermine this principle and in the process would be likely to make the provision largely inoperable.

It is no wonder they made mistakes if their computer cannot deal with that.

An example of the sort of difficulty that the Bill would create in relation to the 1997 amendment is that, while sub-section 6(a) states that joint account holders shall share equally the shares in the society, sub-section 6(e) appears to provide otherwise, in saying that the shares shall be deemed to be held by each of the joint holders, which could imply that each would be entitled to a full share allocation on conversion rather than a proportion of the share issue in respect of the particular account.

The changes made in the 1997 Act represented a major improvement in the legal framework governing the conversion of building societies and I understand the sort of problems that arose in connection with the Irish Permanent conversion were not repeated in the recent First Active conversion. Ironically, there is a danger that the approach being proposed in the Bill could undermine or seriously distort the effect of the 1997 amendments of which this Bill does not take account. Consequently, those whom the 1997 amendment was designed to benefit could lose out under this Bill in the event of any future conversions.

I also have a concern that, by giving every party to a joint account the same voting rights as a single account holder, the Bill could distort the decision making process of a building society. This could, for example, facilitate any possible attempt to engineer the demutualisation of a society against the wishes of the majority of its existing members. It could become easier for "carpetbaggers" opening new accounts to gain from conversion to plc status, as was attempted recently in the UK, to outvote opponents of demutualisation by opening joint accounts with multiple votes.

Not on family homes.

The decision as to whether any further building society conversions actually arise in the future lies in the hands of the directors and members of the remaining mutual building societies. The Government's role is to ensure there is an effective legal framework to regulate this area, with adequate safeguards for the building societies, successor companies formed as a result of conversions, protection of the interests of members of societies and the continuation of a competitive mortgage market based on a diversity of mortgage lenders. One of the key safeguards lies in the protective provisions in section 102 of the Building Societies Act, 1989, for building societies converting to plc status which prevent any one person or institution holding 15 per cent or more of the shares in a building society for five years after conversion.

This ensures that a society converting to plc status will not be exposed to take over within the five year period. It also protects mutual building societies from speculative pressures to bring about a conversion with a view to a takeover. Without this provision there would be a serious risk of the loss of mutual building societies as a distinct sector in the mortgage market, with adverse consequences for the housing mortgage market, for house purchasers and for savers. This would serve to weaken the present healthy competition between the banks and mutuals, would facilitate takeovers which would reduce the number of mortgage lending institutions, and would remove the cost and other advantages inherent in member-owned mutuals.

Strong competition in the mortgage market, to which the mutual societies have made a significant contribution, has greatly benefited borrowers.

And societies.

In recent years we have experienced interest rates at lower levels than for several decades and in the approach to EMU further significant reductions in mortgage rates have come on stream. These will provide welcome improvements in affordability, particularly for first time house buyers.

The Government will consider how the objective of equitable sub-division of share entitlements for joint accounts might be secured through a workable approach, having regard to the implications for related codes such as the Companies Acts which have much wider application. The matter will be examined in consultation with the Attorney General and relevant interests including Government Departments and the Central Bank, which is the regulatory authority for building societies. If it is found that this can best be achieved through a legislative response that would improve on the current provisions, while avoiding the sort of difficulties which the Bill would create, then the possibility of including appropriate provisions in some suitable forthcoming legislation will be looked at.

I am prepared to accept that the intention behind this Bill is one of seeking fair treatment. However, the way it seeks to achieve this is likely to be at the expense of the rights and interests of many others. I am sure Deputy Browne did not intend or would not wish for such an outcome. I hope he will acknowledge that the Bill raises serious legal and practical difficulties and that he will accept my assurance that the matter will be examined to see if a more satisfactory approach can be found.

I assumed all sides of the House would join in common purpose to correct a clear deficiency in the law which may have passed through a previous Dáil unnoticed. In Private Members' business there are various examples of all-party agreement on motions and legislative change. This has become more a feature than an exception in recent times. I know there is a knee jerk reaction by Departments and civil servants to begin with the premise of rejection and then work out the logic afterwards. Even that Luddite premise is wafer thin with the logic presented here tonight.

An extraordinary, clear and concise case was put forward by Deputy Browne of Carlow-Kilkenny in promoting a very simple amending Bill. His own good constituency work identified a glaring anomaly in existing legislation. He brought that example before the House in the way a legislator should. We all spend more time than we should doing the non-legislative work of making representations, etc. The real work we are here to do is to find deficiencies in the law and seek to put them right. When such glaring anomalies are identified it is reasonable to expect that such good legislative work will not be obstructed by the Government through arguments which clutch at straws and seem to be a throw back to a time I thought we had left behind.

