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Seanad Éireann debate -
Thursday, 8 Apr 1976

Vol. 83 No. 20

Building Societies Bill, 1975: Committee Stage (Resumed).

Government amendment No. 29:
In page 21, to delete lines 25 and 26, and insert the following:
"(b) Notice of the receipt of the application shall be given to the society by the Registrar."

As drafted, paragraph (b) of subsection (3) provides that: "Such notice of the application shall be given to the society as the Registrar may direct". The purpose of the amendment is to ensure that whenever an application is made to the registrar under subsection (1) for an investigation of the affairs of the society or for the holding of a meeting, the registrar will notify the society of the receipt of the application. Even if the registrar does not propose to take any action on foot of the application, the societies consider it of importance to be aware if there is dissatisfaction among the members regarding some aspect of the affairs of a society.

Amendment agreed to.
Government amendment No. 30:
In page 21, lines 33 and 34, to delete "to an amount not exceeding £50 for payment of the cost of the investigation" and insert "in such amount as he considers reasonable, for payment of the cost of the investigation or meeting."

This relates to the amount of security which an applicant might be required to give in connection with an investigation into the affairs of a society or the holding of a special meeting. The sum of £50 referred to in the section as drafted derives from section 165 (2) of the Companies Act, 1963.

On reconsideration it is considered preferable to provide for the fixing of the amount by the registrar. It is more appropriate that the amount fixed by the registrar can relate to the current value of money in the years ahead. In addition, the paragraph as drafted only related to security for costs of investigation. It is appropriate that security be obtained equally in the case of the holding of a meeting. This is the position in section 110 (4) (d) of the British Act of 1962.

I welcome this amendment. As I have said on previous Bills going through the House, as a matter of principle I am against fixed amounts being written into legislation. We have seen how they become irrelevant in a very short period particularly with the depreciating value of money. Apart from that, it is far better to have legislation of this kind dealing with any sort of money payment dealt with on a flexible and reasonable basis. That is the way the Minister's amendment meets it. We can leave it to the registrar. He will be a person of authority and, hopefully, he will have the proper expertise available as staff to him. He is the person to do it without being hamstrung by a fixed sum that may become outdated very rapidly.

Amendment agreed to.

An Leas-Chathaoirleach

Amendments Nos. 31 and 68 are cognate and may be taken together.

Government amendment No. 31:
In page 21, line 48, to delete "a society" and to insert "the society".

These are minor drafting amendments to ensure that "society" in these lines refers properly back to the previous reference to "society" in the section.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 30.

I move amendment No. 32:

In subsection (6) (a), line 56, after "Commerce" to insert ", the Central Bank".

When we had this discussion on principle on the earlier amendment that caused a bit of a hassle last night, I was indicating that, in general on consideration of this matter I took the view that the references to the Central Bank and the amendments relating to same were to be withdrawn. In principle, our approach as far as the rest of Committee Stage is concerned, is to enhance the powers and status of the registrars of friendly societies and any amendments in that area. So far as amendments dealing with such things as the Central Bank and the Minister for Finance are concerned, these are now withdrawn.

Amendment, by leave, withdrawn.
Section 30 agreed to.
SECTION 31.
Government amendment No. 33:
In page 24, line 16, to delete "one or more" and to insert "one or both".

This is a minor amendment. Use of the word "both" is preferable in the context.

Amendment agreed to.
Government amendment No. 34:
In page 24, to delete lines 33 to 36.

Subsection (3) (a) deals with the giving of notice by the registrar of his intention to issue a direction to a society to suspend the acceptance of funds or the making of payments not authorised by him. It provides that where he considers that the giving of notice would not be prejudicial to the members or creditors or to the orderly and proper regulation of building society business he may give not less than 14 days notice. Where notice is given, the registrar is required under subsection (4) to consider any representations received. Subsection (3) (b) as drafted prohibited the registrar from giving notice where in his opinion the society had become, or were likely to become, unable to meet their obligations to creditors.

On reconsideration, it is thought preferable to allow the registrar to use his discretion as to whether all the interests concerned are best served by giving, or by not giving, notice. Section 49 (1) of the British Act of 1962 makes it mandatory on the registrar to give notice. As circumstances can arise where a society are running into serious trouble, the delay caused by the need to consider representations after giving notice could have serious repercussions and the registrar will be in the best position to make an assessment of the situation.

Amendment agreed to.
Section, as amended, agreed to.
Section 32 agreed to.
SECTION 33.
Government amendment No. 35:
In page 26, between lines 17 and 18, to insert the following:
"(2) The Registrar may apply to the Court for an order confirming a direction under section 31 or 32 as for an order confirming and extending the period of operation of a direction under section 31 for such time as the Court may, having regard to all the circumstances, consider appropriate, and the Court may grant such an order.
(3) The Court may, in addition to or in lieu of making an order under subsection (2), make such other order in relation to the matter as may appear to it to be necessary.
(4) Where an order is made under subsection (2) confirming and extending the period of operation of a direction under section 31, the society shall be deemed for the purposes of section 95 to be unable to pay its debts."

Section 33 as it stands is based on section 21 (3) and (6) of the Central Bank Act, 1971. The Central Bank Act contains wider powers in subsections (4), (5) and (7) of that section and it was thought desirable to provide similar powers in the Bill. The purpose of the amendment is to include these powers in section 33.

Subsection (2) of the amendment empowers the registrar to apply to the High Court for an order confirming a direction given by the registrar under section 31 or 32—a direction to suspend the acceptance of funds or the issue of advertisements—or for an order confirming and extending the period of operation of a direction under section 31. The court is empowered to grant such an order. This is similar to section 21 (4) of the Central Bank Act but it is more extensive in that it applies to a direction to suspend advertising.

Subsection (3) of the amendment empowers to the court to make such other order as appears to it to be necessary, in addition to or instead of an order under subsection (2). This is similar to section 21 (5) of the Central Bank Act, 1971. Subsection (4) of the amendment provides that when an order is made by the High Court confirming and extending a direction given by the registrar under section 31, the society shall be deemed for the purposes of section 95 to be unable to pay their debts. Under section 95 a society unable to pay their debts may be wound up.

It is visualised that in a case where subsection (4) would apply, the registrar would petition the court to have the society wound up. This would be the culmination of the action taken by the registrar under section 29, where he investigated the affairs of a society, or under section 31 where he issued a direction to suspend the acceptance of funds.

I agree with these amendments because they strengthen the powers of the registrar, particularly in regard to sections 31 and 32. It is right that he should have court machinery available to him which is available, as the Minister stated, to the Central Bank under legislative provisions relating to their powers.

Amendment agreed to.
Section as amended, agreed to.
SECTION 34.
Government amendment No. 36:
In page 26, line 29, after "who" to insert "is or".

This is a minor amendment to correct an omission in the text.

Amendment agreed to.
Government amendment No. 37:
In page 26, to delete line 41 and insert "any of the books and records referred to in paragraph (a)".

Two quite separate powers are conferred by the section on the registrar. The power in subsection (1) relates to the serving of a notice on a society or on a person who has in his power, possession or procurement any books, and so on relating to the business of the society. This power is conferred on the registrar in connection with the exercise of his powers under sections 31 and 32 that is, in connection with the intention to issue a direction regarding the suspension of the acceptance of funds or the issue of advertisements.

Documents sought under subsection (1) could include documents other than those which are the property of the society. Under subsection (3) (a), however, the registrar or a person authorised by him is empowered to enter premises and to inspect and take copies of or extracts from the books and records of a society. This power is conferred on the registrar for the performance of his functions under the Act.

Subsection (3) (b), which is a corollary to subsection (3) (a), requires that a person who has in his power, possession or procurement of books, and so on shall produce them to the registrar. The documents which the person is required to produce must be those referred to in subsection (3) (a), that is, "books and records of a society". The amendment is to give effect to this. It follows the lines of section 17 (3) of the Central Bank Act, 1971.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 35.
Government amendment No. 38:
In page 27, between lines 4 and 5, to insert the following:
"(b) A direction under this section shall specify the considerations by reference to which the Registrar considered it necessary to issue the direction."

The section empowers the registrar to give directions relating to the matter and form of advertisement and may direct a society to take all practical steps to withdraw an advertisement. The purpose of the amendment is to require the registrar to specify the considerations by reference to which he considered it necessary to issue the direction. The amendment has been put forward to meet representations made by the Irish Building Societies Association. The requirement is regarded as reasonable.

Under sections 31 and 32 where the registrar issues a direction to suspend the acceptance of funds or the issue of advertisements, he is required to indicate the considerations by reference to which he considered it necessary to do so. The amendment proposed to section 35 will bring this section into line in that respect with sections 31 and 32.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 36.

I move amendment No. 39:

In subsection (2), line 21, to delete ", with the consent of the Minister for Finance,".

This amendment is one of a number of amendments which, in my view, are consistent with the Minister's own amendment No. 48 to section 38 where he is bringing the registrar into the section to fix limits in respect of investments after consultation with the Minister for Finance and the Central Bank. Our amendments which seek to make the registrar more independent in the exercise of his functions are on all fours with the Minister's amendment No. 48, with which I agree.

In regard to section 36, I do not see how the Bill would be in any way prejudiced by deleting ", with the consent of the Minister for Finance,". We are seeking to establish the registrar as a person of authority and independence. Surely he can, without the consent of the Minister for Finance, fix the fees to be paid for the inspection of documents and so on? That is minor administration which will fall within the ambit of a responsible registrar and I doubt if he needs to be circumscribed by having to obtain the consent of the Minister for Finance.

I am afraid I cannot agree with Senator Lenihan. Yesterday he was recommending that the powers of our registrar should correspond to the powers of the UK registrar. This amendment would run counter to that. The subsection empowers the registrar, with the consent of the Minister for Finance, to fix fees to be paid for the inspection of documents and so on, and provides that any fees received by him shall be paid to the Exchequer. The amendment would allow the registrar, acting on his own initiative, to fix fees. It seems reasonable and prudent to provide that the consent of the Minister for Finance be obtained in a matter such as this. In the British Act of 1962, section 123 (1) (b) provides that the chief registrar, with the consent of the Treasury, may make regulations with regard to fees to be paid for the inspection of documents. In this case we are following the lines of the British legislation.

If the Minister will follow that line right through the Bill in regard to policy matters——

I do not agree with everything the British do.

It is not an important issue. I agree that it is important that the registrar be independent.

Amendment, by leave, withdrawn.
Section agreed to.
SECTION 37.
Amendment No. 40 not moved.

An Leas-Chathaoirleach

Amendments Nos. 41 and 47 are cognate and may be discussed together.

Government amendment No. 41:
In page 27, line 29, after "Minister" to insert ", the Registrar".