I compliment Deputy Browne. He has pursued exactly the correct legislative path. A constituent identified a problem and he sought to have it rectified. It was pointed out to him that it was a legal problem which could only be rectified by introducing amending legislation. Being a good legislator, he drafted a Bill and persuaded his party to provide Private Members' time, which is scarce, such is the concern of the House about the matter and such is the obviousness of the anomaly which must be addressed. It behoves all of us to look at any such reforming measure with an open mind and heart. It profoundly depresses me to hear the knee jerk automatic reaction of rejection. It is profoundly upsetting that the merit of the case could not be parsed and analysed. A wafer thin justification for rejection was produced instead of saying that an obvious anomaly had been highlighted and that we have an obligation as legislators to correct it.

If the Bill is not perfect in every detail we should accept the principle of it as that is all that is being argued for tonight. This is a debate on Second Stage. The detail can be worked out on Committee Stage. If there are aspects of the legislation which require amending then we can amend it. We should accept the righteousness and principle of the case made, pass the Bill and let the anomalies, if there are such, be sorted out on Committee Stage. Opposition Members do not have access either to the Parliamentary Draftsman or the Attorney General's legal advice. Therefore, it is possible that deficiencies can be identified. However, we should recognise the validity of the case being made.

This is a matter of fundamental justice. It is just not good enough for the Minister to say the Bill could add substantially to the costs of building societies. On that basis, why would we make separate pension payments to people if it results in an extra cost on the State? Should we not pay all the money to the man and let him dole out a bit to the wife or anybody else? Fundamental justice says people are equal and joint mortgage holders and not a combination of a mortgage holder and an also ran who cannot be given full information lest the cost of communications, as the Minister indicated, be too onerous on building societies. It is throw back logic which should not be part of a debate in the House at the end of the millennium.

(Carlow-Kilkenny): Hear, hear.

Deputy Browne rightly said this is a fundamental issue of equality. The Buildings Society Act, 1989, contained patronising clauses which viewed the man in a different light to the woman. Largely, the man was the primary mortgagee while the women was the inferior co-mortgagee. This was not universally the case: today I spoke to a woman who is the prime listed person on a mortgage document and whose husband is the disenfranchised one. This is no less acceptable. We have come a long way in recognising the importance of the fundamental issue of equality. We can pay lip service to it in a number of ways — we all do — but the implementation of it sometimes costs money and puts institutions to some amount of bother.

The previous Government, of which I had the honour of being a member, established the Department of Equality and Law Reform. The first Minister to hold that portfolio and to bring the equality agenda to the Cabinet in its full right was former Deputy Mervyn Taylor. I pay great tribute to him as he was an advocate of equality who raised the issue of women's rights and the rights of the disadvantaged and disabled. It was a matter of doing something fundamental in a Republic, namely, vindicating citizenship and establishing that all citizens of the Republic are equal regardless of cost or inconvenience. It is sometimes an inconvenience to put ramps into public buildings, to design buildings so that they are accessible and to ensure footpaths can be negotiated by people who are visually impaired or who have difficulties in movement. However, I do not think the Minister or anybody else in the House would suggest that we do not make such provision on the basis that it would be inconvenient, expensive, difficult, troublesome or bothersome. I am surprised the Minister has done this in the case of the Bill which has been put forward.

Former Deputy Mervyn Taylor set out a fundamental principle which imbued the Government and each member of it — he was permanently there to ensure we all toed the line. The principle which imbued that Government and which was promulgated incessantly by Mervyn Taylor was that of gender proofing legislation. Whatever proposal we had, there was a requirement in every memorandum which went to Government — a clause which said: "implications for women". If women were disadvantaged by any clause, it had to be identified. That brought about a different way of thinking because I assure the House that no member of the Government ever brought forward a memorandum which clearly disadvantaged women.

The original Building Societies Act, 1989, was obviously introduced in the days before gender proofing and Mervyn Taylor's good work had such effect. Because it was enacted before gender proofing and equality became immutable facts does not mean it should not be revisited. We have an obligation to revisit it and to ensure the principles of equality not only impact on legislation which is current, but also on legislation enacted in the past. This type of patronising view must be addressed where the opportunity presents itself as it does this evening in a very simple and clear presentation by Deputy Browne which should be supported by all sides. It grieves me that it is not. We are not talking about issues which cannot be addressed in committee. Any of the points made by the Minister which hold weight at all can be addressed in a committee debate and by amendment.