Representations were made by the societies seeking to transfer to the registrar the powers in the section conferred on the Minister for Finance. It is considered appropriate that the Minister for Finance should exercise the powers conferred by the section. In the Central Bank Act, 1971, the Central Bank exercises the powers to require licensed banks to maintain ratios. As the Minister for Finance is the person who would have authority to confer trustee status on the deposits with building societies based on criteria laid down by him, including matters relating to reserve and liquidity ratios, it is considered that the Minister for Finance should be empowered to act under the section. As drafted, the section provides that the Minister for Finance shall consult the Minister and the Central Bank. The inclusion of the registrar, as a person to be consulted before the issue of a requisition, is partly to meet the objection of the societies. A further reason is that the registrar will be in constant touch with the societies, will receive detailed returns from the societies and will be in a position to know whether societies can comply with any requisition to be issued. Amendment No. 46 is consequential on this amendment.

Amendment agreed to.
Government amendment No. 42:
In page 27, to delete line 30.

The purpose of the amendment is to delete the requirement that a society must maintain a specified ratio between its assets and its liabilities. The section, as drafted, requires a society to maintain a specified ratio or a ratio not exceeding or not less than a specified ratio between its assets and its liabilities. The provision is on the lines of section 23 (1) of the Central Bank Act, 1971.

The societies made representations to the Department of Finance on this matter and satisfied that Department that it would not be practical for societies to have to maintain a specified ratio between assets and liabilities. Although banks have a great deal more flexibility in the matter of investing their funds, they are unable to keep a specified ratio except at one time in a period of a month or longer. In all the circumstances it is considered that the requirement at (b) and (c) will be adequate.

It is much more flexible. It was too rigid as it stood.

Amendment agreed to.
Amendments Nos. 43 to 45, inclusive, not moved.
Government amendment No. 46:
In page 27, line 47, after "Minister" to insert ", the Registrar".
Amendment agreed to.
Section, as amended, agreed to.
SECTION 38.
Amendment No. 47 not moved.
Government amendment No. 48:
In page 28, to delete lines 12 to 20 and insert the following:
"(3) The Registrar, after consultation with the Minister, the Minister for Finance and the Central Bank, may fix limits (whether by reference to amounts or to a proportion of total investments or otherwise) in respect of investments by a society in securities or in a specified class or classes of securities (denoted by reference to such matters as the Registrar may consider appropriate), and different limits may be prescribed for different classes of societies."
Amendment agreed to.
Amendments Nos. 49 and 50 not moved.
Question proposed: "That section 38, as amended, stand part of the Bill."

With relation to the amendment made by the Minister and the power given in this section, the Minister seems to be rather inconsistent in giving the registrar power in this section as it now stands which he refused to give in some earlier sections—for instance, in section 10, where it seemed to be a less important power to give to the registrar. I am glad the Minister has made certain concessions in this section but while it is good that he has done so, it seems rather inconsistent with his refusal to give similar power, and even less important power, to the registrar in some of the earlier sections, particularly in section 10.

I am glad Senator E. Ryan thinks it is a good idea to make the amendment but I would not agree with him that I have been inconsistent. As he will see later on, I am being consistent.

Question put and agreed to.
SECTION 39.
Government amendment No. 51:
In page 28, to delete lines 33 to 42 and insert the following:
"39.—(1) Every officer of a society having the receipt or change of moneys belonging to the society shall give such security as the society may require, conditioned for rendering a just and true account of all moneys received and paid by him on account of the society and for payment of all sums of money due from him to the society, and for this purpose shall become bound with at least one sufficient surety in a bond in such form and for such amount as the Registrar may require or shall make arrangements by way of fidelity guarantee insurance or give such other security as the society may direct in such sum as the society may require."

The section as drafted provided that the consent of the registrar would be required in the case of security given by way of fidelity guarantee insurance. It has been confirmed by the Irish Building Societies Association that fidelity guarantee insurance is already an established practice with most societies. Consequently, it is not considered that the consent of the registrar should be required.

Subsection (2) is therefore being deleted and the reference to fidelity guarantee insurance is being included in subsection (1). In redrafting subsection (1) the wording in section 23 of the 1874 Act and in section 71 of the British Act has been used—"conditioned for giving a just and true account of all moneys ..." has been substituted for "securing the society against loss caused by fraud or embezzlement". Perhaps it is another example of something old being better than something new.

Amendment agreed to.
Government amendment No. 52:
In page 28, line 48, after "moneys" to insert "belonging to the society".

This is a minor amendment to clarify that the moneys referred to in the subsection are moneys belonging to the society.

Amendment agreed to.
Section, as amended, agreed to.
Section 40 agreed to.
SECTION 41.
Government amendment No. 53:
In page 29, line 30, to delete "produced" and insert "available".

This is a minor drafting amendment which does not change the effect of the subsection. The use of the word "produced" might indicate that it was required of the board to circulate the book at a meeting or to invite members to inspect it while the intent of the requirement and the practice in company meetings is for it to be available if required.

Amendment agreed to.
Section, as amended, agreed to.
Section 42 agreed to.
SECTION 43.

An Leas-Chathaoirleach

Amendments Nos. 54, 55 and 56 are cognate and may be discussed together.

Government amendment No. 54:
In page 30, line 6, after "officer" to insert "where that member is not a full-time employee of the society".

The section requires that in the annual return required by section 70 particulars should be included of loans made to directors and members of the family of an officer, the officer includes director, on the principle that information should be available to members of the loans which directors might make to themselves or to members of their families. If the member of the family of an officer is also an employee of the society, it is considered that such a person should not be in any less advantageous position in relation to the section than other employees.

The object of the amendment is to secure that the requirement regarding disclosure of loans does not apply to the member of the family of an officer where that member is also an employee of the society.

Amendment agreed to.
Government amendment No. 55:
In page 30, line 21, after "officer" to insert "where that member is not a full-time employee of the society".
Amendment agreed to.
Government amendment No. 56:
In page 30, line 27, after "officer" to insert "where that member is not a full-time employee of the society".
Amendment agreed to.
Government amendment No. 57:
In page 30, line 33, after "loan" where it first occurs, to insert ", the percentage which the loan represents of the estimated value of the property mortgaged as security for the loan".

Subsection (3) provides that, where a society approves a loan in favour of the member of a family of an officer, the terms of the loan shall not be more favourable than the terms on which other loans of a similar type are approved. In subsection 3 (a) it is provided that "terms" means the rate of interest and the period of the loan. The purpose of the amendment is to include also the percentage of the value of the property which the loan represents. Where a society, for instance, generally issue loans for 70 per cent of the purchase price they could not under the amendment issue a loan to a member of the family of an officer for a percentage of the purchase price higher than 70 per cent.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 44.
Government amendment No. 58:
In page 32, to delete lines 6 to 10 and insert the following:
"(7) Where the requirements of this section are not complied with it shall be the duty of the auditor by whom the relevant accounts are examined to include in his report on those accounts, so far as he is reasonably able to do so, a statement giving the required particulars."

The word "auditor" has been used throughout the text except in this subsection where the plural form is used. The amendment proposes to bring the reference in this section into line with the other references.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 45.
Government amendment No. 59:
In page 32, between lines 37 and 38, to insert the following:
"(4) In this section ‘remuneration' includes emoluments specified in section 44 (2)".

The purpose of the amendment is to provide that the prohibition on the payment to a director of remuneration free of income tax shall apply to fees and percentages and sums paid by way of expense allowances as well as directors' fees and salaries.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 46.
Government amendment No. 60:
In page 32, between lines 42 and 43, to insert the following:
"(2) If special circumstances exist which render it in the opinion of the Registrar expedient that such an exemption should be granted, the Registrar may, subject to such conditions as he may think fit, grant exemption from the obligations imposed by this section."

The purpose of the amendment is to provide an exemption, as in section 196 (2) of the Companies Act, 1963, in a case where, for instance, there would be a long list of directors and where because of deaths or changes in personnel frequent reprinting of stationery would be required in order to keep the list of directors up to date.

Amendment agreed to.
Section, as amended, agreed to.
Section 47 agreed to.
SECTION 48.
Government amendment No. 61:
In page 33, lines 20 and 21, to delete "at the first general meeting of the society" and insert "one arbitrator shall be named by the board of directors and one by the member".

The rules of a society are required under section 10 (1) (s) to specify whether disputes are to be settled by reference to a court, registrar, or arbitration. Where the rules specify that disputes are to be settled by arbitration, and do not mention how the arbitrators are to be chosen, subsection (2) (b) provided that they be selected at the first annual general meeting of the society. This is in line with section 94 (2) of the British Act of 1962.

On reconsideration, and in order to bring the section into line with the Arbitration Act, 1954, it is thought preferable to provide, as in the amendment, that one arbitrator be named by the board of the society and one by the member who is a party to the dispute. The provisions of the Arbitration Act will then take over.

Amendment agreed to.
Section, as amended, agreed to.
Sections 49 and 50 agreed to.
SECTION 51.
Government amendment No. 62:
In page 34, to delete lines 4 to 9 and insert the following:
"(2) A meeting of a society called by a shorter notice than 21 days' notice shall be deemed to have been properly called if it is so agreed by the auditor of the society and by the Registrar on application being made to him in writing by the society.
(3) Notice of a meeting of a society shall not be given to members of the society more than 42 days before the date of the meeting."

This is merely a rearranging of the order of subsection (2) and (3).

Amendment agreed to.
Government amendment No. 63:
In page 34, to delete lines 11 to 16 and to insert the following:
"(a) by sending to every person entitled to attend the meeting a notice in such form as the Registrar may direct, or
(b) with the consent of the Registrar, by publishing in at least one daily newspaper published in the State and circulating in the area in which the chief officer of the society is situated a notice in such form as the Registrar may direct."

This is a minor amendment rearranging (a) and (b) as drafted. It is thought desirable to require the Registrar's consent in a case where notice of a meeting is to be given by Press advertisement. It is expected that this would be a matter of form in most cases. However, a case could arise where the Registrar might wish, because of the conduct of previous meetings, the financial situation of the society or, say, the retirement of an auditor, that all members be notified.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 52.
Government amendment No. 64:
In page 34, line 27, after "section 22 (1)" to insert "and at the date of the meeting continued to hold such shares".

The purpose of the amendment is to ensure that persons entitled to attend a meeting of a society comply with two requirements: (1) that they held investment shares to which voting rights attached at the end of the previous financial year; and (2) that at the date of the meeting they still continued to hold those shares. If the amendment was not included a borrower who held investment shares at the end of the previous financial year and disposed of them before the meeting could claim to be entitled to attend a meeting as he would technically be still a member in his capacity as a borrower.

Amendment agreed to.
Section 1, as amended, agreed to.
NEW SECTION.
Government amendment No. 65:
Before section 53 to insert a new section as follows:
"53.—(1) Subject to subsection (2), the persons entitled to vote at a meeting of a society shall be all members who, at the end of the last financial year before the date of the meeting, held shares to which voting rights attached which were issued by the society under section 22 (1) to a value of not less than £10 and at the date of the meeting continued to hold such shares.
(2) A person under the age of twenty-one years shall not be entitled to vote at a meeting."

The section, as amended, differs in some respects from the section as drafted: (a) it includes the requirement, as in section 52, that the member still held investment shares at the date of the meeting, (b) subsections (2) and (3) of the original section are being deleted and (c) shareholding reduced from £25 to £10. The section, as amended, will clarify the right of members to vote. All members who held investment shares to which voting rights attached to a value of not less than £10 will be entitled to vote at meetings. The shares must have been held at the end of the previous financial year and must still be held at the date of the meeting.

It will be noted that reference is made to the shares issued under section 22 (1). This is in order to differentiate between investment shares and advance shares which might be issued to a borrower. A borrower is not entitled to vote unless he is also the holder of investment shares. Reference also is made to shares to which a voting rights attached. This is in line with section 22 (7) to meet the case of the Irish Civil Service Building Society. Savings shares in that society do not carry voting rights. Section 10 (1) (r) provides that the rules shall specify the voting rights of members. In subsections (2) and (3) of the section as drafted, it was proposed to specify precisely the voting rights, on a show of hands or on a poll on a special resolution, one vote, and on a poll on a resolution other than a special resolution, the number of votes set out on the table.

Representations have been received from one society that the investment shares in that society carry a vote for each share held. If that society were to bring their voting structure into line with the requirements of the section as drafted, it would cause a serious problem for the society. The group have invested a substantial sum in the society and would wish to retain control. Similarly, under section 18, the Bill requires a substantial investment on the part of founders of new societies. It is logical that if they wish to do so, the founders of new societies should be in a special position at least for the five year period during which they are required to maintain their funds in the society. The deletion of subsections (2) and (3) will mean that the rules will be relied upon to set out the voting rights.

I agree broadly with the amendment and what I am going to say now is probably more valid on the section. I refer to the question of 21 years. I notice a legal problem in the definition of "minor". There is a lot of confusion. It is a grey area since we gave voting rights to people of 18 years in elections. Similarly, in certain aspects of law. 21 years is still regarded as absolute vis-á-vis the definition of minor. In other areas it is 18 years. Perhaps the Minister should take a bold step here—I am waving a banner now for a cause—and be consistent in regard to giving responsibilities to young people and have 18 years written in here instead of 21 years.

I have already taken a bold step with regard to the 18-year-olds. In fact, I understand the position is that, if the Department of Justice bring in a law which reduces the age of majority to 18 years, or whatever it may be, it automatically replaces the 21 years wherever it may occur in any legislation.

I wonder would it? "Minor" is a sort of grey definition which is undefined at the moment. If the definition of "minor" in whatever legislation the Department of Justice bring out is deemed to be 18 years, automatically every reference in every Act of the Oireachtas to "minor" will automatically mean 18 years. When the Minister puts in 21 years specifically here, there may be a difficulty at some future date.

I see the Senator's problem but the word "minor" is imprecise and we are not supposed to use an imprecise word in legislation. In fact, I am advised by the legal people that if the age of majority is reduced to a specific age, it will automatically follow that where 21 occurs it will be replaced.

If the draftsmen are happy with it——

They are and they say that this is the precise way of doing it.

I was not aware that was the intention of the Minister. I thought the intention was that even if the age for voting and other matters was reduced to 18 years, nevertheless the Minister wanted to have 21 years here.

I am glad to hear that because, in my view, we should have a common definition of legal responsibility in accordance with the democratic franchise. Once we made a decision to extend voting rights to our national Parliament, to our local authority councils, to 18-year-olds, that gives enfranchisement and responsibility to people of 18 years and the whole area of legal obligations and responsibilities in the legal area, in the company law area, and in the building societies' area, right across the board it should be at 18 years. I feel very strongly about it.

A number of complications including marriage are involved in this as well as company law and building societies and, perhaps, it would be better if we leave it until it is decided by law that it should be reduced.

Amendment agreed to.

An Leas-Chathaoirleach

Acceptance of this amendment involves the deletion of section 53.

SECTION 54.

Government amendment No. 66:
In page 35, between lines 17 and 18, to insert the following:
"(4) The instrument appointing a proxy shall be in such form as the Registrar may direct."

This amendment has been put forward at the suggestion of the Irish Building Societies Association. Its purpose is to ensure that the form will be uniform for all societies. The intention is that it will set out clearly the rights of proxy voting.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 55.
Government amendment No. 67:
In page 35, line 38, to delete "five" and insert "ten".

The purpose of the amendment is to increase from five to ten the minimum number of persons who may effectively demand a poll at a meeting. While company law specifies five persons, the British Building Societies Act specifies ten. The number of persons who would attend a meeting of a building society would be much greater than those normally attending company meetings. The minimum of ten is regarded as reasonable.

Amendment agreed to.
Section, as amended, agreed to.
Section 56 agreed to.
SECTION 57.
Government amendment No. 68:
In page 36, line 8, to delete "a society" and insert "the society".
Amendment agreed to.
Government amendment No. 69:
In page 36, line 13, before "a society" to insert "directors of".

The purpose of this amendment is to bring the reference to "the board of a society" into line with the term as defined in section 2 (1), that is the board of directors of a society.

Amendment agreed to.
Government amendment No. 70:
In page 36, line 18, to delete "would" and insert "could".

As drafted, subsection (2) empowers the board of directors of a society to refuse to give notice of a member's special resolution if it is of the opinion that, if the resolution were passed, the society would be involved in activities likely to be ultra vires. It is considered that “could” is more appropriate in this context than “would”.

Amendment agreed to.

An Leas-Chathaoirleach

Amendments Nos. 71 and 82 are cognate and may be taken together.

Government amendment No. 71:
In page 36, line 24, before "special resolution" to insert "intended".

These are minor drafting changes. An intended special resolution is not a special resolution until it has been passed.

Amendment agreed to.
Section, as amended, agreed to.
Section 58 agreed to.
SECTION 59.
Government amendment No. 72:
In page 37, line 26, to delete ", with the written consent of the Registrar,".

Books of account of a society are kept at all offices of a society. It is not considered necessary to require the consent of the registrar to their being kept at offices other than the chief office.

Amendment agreed to.
Government amendment No. 73:
In page 37, line 31, before "six years" to insert "not less than".

This is a minor amendment to bring the subsection into line with the standard wording of such type of provision.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 60.
Government amendment No. 74:
In page 38, line 6, to delete "wilfully".

Section 60 has been adapted from section 148 of the Companies Act, 1963. That section does not require, for the purpose of an offence, that a director "wilfully" fails to take all reasonable steps. The purpose of the amendment is to keep the section in line with the provisions of the Companies Act. In the previous section, section 59, which is based on section 147 of the Companies Act, the word "wilfully" is also used but not in reference to failure to take all reasonable steps.

I agree completely here. The word "wilfully" is a hangover and is now recognised as superfluous legal jargon. It has no meaning. It is irrelevant from the legal interpretation point of view. It is a hangover from old legislation going back to common law periods. It should disappear from all legislation. It does not add anything. You either fail or you do not fail to take reasonable steps and "wilfully" adds nothing to it.

I agree. I am sure Senator Lenihan remembers the Occupational Injuries Bill when I had 157 amendments down in an effort to have the word "accidental" removed. The Minister was not as reasonable as I am.

Amendment agreed to.
Section, as amended, agreed to.
Section 61 agreed to.
SECTION 62.
Government amendment No. 75:
In page 38, line 27, to delete "Unless the Registrar otherwise directs," and insert "Except in the case of the first account,".

The purpose of the amendment is to require that all societies shall include in the income and expenditure account and balance sheet, the corresponding particulars relating to the previous year. It is necessary, of course, to exempt the accounts for the first year from this requirement. Most existing societies provide the particulars for the preceding year in their accounts.

I wonder if this will lead to difficulties now and again. There may be situations from time to time where it would be impossible to give corresponding particulars. It certainly happens in companies where there are mergers, and so on. I am not sure whether the same thing could happen with a building society. In other spheres it is impossible at times to give corresponding particulars and to try to do so would only be misleading rather than helpful. I am sure this has been carefully considered but it occurred to me that it might be a pity not to leave it as it is. As it is, it deals with the situation mentioned in the amendment but it would also deal with other situations.

Possibly Senator Ryan may have a point there. In view of what he said I would suggest that we would have another look at it.

Amendment, by leave, withdrawn.
Section 62 agreed to.
SECTION 63.
Government amendment No. 76:
In page 38, line 35, after "auditor's report" to insert "shall be attached thereto".

Company law draws a distinction between documents which are "annexed" to the balance sheet and documents which are required to be "attached" to it. The income and expenditure account is required to be "annexed" while the auditors' report and the directors' report are required to be "attached". "Annexed" connotes an addition to a document. "Attached" implies something fastened to or adhering to a document. The purpose of this amendment and amendments proposed in sections 65 (1) and 65 (2) is to preserve this distinction.

Amendment agreed to.
Section, as amended, agreed to.
Section 64 agreed to.
SECTION 65.
Government amendment No. 77:
In page 38, line 48, after "auditor's report" to insert "and the directors' report".
Amendment agreed to.
Government amendment No. 78:
In page 39, line 5, after "auditor's report" to insert "and the directors' report".
Amendment agreed to.
Government amendment No. 79:
In page 39, line 8, to delete "person" and insert "member".

The purpose of the amendment is to restrict the right of inspection in the chief offices of the accounts of a society to members of the society.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 66.
Government amendment No. 80:
In page 39, line 34, to delete "Subject to sections 67 and 68".

This is a drafting amendment. The provisions of sections 67 and 68 will stand independently of a reference in the subsection.

Amendment agreed to.
Government amendment No. 81:
In page 39, between lines 45 and 46, to insert the following:
"(c) A society shall, within one week of the Registrar's powers under paragraph (b) becoming exercisable, give the Registrar notice of that fact."