A number of fundamental issues arise in a discussion of this type. The first issue, which was raised by Deputy Barnes, is the difficulties experienced down through the years as regards the fundamental right of private property which has stopped social progress in a number of areas. The arguments put forward by the Minister in terms of Article 41 of the Constitution and his indication about significant constitutional doubts is the type of language used to oppose the Family Home Protection Act. If that logic had prevailed, there would be no Family Home Protection Act and many women would have been dreadfully disadvantaged. That is old legislation and that thinking has been left behind. We cannot allow artificial barriers to get in the way of rectifying anomalies in law which disadvantage women or any citizen.

On a linked issue, I asked the Tánaiste on today's Order of Business where the Government's proposal on the abolition of ground rents stands and the same response was given to me. Although it is part of the programme for Government and is included in the legislative list circulated for this session, it will never appear. That was not said in so many words but clearly the Tánaiste said there were constitutional difficulties because of the absolute right of private property. These are difficulties about which we have known for 20 years, when the programme for Government was drafted and certainly when the legislative programme for this session was drafted. The will of this House, shared by Deputies on all sides, to abolish ground rents will not be implemented because of that constitutional difficulty which seems like a barrier, in so many instances, to social progress.

Deputy Barnes instanced the decades of disadvantage women have endured because of that being cited as a problem. We have an obligation to be brave on many of these issues. If we want to give equal treatment to our citizens, let us do that and allow somebody to take a constitutional case to strike it down. In this instance, I do not believe anybody would want to oppose the principles of Deputy Browne's Bill. Does anybody believe that where there are joint mortgagees the first named should have all the benefits, voting rights and shares and the second named, most often the woman, should have none? I do not believe anyone would argue that is fair or just. Most people would see it as an anomaly in the law, a simple matter to be rectified and an issue which would cause no difficulty in terms of political consensus and which could be resolved in a day's work by the Houses of the Oireachtas.

That is why I could only describe some of the rhetoric in the Minister's speech as hogwash. I instance the paragraph in which he states that fundamental restructuring of computer and information systems would be needed which would be likely to require very considerable time and expense in addition to the cost of communicating with every joint account holder on an ongoing basis. God help us. It would be such a terrible burden that they might have to write to people who are their mortgagees.

(Carlow-Kilkenny): The computer might overheat.

I do not believe the Minister is serious in that, or believes it. We have the Internet, global communications and the information superhighway so the building societies can afford a few extra stamps. They could communicate with their joint shareholders and mortgagees as effectively as they would with the first named on the account. Let us put them to the test and see if they would be so brave as to take it on as an act of solidarity and equality. As he spoke those words, the Minister must have had his tongue in his cheek because I do not believe he believes that type of convoluted logic and patronising throw back to a bygone time holds any water.

Deputy Enright called for an Ombudsman for the building societies. In the instances he quoted, he made a convincing case. It is clear that more families deal with the building societies and a significant proportion of family income is expended on paying the mortgage and protecting the roof over the family household. In those circumstances, we have to monitor carefully all the building societies do. There have been instances which have been carefully selected and presented to us tonight by Deputy Enright concerning the practices of individual building societies in individual cases about which everyone in this House would raise an eyebrow. A good case was made by the Deputy.

That remit must go beyond the building societies because the greatest rip-off, if such a phrase may be used in the House, concerns those paying HFA mortgages to local authorities. There is a huge and significant disparity between the rate of interest charged to mortgagees of the local authority Housing Finance Agency accounts and those available in the commercial sector. Many people do not know that and could be paying 8.5 per cent or more.

I saw a case this week with interest rates of 8.5 per cent while under 6 per cent is available in the commercial sector. Because of the structure of the Housing Finance Agency loans, money was borrowed expensively and repaid expensively and is being carried by the poorest sector. By definition, to get the Housing Finance Agency loan, one had to be rejected by the commercial sector. For the privilege of being too poor to get a commercial loan, one is expected to repay a greater rate than those who are wealthier and in receipt of a commercial loan.