This amendment is necessary in order to place responsibility on the society concerned to notify the registrar that no auditor was appointed at the annual general meeting so that he may become aware as soon as possible of the situation and take steps to carry out his function in the matter.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 67.
Government amendment No. 82:
In page 40, lines 13 and 16, before "resolution" to insert "intended".
Amendment agreed to.
Government amendment No. 83:
In page 40, to delete lines 22 to 36, and insert the following:
"(5) Subject to subsection (6), where notice is given of such an intended resolution and the retiring auditor makes in relation to it representations in writing to the society (not exceeding a reasonable length) and requests their notification to members of the society, the society shall, unless the representations are received by it too late for it to do so—
(a) in any notice of the intended resolution given to members of the society, state the fact of the representations having been made, and
(b) send a copy of the representations to every member of the society entitled to attend and vote at a meeting of the society,
and if a copy of the representations is not sent as aforesaid because received too late or because of the society's default, the auditor may prejudice to his right to be heard orally) require that his representations shall be read out at the meeting."

The purpose of the amendment, which, in effect, inserts the five lines after (a) to the original draft is to ensure that notice of the intended resolution to appoint a new auditor shall also give notice that representations have been made by the retiring auditor. The amendment will bring the subsection into line with section 161 (3) of the Companies Act, 1963.

Amendment agreed to.
Government amendment No. 84:
In page 40, line 47, to delete "or 66 (6) (b)".

This is a minor change to bring the provision into line with section 161 (5) of the Companies Act, 1963. That section applies the requirements regarding the circulation of representations made by a retiring auditor to a proposal to remove the first auditor appointed by the directors, that is, 66 (4) of the Bill.

Amendment agreed to.
Section, as amended, agreed to.
Section 68 agreed to.
SECTION 69.
Government amendment No. 85:
In page 41, line 41, to delete "section 60" and insert "section 59".

This amendment is necessary to correct a reference error in the draft.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 70.

An Leas-Chathaoirleach

Amendment No. 89 is consequential on 86 and they may be taken together.

Government amendment No. 86:
In page 42, line 10, before "the Registrar" to insert "the Minister or".

These are drafting amendments, the purpose of which is to transfer from subsection (8) the power to enable the Minister to obtain such information and returns as he may require, thereby enabling the deletion of subsection (8).

Amendment agreed to.

An Leas-Chathaoirleach

Amendments Nos. 87 and 88 are related and may be taken together.

Government amendment No. 87:
In page 42, between lines 35 and 36, to insert the following:
"(7) Every society shall submit to the registrar together with the annual return required under subsection (1) a return with respect to—
(a) every property which has, during the financial year to which the return relates, been sold by the society in the exercise of its powers as mortgagee, and
(b) every mortgage which has been transferred by the society during that financial year."

These amendments are necessary in order to define the particular return to which the subsection refers.

Amendment agreed to.
Government amendment No. 88:
In page 42, lines 40 and 41, to delete "this section" and insert "subsection (7)".
Amendment agreed to.
Government amendment No. 89:
In page 42, to delete lines 42 to 44.
Amendment agreed to.
Section, as amended, agreed to.
Sections 71 and 72 agreed to.
NEW SECTION.
Government amendment No. 90:
Before section 73 to insert a new section as follows:
"73.—(1) Every society shall keep a register of the names and addresses of its members.
(2) The register shall be kept at the chief office of the society or, with the consent in writing of the registrar, at one or more offices of the society other than its chief office.
(3) Every society having more than 50 members shall, unless the register is in such a form as to constitute an index, keep an index of the names of the members of the society and shall, within 14 days after the date on which any alteration is made in the register of members, make any necessary alteration in the index, and the index shall at all times be kept at the same place as the register of members.
(4) (a) A member of a society may, for the purpose of communicating with other members on a subject relating to its affairs, request the secretary to transmit to those other members such information as he requires and where the secretary, having regard to the interests of members as a whole and to any other relevant circumstances, is satisfied that the application is made in good faith, he shall comply with the request.
(b) Where the secretary of a society complies with a request under paragraph (a) the applicant shall be liable for any costs incurred by the society in complying with the request and the society may require the applicant to give security for payment of costs.
(5) In the event of the refusal of a society to comply with a request under subsection (4), the secretary of the society shall notify the member who made the request of the grounds for such refusal and the member may refer the refusal to the Registrar.
(6) A decision on a request under subsection (4) shall be notified to the member who made the request within a period of one month after the day on which the request is received by the society.
(7) Where an applicant makes a reference to the Registrar under subsection (5), the Registrar may, having heard any representations made by the society, direct the society to comply with the request subject to such limitations or conditions (including conditions relating to the nature of the information to be given, and to arrangements for payment of costs) as the Registrar may think fit."

It is proposed to delete the section as drafted by deletion of lines 35 to 54 in page 43 and lines 1 to 33 in page 44 and to substitute the new section.

The amendment arises out of very strong representations made by the Building Societies Association in regard to the difficulties which the section as originally drafted would create. It was agreed that there was no necessity for the registers of names and addresses of members to show the date on which each person was entered on the register and the date on which he ceased to be a member. The strongest objections related to the proposed requirement that a member of a society be enabled to obtain names and addresses from the register for the purpose of communicating with other members of the society on a subject relating to its affairs. The case was made, and the argument is accepted, that no matter how justifiable a case could be made to obtain lists of names and addresses of members, there could be no guarantee that the lists would not be used for other purposes subsequently. The societies' representatives considered that the intrusion on the confidentiality of their operations with their members which the section as drafted would enable would be extremely harmful to them.

In these circumstances a new section is proposed which will require the societies to keep a register of the names and addresses of their members at the chief office, or at other offices with the consent of the registrar, and require them to keep it in the form of an index if they have more than 50 members. In so far as it is necessary to provide so that members should be able to communicate with other members on matters relating to their membership, it is proposed that any member may request the secretary of a society to issue the communication which he provides to the members and, if the secretary is satisfied that the application is made in good faith, he shall comply with the request.

Where the secretary complies with the request it is proposed that the applicant should be liable for the costs incurred. In the event of a refusal to comply with such a request, the secretary will be required to give the member the grounds for such refusal and the member may refer the matter to the registrar. Provision is then made so that the registrar may, having heard the representations, direct the society to comply subject to such limits or conditions as he thinks fit.

Amendment agreed to.

An Leas-Chathaoirleach

Acceptance of this amendment involves the deletion of section 73.

SECTION 74.

Government amendment No. 91:
In page 44, to delete line 45 and to insert the following:
"(b) any other directorships held of bodies corporate incorporated in the State."

In section 195 (2) (e) of the Companies Act, 1963, the corresponding requirement is related to directorships of bodies corporate incorporated in the State. The amendment is designed to bring the paragraph in the Bill into line with the Companies Act. The rearrangement of the wording is an improvement.

I am surprised to hear this. I intended to make a point about this. I am somewhat discomfited to find that this wording is in the Companies Act. I cannot imagine a body which is not a corporate body being incorporated in the State. In other words, the word "corporate" seems to be surplus because "any other directorship of bodies corporate in the State held" could not apply to any body that was not a corporate body. However, if it is in the Companies Act I will withdraw my observation.

Amendment agreed to.
Government amendment No. 92:
In page 44, to delete lines 52 and 53, and in page 45, to delete lines 1 and 2, and to insert the following:
"(b) The periods mentioned in paragraph (a) are—
(i) in the case of the return, 14 days from the commencement of the section where a society is incorporated before such commencement, and 14 days from the date of appointment of the first directors where a society is incorporated after such commencement.
(ii) in the case of a change, 14 days from the change."

This is a drafting change to make clear the dates from which the periods commence for both existing societies and new societies within which they are required to make returns of directors. The original section did not make this sufficiently clear.

Amendment agreed to.
Government amendment No. 93:
In page 45, to delete lines 15 and 16.

The purpose of the amendment is to delete subsection (6) which provides where a society refuses to allow an inspection of the register of directors and secretary the court may by order compel such inspection. It is not considered necessary to make this provision. Subsection (5) provides the register shall be open to inspection by members and societies will be required to comply with this requirement.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 75.
Government amendment No. 94:
In page 45, line 35, to delete "An officer, solicitor or surveyor" and insert "A director".

The purpose of the amendment is to limit the scope of the subsection to a director of a society who is also an auctioneer. As drafted, the subsection could have very wide implications resulting in the loss of professional fees to an auctioneer who was, for instance, a society's surveyor or where a branch manager was an auctioneer and under the rules of the society also an officer of the society. While a surveyor or branch manager might be able to influence the making of a loan, he would not be in a position actually to authorise the loan. A different situation would arise in the case of a director who would be a person authorising the making of a loan. The amendment strikes a more reasonable balance in controlling this matter.

Amendment agreed to.
Government amendment No. 95:
In page 45, between lines 47 and 48, to insert the following:
"(7) A society shall not require a borrower to take out, in consideration of or in connection with the making of a loan, a life assurance policy, other than a policy providing, in the event of the death of the borrower before the loan has been repaid, for payment of a sum not exceeding the amount then outstanding on the loan or a policy taken out to provide additional security under section 78 (2).
(8) Subsection (7) shall not apply in relation to a loan in respect of which the sum advanced will, under the terms of the mortgage, be repaid out of the proceeds of a life assurance policy taken out at the time the loan is made on the life of the mortgagor.
(9) A person who gives any commission the acceptance of which is prohibited by subsection (3), (4), (5) or (6) shall be guilty of an offence."

The effect of subsections (7) and (8) is to secure that a society shall not require a borrower, to whom a loan is made, to take out an insurance policy other than a mortgage protection policy or a policy used as additional security or an endowment policy under which the borrower pays the interest on the loan and the principal is repaid out of the proceeds of the policy.

Subsection (9) makes it an offence to give any commission, the receipt of which is prohibited under subsections (3), (4), (5) or (6). Section 23 of the 1894 Act made it an offence either to give or to receive commission in addition to the remuneration prescribed in the rules.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 76.
Question proposed: "That section 76 stand part of the Bill."

Discussions have taken place with the building societies regarding this section. I am still considering whether an amendment might be needed. I will examine the matter between now and Report Stage if the House so agrees.

Question put and agreed to.
SECTION 77.

An Leas-Chathaoirleach

Amendments Nos. 96, 97, 98 and 99 are related. If amendment No. 96 is agreed to, amendments Nos. 97 and 98 cannot be moved.

We can debate it, but amendment No. 98 strengthens amendment No. 96.

Government amendment No. 96:
In page 46, to delete lines 18 to 24 and insert the following:
"77.—(1) Whenever the Minister considers it expedient, in the interests of the orderly and proper regulation of building society business and having regard to the demand for loans for house purchase, he may, subject to the consent of the Minister for Finance and after consultation with the Registrar, make regulations in relation to the purposes and amounts of loans by societies."

Ministerial amendment No. 96 modifies slightly subsection (1) as drafted. The effect of Senator Yeats' three amendments would be to confer on the register, subject to the consent of the Central Bank, power to make regulations regarding the amounts and purposes of loans. Senator Yeats does not provide for any involvement or consultation with either the Minister for Local Government or the Minister for Finance, the two Ministers most directly concerned with housing matters. The Minister for Local Government has overall responsibility for the housing programme and has expert advice available on housing matters. The Minister for Finance has responsibility for the provision of finance for all State services including the funding of the capital programme for housing. To exclude both Ministers from the section would be most unrealistic.

Furthermore, no criteria are proposed by reference to which the controls might be exercised. In his proposal to delete subsection (3) he would create problems in the framing of the regulations. Throughout the Bill, the principle of framing provisions tailored to meet the needs of different types of societies has been enshrined and it would be inappropriate to delete the subsection in this instance. The purpose of the ministerial amendment is to modify subsection (1) of the section as drafted. It will be noticed that the amendment would provide for consultation with the registrar before making regulations under the section. The revised subsection would not include a reference to the needs of the national housing programme or to the conditions subject to which such loans may be made.

The Irish Building Society Association made representations to the effect that any controls under the section should be exercised by the registrar. In the course of lengthy discussions on the matter, the societies did not disagree about the possible need for the controls over the amounts and purposes of loans. Their principal worry was that the section, as drafted, would enable the control of interest rates and that the decision might be based upon political considerations to the detriment of economic and financial ones, or even that decisions would be delayed for political convenience.

It can be argued confidently that in certain circumstances there is a need to control this vital sector of building society business. For example, at a time when there is a shortfall in the inflow of funds in relation to the demand for loans, it would be desirable to ensure that an undue proportion of the funds available to societies was not devoted to non-housing purposes or to the purpose of expensive houses. It is agreed that, in the main, the societies have been very conscious of their social responsibilities.

The present Bill is intended to last for a long time. It would be unwise not to take the powers now sought and thus provide for changed circumstances in the future. The provision of finance for housing, whether in the public or the private sector, is one of the most important functions of Government. Any regulation made under the section would have regard to the overall position of housing which, in turn, has an important impact on employment. It is clear, therefore, that the exercise of controls over the amounts and purposes of loans could most properly be exercised by the Minister who is responsible for the organisation of the housing programme. It is also appropriate that the consent of the Minister for Finance should be sought. He is the Minister primarily concerned with the provision of finance for housing and all other services.

Consultation with the registrar is envisaged in the amendment. This should provide useful information and advice on which to make regulations since the registrar who, it is envisaged, will be in constant touch with societies will be able to identify the pattern of lending by the societies or any changes in that pattern. He will also be in a position to advise whether the making of regulations would have any effect on other aspects of building society business.

This section represents the nub of our disagreement in principle with the Minister. The Minister is well aware of the issues involved. It is a question of how to go about it. The building societies have been expanding and drawing in funds in a particularly expert way. They are particularly equipped to attract small investments. We want to ensure that is accelerated in the overall interests of the economy. That is the objective.

The Minister says that, for policy reasons, the Minister for Finance and the Minister for Local Government should have their finger in this pie. That is what is proposed here under section 77 and only moderately improved by the Minister's amendment which brings in the registrar for consultation with the Minister for Finance. As the section stands, the registrar is not even mentioned. The Government are getting their priorities all wrong.

This subsection provides that whenever the Minister considers it expedient, in the interests of proper and orderly regulation of building society business and having regard to the demand for loans for house purchase and the financial needs of the national housing programme, he may, subject to the consent of the Minister for Finance, make these regulations. This gives to the Minister for Local Government and the Minister for Finance enormous bureaucratic control. With all due respect to the two Ministers concerned, and witnessing in other areas the question of the direction of our economic affairs, we are witnessing a total run down of the economy at present. That is a fact. We are in very serious financial straits. Here is a sector of the economy, the building societies, who are apparently able to attract money and who, on the Minister's statement in his opening speech in which he paid just tribute to them, are the repository of upwards of £300 million. We want to see that accelerated and improved. They appear to have an expertise in attracting funds and in the proper distribution of funds to aid a private house-building programme, apart from the other investments to which they contribute to the national economy. Here are people in a proven area of the economic and social activity who have proved their worth and now we are going to impose on them the Minister for Finance and the Minister for Local Government who have failed totally in the management of our economy at present.

I will leave aside the other point I have just mentioned and come to the fact that, apart from the politics of whoever is Minister for Finance and whoever is Minister for Local Government, we are now seeking to have imposed on a highly successful area of investment and financial business controls in regard to the amounts and the purpose of loans and the conditions subject to which loans will be made, and this control is to be held by the administration residing in the Department of Local Government and the Department of Finance.

With all respect to these people— they are administrators—what expertise have they in this business of banking, financing, house loans, investment incentives, liquidities, ratios of exchange and liquidity, reserves and so on? What experience resides in either of these two Departments of State sufficient to engage in the sort of control that is envisaged under this section? This is the nub of it. The serious matter is that the Minister will have to agree that that experience does not exist. The Minister may quote to me that this is a policy area. That is a fine, global description, a policy area.

May I interrupt the Senator? I would suggest that he is talking about the wrong section. The things which he is talking about come under section 76 which has already been passed.

No. I am talking about the amounts, purposes and conditions of loans. I am referring to section 77, subsection (1) and I quote:

Whenever the Minister considers it expedient, in the interests of the orderly and proper regulation of building society business and having regard to the demand for loans for house purchase and the financial needs of the national housing programme, he may, subject to the consent of the Minister for Finance, make regulations in relation to the purposes and amounts of loans by societies and the conditions subject to which such loans may be made.

Section 77 (2) states:

(2) Without prejudice to the generality of subsection (1), regulations under this section may provide for all or any one or more of the following—

(a) the maximum amount of a loan that a society may make;

(b) the purposes for which loans may or may not be made by a society; and

(c) the maximum amount that a society may lend to a body corporate and the total amount of such loans.

That sort of bureaucratic control envisaged under section 77 will deter investment in building societies. The very existence of section 77, even with the improvement the Minister suggests, will act as a deterrent to this sort of investment and the required flow of funds into building societies. It must be taken in conjunction with section 76. I am on the right section with regard to this aspect, and our amendment pinpoints what I say.

The Minister's amendment to section 77 merely brings in the registrar, whom I would regard as the central office in the policing and monitoring of building societies. I envisage the registrar being established as an independent institution. The office has been established in Britain where it has functioned well since 1962 and where under that system the registrar fundamentally is regarded as the institution that has the sole supervisory function on both the policing and the financial monitoring sides vis-á-vis building societies. Building societies relate to him and to him alone and that is the way it functions. Now, for policy reasons, under section 77 and also under section 76 and right through the Bill, on this area of managing the financial, investment and distribution policies of building societies, the Minister is seeking to bring in the Minister for Finance and the Minister for Local Government. He has promised in regard to section 76 that he is considering an amendment for Report Stage. I suggest that his proposed amendment to section 77, which we are now discussing, is inadequate in this respect if we are to retain the confidence of the investing public in building societies. Their confidence will be deterred enormously if they see a situation where building societies are, in effect, a section of the Departments of Local Government and Finance.

If the respective Departments concerned could attract such funds why not set them up to attract such funds? They are not in a position to do it. They do not have the expertise. They would be the first to admit themselves that they do not have the expertise. Departments of State are set up to be administrators in regard to legislation passed by this House and in regard to the administrative functions vis-á-vis the Government of the day. That is what an administration is for. That is what the Department of Finance are for in the financial field of State administration. The Department of Local Government have their functions in regard to local government administration of the State. They are not bankers, building societies, or insurance companies. They are not operators in the field of money; they know nothing, or very little, about it.

This is a field of expertise able to attract funds that are not thrown into the banking net, not thrown into the insurance company net, and able to attract funds of the order of £300 million, and hopefully more, which are to be distributed in accordance with the needs and requirements of the private house-building industry. Does the Minister think that his Department or the Department of Finance can perform this function any better, and can so presume to perform the function that under section 77 the respective Ministers may make regulations relating to the purposes, amounts and conditions of such loans? I do not think they can do it. I am very serious about this. There is an issue of principle here. I do not think they are equipped to do it.

The sensible thing to do would be to equip the central office, as it were, relating to building societies under an independently appointed registrar, equip that registrar and that office with all the necessary expertise and capacity, with people of banking and building society experience, people of financial expertise who have knowledge to advise, to monitor and to make the appropriate regulations in regard to a building society. It can be done by our amendments that have been taken here with the Minister's amendment.

The Minister's amendment is a very minor improvement on the situation. It just brings in the registrar in a consultative capacity and the Minister for Finance must consult with him. The Minister could consult him until the cows come home and need not take the advice arising out of the consultation. If the Minister wants to put the heavy hand of administration into the policy areas of the building societies, then he is running into the very serious danger of deterring investment in the building societies.

What we suggest in the two amendments put down by Senator Yeats is to delete altogether subsection (1), which embodies this over-regulation and over-supervision on the part of the two respective Ministers and their Departments. Senator Yeats proposes that should be deleted. He also proposes in amendment No. 98 that what should be substituted in subsection (2) is "the registrar subject to the consent of the Central Bank". I have agreed to withdraw "the Central Bank". I am agreeable to having "the Minister Finance" in there or "the Minister for Local Government" instead of "the Central Bank" as long as it is the registrar, with the concurrence or consent of the Minister for Local Government or the Minister for Finance, who makes the regulations in this matter. The policy area is the responsibility of the boards of these building societies that are set up, as the Minister provides for under the Bill, under various voting and other procedures. This is what the policies are about. Otherwise why are boards there? Why have building society boards? Why go through voting procedures to elect representatives of shareholders on the boards of building societies unless they are going to be responsible for policy matters?

What the Minister proposes is that he and the Minister for Finance should, in effect, be the equivalent of, and indeed, superseding the respective boards of the building societies. I always understood that boards of companies or of building societies or appointed by properly constituted voting methods were there to look after the policies of the respective companies or building societies. That is what boards are for.

What the Minister, in effect, is saying—and I am quoting him on this—is that he feels that he and the Minister for Finance should be responsible for the policy-making approach on the part of building societies. That is very near a complete State takeover of building societies, if the Minister for Local Government and the Minister for Finance feel that the policy matters in relation to building societies are their responsibility. I can see a very serious situation if the word gets abroad at all that the people who are running the policy of building societies are the Ministers for Finance and Local Government. It would be a very serious situation with regard to funds drying up. The Minister should bear very seriously on this point. The Government are in sufficient trouble at the moment.

I do not think it is fair that an effort should be made by a Senator here to try to give the impression that there is any danger in investing in building societies. It is reprehensible that this should happen here.

We are having a very sensible debate.

There is nothing sensible in what the Senator is saying.