It is possible to remortgage, pay off the Housing Finance Agency loan and obtain a commercial loan instead. Most local authorities are very facilitating in this regard and I encouraged it during my time as Minister. Many people are unaware of this, and perhaps the Minister should respond to the point by issuing a circular requiring each local authority which grants loans to advise its mortgagees that a lower commercial rate is probably available to them and to advise them how to go about obtaining it. I hope it can be done without great cost. It should be examined.

If competition in the mortgage business is important to the Minister, a start should be made in the area for which he has direct responsibility. The Housing Finance Agency and local authorities are directly under his remit and they charge the highest rate of interest with no significant competition. It is something to which I would dearly love the Minister to respond, and perhaps he may do that through another Government speaker saying such a circular will be issued.

The Minister said the Bill was unamendable. No Bill is such if the principle of amendment is accepted. For example, an amendment could be tabled to delete all words after "Building Society (Amendment) Bill, 1998" and to insert new sections. The last Bill with which I dealt which was deemed unamendable was the Electoral Act. When I introduced it to the House, the spokes-person for the Progressive Democrats, lamentably no longer a Member of the House, described it as being so bad as to be unamendable. His Fianna Fáil counterpart said most of it would be repealed as soon as Fianna Fáil came into office. While they did so sooner than I expected, the Bill was enacted in full and not one line was deleted, repealed or amended by the new Government, which ironically comprised the two parties, one of which said it would repeal much of it and the other which found it unamendable. Therefore, I am not impressed by such language.

The Minister should re-examine the issue and he has some time to do so. It is an extremely important issue although the argument could be made that it does not impact on a significant number of people. I do not know if Deputy Browne has had the chance to conduct an audit, but he would be surprised to hear of the number of people disadvantaged by the current legislation. I am sure it is a considerable number, many of whom are probably unaware they are disadvantaged. It is our job to identify that and to do right by them. I invite the Minister to think again.

The Bill deals with one aspect of building societies but I also want to draw to the Minister's attention a document which I know is in his Department and which was discussed by the Joint Committee on the Environment and Local Government. It is entitled "Affordable Accommodation — A Trade Union Issue and a Human Right" which was published jointly by the trade unions, CPSU and SIPTU. It contains an analysis of affordable accommodation and is an extraordinarily good document which is not only worth reading but largely worthy of implementation. In terms of building societies, there are two specific recommendations which might be taken on board if this Bill were enacted. They could be examined as amendments to the Bill.

The action plan of recommendations, contained at the conclusion of the report, can be adopted to address one of the gravest social problems facing people in this tiger economy concerned about having a roof over their heads. The figures are stark and bleak. We can talk of booming societies but any society which tolerates a local authority waiting list of 45,800 and which, according to Threshold, has up to 6,000 homeless people living on its streets is not a healthy one. The recommendations for tackling this need to be taken seriously and to be acted upon. It is not good enough to examine one aspect, as the Bacon report did, and to then say enough has been done. Clearly that is not the case. Houses and their purchase are now beyond the ability of a huge number of people in society who always expected to be in a position to buy them because they earned good wages, but who cannot now enter the market due to the cost of a basic home, especially in cities. The Minister should examine the recommendations as they pertain to building societies, specifically two.

Recommendation No. 19 examines the role of building societies and other financial institutions in the provision of soft loans to housing trusts, co-ops or voluntary agencies. Recommendation No. 22, which is extremely important, calls for a code of practice to be drawn up to protect people who have purchased houses at current inflated prices and who subsequently experience difficulties in making repayments. In such situations, the option of lengthening the duration of the mortgage should be an alternative to repossession. That is something which must be examined. If the financial circumstances of people who are put to the pin of their collar to pay a large mortgage change and they can no longer carry that extraordinarily demanding burden, there must be another option available to them than repossession. It is the norm in other societies. I recommend this document highly to the Minister and I know it is in his Department. I do not seek to trespass the issue of affordable accommodation into the debate but it is the most critical social issue we face. The Government has not faced up to it and I expect it to be mindful of the need of so many in society.

The Bill requires equality in the conduct of building societies in the issues of shares, voting rights and communication to shareholders. I listened carefully to every word spoken by the Minister in his presentation and have reread his speech since. There is no justification for not accepting this Bill on behalf of the Labour Party. I plead with the Minister to accept the case put forward. It is an unanswerable case for equality and any difficulties in the text can be dealt with on Committee Stage. I urge the Minister to change his view and ensure the next Government speaker reverses the outdated, outmoded and anti-equality line taken by the Minister.

Debate adjourned.
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