We are debating on the basis that the Minister has categorically stated here this morning, and last night, that what he envisages under sections 76 and 77, and generally in regard to the operation of this Bill, is that the Ministers for Finance and Local Government should be responsible for policy matters related to building societies. Is that the Minister's approach? Do I take up the Minister wrong in that? Let us have a rational discussion.

When Senator Lenihan has finished his statement I will comment on it.

Let us keep our heads on our shoulders. The Minister is talking to a sensible assembly and we hope we are talking to a sensible Minister. I want to know if I have taken the Minister up wrongly in this. I took the Minister to state that he and the Minister for Finance are responsible for the policy areas in regard to the functioning of building societies. Is that right? Would the Minister agree with that proposition that that is what he said or am I summing up wrongly?

I would prefer to wait until Senator Lenihan has finished.

The Minister can come again and again.

I can, yes.

If this is the sort of thing that is involved then I have no apology for saying that it is going to cause a drying-up of the flow of funds into building societies. The whole essence of building societies is that they are composed of widespread shareholders who are in a position to attract small investments. They have a democratic system of voting and of electing boards of their societies. They have a facility and a capacity and an expertise in attracting small funds into these building societies.

Building societies are now funded in excess of £300 million at present, making a very positive contribution to the economy. I do not see building societies acting as units of the Departments of Local Government and Finance under policy objectives of the respective Ministers, particularly under a discredited Government as at present, in the handling of financial matters. I do not see much building societies continuing to attract funds of the order that they have attracted in recent years and we hope they will attract in the years ahead. That is all I am saying. It is a point of view and an opinion.

The Minister for Local Government should take himself and the Minister for Finance out of section 76 and particularly out of section 77. Instead, he should write into the legislation that the registrar be properly established as an institution with a proper office and proper expertise to supervise and monitor building societies." He should leave the policy direction to the boards of building societies, provided that, in accordance with overall building society criteria in regard to their funds and overall policing in regard to their structure and establishment, that aspect of policing and monitoring their administration, their investment and lending practice is done under an independent authority—say the registrar of friendly societies or some new animal of that kind equipped to do that job. The day-to-day policy direction in regard to collection and lending of funds should be left to the boards of the building societies, properly appointed in accordance with this statute. The Ministers for Finance and Local Government should take their hands out of it. If they insist on keeping their hands in it is going to be very serious and deleterious as far as the flow of funds to the building societies is concerned.

It is a factual statement of opinion which I am entitled to express and I say it on very secure and solid advice. There is no need for the Minister to develop any hot air about it. They are the facts that are concerning people who are very interested in investment and development, and particularly interested in the private house-building sector that is on its knees at the moment and requires a lift through accelerating an inflow of funds. The Minister should seriously take into account the single aspect whether he and the Minister for Finance are better equipped to act as policymakers for the building societies than the boards of building societies properly appointed and elected under this statute, subject to the overall policing and monitoring of an independent registrar who has available to him the expertise necessary to ensure that building societies operate in accordance with the law and proper lending practices.

In fairness to the Minister, I would like to take another tack on that section and section 76. Already the Minister has proposed a great deal of amendments to the Bill, and he has yielded to persuasion with regard to the importance and the salience of the role of registrar. My approach to this section would be to suggest that, in a way, it stands out at this moment in spirit a little bit from the amended sections earlier on—sections 37, 38 and so on. The Minister has shown himself amenable to persuasion and to giving the position of registrar a far larger role than in the Bill originally considered.

I was going to speak on section 76 but the Minister said he would be bringing in an amendment. It seems that section 76 has the disadvantage that it almost substitutes itself for the Bill itself. In other words, it hands over plenipotentiary powers, so to speak, to the Minister and to the Department of Finance. I do not know how radical the Minister's amendment will be——

I am considering an amendment. I may not be putting an amendment in.

I am glad the Minister has made that distinction. He may not put down an amendment. I did not realise that that might be the outcome of considering an amendment. I thought the Minister was seriously considering it.

I am seriously considering it.

But even seriously considering makng an amendment could result in not making an amendment at all. I am glad to have that timely warning, because I may put down an amendment myself, in case of a lacuna, when we come to Report Stage.

I do not think it is the Minister's intention to put the building societies into the hands of the Departments of Finance and Local Government, else there have been unnecessary and superfluous feints in his amendments so far. Something better might be considered if one were to think about section 77. Instead of saying "whenever the Minister considers it expedient" would it not be better to say "whenever the registrar considers it expedient in the interests of the orderly and proper regulation of building societies that he may, subject to the consent of the Minister", do this, that or the other? In earlier sections and in amendments he has given the initiative to the registrar and he seems to have been sensitive to the suggestion that the registrar should have a large role in the matter. I suggest that perhaps that kind of formulation might help.

I agree with Senator Lenihan on one or two points. This Bill is to be here for all time. It is not simply a Bill to be at the service of the present Minister, whose intentions on these matters are above reproach. It may fall into the hands of other Ministers in the future. He has said it will be a long time before this happens and his confidence is to be admired, if not wondered at. It seems to me if we have a Government even like the present one, with a strong ideological split already evincing itself, the uses to which that Bill could be put could differ greatly. If Senator Halligan, for instance, was calling the shots, interference with building societies and the direction of their policies, would be rather different from a situation where Deputy John Kelly was calling the shots. In other words, the instrument is one which will be there for all time. Its use would depend on the ideology of the Minister in power and his idea of what a free enterprise society is about. Have we a free enterprise society or have we a socialistic society? We are vacillating between one and the other, and these two ideologies are being tossed from one side of the Coalition to the other at present. Not being a member of any party, I would be interested in having a Bill which would be proof against the vacillations of ideology as between the three major parties. I trust totally the Minister with this Bill in his hands, but others could come in his place.

Senator Lenihan says that the building societies have done a very reassuring thing. Through television advertisements the people have been encouraged to invest their money in building societies. These advertisements must be bearing fruit. The small man, the ordinary citizen, has a sense of cosy comfort about investments in these societies. It would be dangerous if such investors were frightened off. As much power as is reconcilable with democracy should be given to the registrar. He would not be the tool of the building societies. He would be an independent agent who would mediate between the Government and the building societies and he would have the advantage of being outside the area of politics and therefore of ideologies.

I suggest to the Minister that in section 77 and when he comes to consider, with whatever outcome, an amendment to section 76 he would, instead of the present form, say something to the effect that "wherever the registrar considers it expedient that, subject to the consent of the Minister, he may issue directions in relation to the purposes and amounts of loans by societies." In the small, intimate area of the working of the society the registrar should have the initiative but always, in a democracy, subject to the consent of the Minister for Finance. In Britain, they use the phrase "subject to the consent of the Treasury".

The Minister was rather annoyed by an opinion expressed by Senator Lenihan. Let it be said, to the Minister's credit, that it seldom happens that he gets annoyed. I cannot understand why he got annoyed because it is our duty here to point out dangers we may see and they can be considered by the Minister. Senator Lenihan said that the investing public and the members of the societies will be suspicious of the motives behind ministerial control. They will either view it as a means of making building societies an arm of Government policy or feel that the societies' managements are unable to carry on their operations without Government supervision. There is a danger in either case that confidence will be severely shaken, and the result could be counter-productive. The inflow of funds to the societies could be jeopardised and it is our duty to point out these dangers.

This is a very important Bill. I am not sure if the Minister had consultations with representatives of the building societies' association on these sections. The Minister will agree that the building societies have done more to create a happy society than any other agency in the country.

The previous speaker referred to advertising on radio and television by building societies. There are other agencies also looking for money but the difference is that, even though they offer attractive rates, the money may well be used for investment outside the country and to create business elsewhere. At least the building societies' money is used here to create homes for people. They deserve great praise for their efforts and the initiative they have shown towards helping people to purchase their homes.

The Minister should take all our points into consideration. I cannot understand why he resented Senator Lenihan's opinion. If he gives it due thought, he may well reconsider his attitude.

I did not resent the Senator's opinions. I said I would consider any suggestions made. What I did resent—and I am sure Senator Lenihan on reconsideration will agree that it was not a very wise thing to say—was the suggestion that the public might be afraid to invest their money in building societies.

They might in view of what the Minister proposes. That is my point. It is the whole kernel of our opposition.

They could be forgiven for being suspicious of the Government's motives.

Why should they be suspicious? In effect, what is being asked now is to regularise what has been in operation by arrangement since 12th May, 1973. It is not, as has been suggested, a question of telling the building societies how to run their own business. Section 77 (1) reads:

Whenever the Minister considers it expedient, in the interests of the orderly and proper regulation of building society business and having regard to the demand for loans for house purchase and the financial needs of the national housing programme, he may...

Those are the only matters. If there are any other regulations they will have to go before both Houses of the Oireachtas. Since 12th May, 1973, an arrangement has existed between the Minister for Local Government, the Minister for Finance and the building societies which covers this point which is included in this section. They are working very well, and instead of frightening away the investor what has happened is that the inflow of funds in 1972-73, immediately before I took over, was £34 million for the year and last year it was £74 million. Does that show people getting afraid because the Government are laying down regulations and saying they must spend the money they get for the purpose of building houses? We also gave a subsidy for a lean period in order to encourage the building societies, and the Minister for Finance had to explain what the subsidy would be and how it would be regulated. The result has been that the inflow has increased from £34 million to £74 million in 1975. The amount of money which has been paid out in loans rose from £43 million in 1972-73 to £65 million in 1975 and, according to the building societies themselves, will be about £85 million this year. This does not show a lack of confidence under the regulations which we are putting in a formal way into the Bill. Perhaps I should have explained this a little earlier but I was under the impression that everybody understood it.

On the question of whether they want a guarantee, trustee status will give them a much greater guarantee than they have at present. Building societies will continue to grow. Senator Lenihan said there was no expertise in the Department of Finance or in the Department of Local Government. This is entirely wrong.

No expertise in this area.

Expertise in this area is in both Departments and, in the main, they are people who came with the change of Government and who had worked under the previous Government and many of them have been many years there. Civil servants in both the Department of Finance and Local Government are excellent people who have got an expertise which is in no other society that I know. I do not think the building societies could claim that they have the type of expertise which is needed in those cases.

Senator Lenihan introduced a few things which I hoped would not be introduced in this House, as we had been discussing matters reasonably. But since he has referred to the crux in the house building industry I repeat that, with the assistance of the building societies, we built twice as many houses as the Government of which he was a Minister over the last three years of his office. We should not try to make political points in matters like this because they will only backfire. I introduced so many amendments to this Bill that it appeared as if it would have a long and difficult passage through this House, but I did most of them after my officials and the officials of the Department of Finance had discussions with the building societies.

I have not agreed to everything the building societies wanted. I would be a very poor Minister if I did. It is not my function to regulate the Bill for the purpose of facilitating the building societies, because they are only one side of it. They have done an excellent job here. We have given them— and they would be the first to admit it —excellent support and encouragement to carry on the business. We found it necessary to make an arrangement in 1973 to have the business carried out in a certain way, because it was known—and there is no point in covering it up—that certain building societies, some of which no longer exist as building societies, invested the money they received for the purpose of building houses as a building society other than in building houses. We said this was wrong. We made a regulation which the building societies accepted. We made the regulation about interest rates and so on. These have worked very well. If there is any major change suggested it would have to be passed by both Houses of the Oireachtas. There is no question of a major change being made nor is there any suggestion of interference in the day-to-day business of the building societies. This is a section to which I am not prepared to accept an amendment. This received more consideration than any other part of the Bill because we wished to ensure that there would be no cause for complaint. To refer back, if I may, to section 76, to which Senator Martin referred, that does require an amendment. My idea is that when we get the Bill through this House and have it passed through the Dáil, it will be an excellent Bill. It will be legislation of which both Houses will be proud. I would prefer if we kept the discussion on the basis of what is best for the country, and leave the narrow sectional interest to one side.

Hear, hear. That is more like it.

The more one reads the preamble to this section the more one realises that it is misleading, whether it is deliberately misleading or not I am not saying.

Is it the preamble as proposed to be amended by me? It is still misleading?

Yes. It is misleading in the sense that it seems to go out of its way to suggest that this section will not allow the Minister to interfere in an unwarranted way in policy matters. It goes out of its way to say "whenever the Minister considers it expedient in the interests of the orderly and proper regulation of building society business and having regard to the demand for loans for house purchase". It is hardly necessary to say all of that. We all expect the Bill to be about that kind of thing. Furthermore, section 76 deals with the regulations relating to the management of building societies and it says:

The Minister may, after consultation with the Minister for Finance, make such regulations relating to the management of societies as he considers it necessary or expedient for the purpose of securing their proper and efficient management...

It seems to be hardly necessary to say this at all in section 77. It certainly seems unnecessary to repeat what has been more or less said in the previous section.

The Senator appreciates that a regulation can be annulled by an order of either House.

I appreciate that. The very fact that this section has been amended and the words "the financial needs of the national housing programme" deleted in a sense concedes the point that, as originally drafted, this section was giving the Minister power to interfere in a way which would really be a radical departure from the power which the Minister had in the past, interfering in the ordinary business of the building society by allowing the Minister, for political reasons,—I do not mean that in any narrow sense—to dictate to the building societies how they should run their societies because the Minister in a particular situation wanted the national housing programme to proceed in a certain direction.

The amendment which has been put down by the Minister recognises that he was possibly going too far in that direction. It would be quite wrong for the societies to find themselves having to change their policy, having to do things they did not want to do, because of the political whim of the Minister of the day and because the Minister of the day had a particular idea about what the national housing programme should be, what form it should take, what direction it should go in. Therefore I am glad, at least, the Minister has taken out these particular words because quite clearly the whole building society sphere was in danger of being disrupted by whatever the Minister of the day considered should be done for the national housing programme.

Even as it stands, it allows political interference, interference in the ordinary running of the building societies as a result of what a Minister thinks. Ministers have enthusiasms and various indiosyncrasies, some of them very desirable ones and some of them not so desirable. The important thing is that the building societies should not be too susceptible to the whims and enthusiasms and so on of the Minister of the day.

What is important here is that the views of the Minister should not be capable of interfering too easily with the policy of the building societies. I know that if the Government or the various Ministers involved in this sphere want the building societies to do something and if they want it hard enough, they are certainly in the long run going to persuade the building societies to do what they want or at least to make some concession; but the Minister should not be able to do it too easily. The merit of the kind of amendment that we, on this side of the House, put down—although admittedly it had to be changed slightly —is that the regulations would have to be made by the registrar, that the registrar would have the initiative in these regulations. Certainly in the long run the Minister would have to be consulted and the Minister, from a statutory point of view, would, in the end, have to consent and make the regulations. But the initiative should be left quite firmly in the hands of the registrar so as to inhibit at least to some extent the Minister and to discourage him or slow him down in implementing his whims to the detriment of the building societies.

I am quite certain from reading this section as originally drafted, in particular, and even as it remains here that there is a deliberate effort to try to play down the fact that this section gives rather far-reaching and dangerous power to the Minister to interfere with the ordinary running of a building society, not in the sense of being a supervisory authority to prevent the building societies from doing things which would be dangerous or not in the interests of their members or good management but in the sense of interfering with the policy of a building society. For that reason, this section should be amended. Perhaps our amendment has its shortcomings and perhaps we can devise a better one for the next Stage, but there should be some amendment on it.

The Minister said that what is proposed in this amendment is merely to implement a state of affairs that has existed since 1973. Of course, the state of affairs there, as I understand it, was merely a temporary agreement but to put that into a Bill which may last for a long time when enacted, as previous building society Acts have done, is a quite different thing from having an ad hoc agreement between the Minister and the societies for the last few years. This section goes too far and it should be amended.

The Minister may be outraged at our suggestion that this would have a discouraging effect on investment in the building societies. There is no doubt at all that if the Act, in its final form, is an Act which gives too much power to the Minister to interfere in policy and with the ordinary working of the building societies, it is certainly bound to have some discouraging effect on investment in building societies. The way to avoid any discouragement of that kind, the way to avoid any suggestion that the building societies are going to be interfered with by the Minister, the way to stop people making that kind of statement and suggestion that we have made over here, is for the Minister to amend this section so that it cannot be said and that it would not be true if it was said.

There is just one point I would like to clear with the Minister. I asked him if he had consultations with the Building Societies Association and he said "at length". Did he mean that he, personally, had consultations with them?

I had discussions with individual members of the association. My officials and officials of the Department of Finance have had discussions at length with them.

The Minister had consultations with individual members but he did not have discussions with the representatives of the Building Societies Association?

I had discussions with them but I did not go through the Bill with them, if that is what Senator Hanafin means.

Did the Minister meet the representatives of the Building Societies Association? I do not know what the Minister means by saying he had consultations with individual members.

Senator Hanafin knows quite a number of the members of the Building Societies Association who have views on these things and they made those views known. I think what Senator Hanafin wants to know is if the Building Societies Association agree with the amendments, the section as put in here. Of course, they did not.

No. What I am saying is that I understood the Minister to say he had consultations with the representatives of the Building Societies Association.

My Department were in consultation with them on numerous occasions and I discussed matters with individual members of it.

With individual members. It would have been better had the Minister himself met the representatives of the Building Societies Association.

I do not think so. My officials are very efficient and would be in a better position to get to the nitty gritty parts than I would.

This is a very important section. The Minister's attitude might be quite different if he had discussed it with them. Like the Minister, we all want to have a good Bill. That is very important, but some of us are convinced that, in order to retain the confidence of the investors, it is essential that the society should be and be seen to be independent of ministerial control.

I cannot understand what the objection is. All regulations must be laid before the Houses of the Oireachtas. If there is anything wrong with them, such as has been suggested, they can be annulled. The key words of the section are the orderly and proper regulation of building society business, and if regulations are considered capricious or arbitrary, they can and will, I am sure, be challenged on this ground. The basic point at issue is whether the regulations are to be made by a Minister answerable to both Houses and to the public or by a functionary who is not so answerable. It is the first time I have come across politicians who are anxious to ensure that they will not be able to question certain things that have been done. This is exactly what you are saying.

No, that is not right.

If the registrar has the authority to make the regulations nobody here or in the other House will have any right to challenge them. If the Minister makes them both Houses have that right to challenge them. Therefore, I think there has been some kind of a double think on this and I would suggest that perhaps it might be considered again by the people who want it amended.

Let us not muddy the the waters, let us come back to the principle involved here.

I am trying to clear them.

This is no reflection on the Minister for Finance or the Minister for Local Government or the officials of both Departments. But what we are concerned about is what motivates people to invest. Why does an institution such as a building society grow over 100 years in its various forms and structures, particularly in the United Kingdom and now here? What does it have that attracts money? This applies to all banking, but it applies in particular to building societies that have been able to attract small funds and small shareholders and attract a flow of funds that other financial institutions have not been able to attract. That system has grown over the years into a very successful integral part of the whole money-raising and money lending sphere in our society and in Britain, rather peculiar to the two islands, and performs a very positive function in regard to private house building. That depends on a certain relationship, a certain image, depends on a certain facit that people have in building societies. Now for the first time, we are writing into law a situation where the Ministers and their administrations can, under sections 76 and 77, direct the societies in regard to the management of their funds, both in regard to the raising of them and their distribution.

I am not disputing the bona fides of the representative Ministers or their respective administrations. The only question I am asking is, will this new structure deter or facilitate the flow of funds to building societies? There is a very real danger that it will do serious damage.

It has not proved so in the last few years.

This is a very important point and what the Minister has been operating over the past two years is an ad hoc arrangement with the building societies. That is a different matter. That is not a matter that motivates or concerns the investors. As far as investors are concerned the building societies are in charge of their affairs. The boards whom the shareholders appoint are in charge of the affairs of building societies; they may make ad hoc arrangements with whoever is Minister for Local Government at the time; that is part of an internal arrangement. That is not written into law. What is suggested to be done here by the Minister is to write into law that he and the Minister for Finance can, in effect, direct the policy arrangements.

No. We must put them before the Houses of the Oireachtas and they must be approved.

I know that. If the Minister for Finance and the Minister for Local Government in a Government commanding majority support in the Oireachtas decide on putting certain regulations through with regard to governing and directing building societies, those regulations will stick once the Government have a majority. That is our system. It is only window-dressing to talk otherwise. This Government, if they want to, so long as they wish to stay there, can push through whatever regulations they want. Another Government can do the same thing. The reality of the matter is that we are writing into legislation a new situation concerning societies that built up an enormous reservoir of goodwill in attracting funds over the years and have shown a capacity to distribute those funds, particularly in the private house building area, that no other agency has been able to emulate. They have managed to corner a certain line of attracting funds, in particular from small investors, and they have been able to translate that investment into investment on their part in the private house building industry. They have done that very successfully.

The very serious question I am making is whether that relationship that exists between building societies and their organisation and their investors is going to be seriously upset by the intrusion for the first time in legislative form of the Ministers for Finance and Local Government in regard to the policy directions of those societies.

I am all for the various policing and monitoring requirements written into the Bill. I am aware of the abuses that exist in regard to building societies. I support the Minister in 90 per cent of this Bill and I said this on Second Stage. I support him fully in regard to the policing and monitoring powers. But what I would like to see is those powers handed over to a reputable, independent institution such as a registrar of friendly societies, strengthened, provided with a staff, given independence and operating with the consent of the Minister for Finance in dealing with the building societies. It has worked this way in Britain for the past 14 years. It has worked very well in a country that has more experience of the sophisticated operation of building societies than any other country in the world.

In the UK he is subject to the Treasury. He has even less powers than we are giving to the registrar here.

In practice in the United Kingdom Act the registrar is given the whole function of controlling the societies.

Subject to the Treasury.

This is the burden of our amendments. The Minister in his amendment puts the Minister for Finance in the central position, after consultation with the registrar. The British Act puts it in reverse—the registrar, with the consent of the Chancellor of the Exchequer, has the authority. What the Minister here is saying is that if the Minister for Local Government considers it expedient, "he may, with the consent of the Minister for Finance, after consultation with the Registrar..." That does not put the registrar in the central policing and monitoring position. Consultation means nothing. It is a form of window-dressing, not very successful. Consultation would want to be very successful on many fronts.

Very successful.

I hope the consultation yesterday works out well.

I am sure it will.

For the sake of Ireland I hope it does. At any rate we will leave that point, it is a rather contentious area. The Minister's amendment puts the Minister for Local Government and the Minister for Finance in the central position. The only requirement is "after consultation with the registrar". The British Statute, I will have it on Report Stage, specifically puts the registrar in the central position; with the consent of the Treasury, he may make appropriate regulations.

What Fianna Fáil suggest in the two amendments put down by Senator Yeats—I will put down a more specific amendment on Report Stage because I am withdrawing the reference to the Central Bank which the Minister has incorporated in his amendment—is to delete the subsection relating to the Minister for Local Government and Finance, deleting their relationship to making regulations in regard to building societies and instead writing in the "Registrar, subject to the consent of the Central Bank". I would agree with "the Registrar subject to the consent of the Minister for Finance" which is the equivalent of the British section which says: "the Registrar subject to the consent of the Treasury may make regulations to..."

An amendment will be put down on Report Stage that one can remove the names of the Minister for Local Government and Finance from section 77 and instead insert a simple, regulatory section writing in the Registrar of Friendly Societies and empowering him to make the necessary regulations with the consent of the Minister for Finance. It is no more and no less. That amendment, allied to what we propose in amendment No. 104 guaranteeing the status and independence of the registrar, is the right way to solve the problem.

I agree with the Minister that there is plenty of expertise in the civil service to deal with this but this expertise must be attached to an independent body in which the investing public in the building societies, can have confidence. If it means transferring staff from the Minister's Department or from the Department of Finance, then they should be transferred to a new adminitrative apparatus under the Registrar of Friendly Societies, an independent registrar with the proper staff and officials and with a central clearing house of information in regard to building societies, as it operates in Great Britain. That would take the whole operation, as Senator Eoin Ryan pointed out, away from the political arena.

It will not be possible to attract funds into building societies if there is any whiff of day-to-day political interference. In law there is the old saying that not alone must justice be done but it must be seen to be done. If we do not have an independent registrar with his own staff, away from the day-to-day political interference of the Ministers for Finance or Local Government and their civil servants who must go along with whatever the Minister of the day may propose, it will be a deterrent to investors.

It has not been up until now.

Not up to now.

The regulations are allowing it——

The Minister has ad hoc arrangements over the past few years with building societies. That is not a matter of statute which enables the two Ministers concerned and their officials to impose political policy decisions on to the board of building societies by law. That is what this section means. I know the regulations will be tabled before each House of the Oireachtas, backed by a majority Government making policy decisions. The end product of that is complete totalitarian control of the building societies. There is a whole area where lack of confidence and a complete stoppage of funds is a real prospect in that type of environment.

That is what I objected to before. The Senator should not make those comments——

Senators Ryan and Hanafin have said it. It is common sense.

No, not in the same way.

This is the essence of the point we are making. The essence of the point we are making is that writing in the Minister for Local Government and the Minister for Finance into this policy-supervising position by way of regulation under this and the previous section will give the impression to investors that this is a State-controlled operation, subject to the whims, dictates and the policy changes of political Ministers of the day, however appointed.

That is not good for investment. Banks, insurance companies and anybody in the quasi-banking area, as building societies are, will tell you that money is a highly sensitive matter, that money goes for investment into certain institutions for particular reasons, perhaps of confidentiality and trust, which are not part of a Government apparatus. If any unit of a Department of State set out to try and attract funds they would not be able to get them. That is a fact of life. The Minister could not set up a building society in a corner of the Custom House in the Department of Local Government and expect it to attract the sort of funds attracted by a building society.

If building societies were not there perhaps it might be done.

So the Minister is seriously suggesting that he could establish a building society which would attract the same funds?

So could the Senator when he was Minister.

That is an interesting speculation. Perhaps we are seeing some of the real reasons behind this. If the Minister has the arrogance to think that he can set up units of Departments of State which will attract the same sort of funds as building societies attract he is making a very big mistake. I do not think the Minister is serious about that.

I do not think the Senator is serious. I believe Senator Lenihan has not read the section. I do not know why he is saying these things. He does not seem to understand.

The Minister should not bluster—it is an old tactic of his. What is suggested here is that the Minister for Local Government and the Minister for Finance are being brought into this section and the previous section to ensure that the Registrar of Friendly Societies will not have any function in regard to policies. He will only be consulted; the boards of the building societies will be told what to do in regard to raising their funds, distributing them, and the policy decisions both in regard to fund-raising, distribution and investment generally will be taken not by the boards of the building societies—properly elected under the Bill—but by the respective Ministers. That is what the Bill, and the two sections in particular, is about.

That is not the way to attract funds. The Minister and building societies in general will get into serious trouble if this attitude persists. If the Bill becomes law, without the Minister making a very constructive effort to meet some of the amendments put down, we will retreat into a State-controlled situation where serious harm could be done to increasing the flow of funds to the building societies. The Minister could go along with the suggestion embodied in our amendment and make provision for an independent registrar with his own staff, away from the political administration, in a position to supervise in a monitoring and policing sense the activities of building societies and leave the policy decision to people who know what it is about in regard to raising moneys and investment.

I am touched by the Senator's anxiety to get things away from politics now. The suggestions which he has made might have been all right some years ago but, in fact, I do not think that Senator Lenihan really understands what the section is about.

I know it off by heart.

The Senator is talking about not putting any tight rein on the building societies and allowing them a lot more freedom to do their own thing and he believes in that. Yet, there is an amendment down, amendment No. 100, which states:

"(3) A society may make loans only on residential property."

He is proposing that this be written into the Bill. It is not a regulation. They are to be told that they must do this. The only reason they must do it is because Senator Lenihan thinks it is right but if it is put forward by the Government it does not appear to be the right thing to do.

The Minister was boasting yesterday that he introduced it.

By regulation. Senator Lenihan wants to write it into the Bill so that they must be told to do this. The section means that under certain stated circumstances the Minister for Local Government and the Minister for Finance may consult with the registrar who will be an independent man. Senator Lenihan need have no doubt about that. He will be an independent person, with an independent office.

Properly staffed?

We have not set up any body yet but we will give them proper staff. The Senator may be assured of that. The decision will be on the matters which are referred to then. Regulations will be made which will be ad hoc. They will not be permanent. They will not be written into the legislation and they must go before the Houses of the Oireachtas. There must be something which we can stand over publicly. Nothing will be done behind backs. They must be brought out in the open and we will stand over them publicly. I cannot see what the objections are because by doing it that way if any Member of the Oireachtas is dissatisfied he can ask the Minister for Local Government or the Minister for Finance to explain why certain things are done. Members are entitled to look for information, whereas if the registrar does it he need not give such information. As a matter of fact, it will not be necessary for him to give this information.

Senator Hanafin referred to the discussions which I, my Department and the Department of Finance had with the building society institutions. They expressed views on various aspects of the Bill, and where it was possible to incorporate them this has been done. It was made clear that as far as we were concerned we did not consider we could alter this except in the way in which my amendment suggests it should be altered, and no other way.

I am sorry if the people on the opposite benches feel that they must oppose what I am suggesting but as far as I am concerned I am not prepared to amend this any further. I feel that as it is it is the correct way that it should be done. It is giving the control to the Houses of the Oireachtas. It is giving the right to Members to query decisions made under this section and I feel that is the way it should be. I am sorry that I cannot accept the amendment as suggested.

I accept a good deal of what the Minister is saying in the sense that I accept that the regulations can, of course, only be made by a Minister. I accept that it is right that the regulations that are made should be brought before both Houses so that they can be looked at. The point we have been making is really around the word "initiative", that the regulations which should be made should be made on the initiative of the registrar. By all means the Minister can then disagree with them if he likes and eventually if he approves of them he can make them. What we want to avoid is the Minister being able to ride roughshod over the registrar and everybody else so as to implement a particular enthusiasm that he has about the housing programme. This can be done at the moment. Perhaps there might be some way of getting around it by giving the initiative to the registrar to make the regulations. Then I think we will have a balance between Government policy and what the building societies think is the best thing for them. I agree it is a difficult thing to draft but we will make an effort to draft it for the next Stage.

Amendment agreed to.
Amendments Nos. 97 to 99, inclusive, not moved.
Section, as amended, agreed to.
SECTION 78.

I move amendment No. 100:

Before subsection (3) to insert a new subsection as follows:

"(3) A society may make loans only on residential property."

The Minister mentioned yesterday that when he came into office loans were made on property other than residential property and he was very proud of that fact. There is a lot to be said for that point of view. This amendment was put down with a view to hearing the pros and cons of whether this should be written into the Bill. By and large, that should be the policy. On the other hand, there are arguments that there should be some latitude in this regard. The amendment has been put down to allow the House to hear the arguments for and against writing this into the Bill.

It is true that when the amount of money available from the building societies for home loans did not meet the demand it was felt essential that all available money should be used for home loans only but if this amendment is accepted a situation would arise where they could not invest such surplus funds. As of now there appears to be surplus funds in the building societies. That being so, I think the amendment should not be pursued. I can appreciate the situation but as far as we are concerned, and I am quite sure as far as the Opposition are concerned, the building societies' money is for the purpose of assisting people to build or buy houses. That is as it should be. If there is a surplus they should be entitled to use that surplus in such a way that it will raise further moneys for them rather than lose money, which could be the result if this amendment were accepted.

Amendment, by leave, withdrawn.
Section agreed to.
SECTION 79.
Government amendment No. 101:
In page 47, line 34, to delete "a security" and insert "the security".

This is a minor amendment to subsection (3) to bring the wording into line with other subsections where "the security" is correctly used.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 80.

An Leas-Chathaoirleach

Amendment No. 107 is consequential on amendment No. 102 and they may be discussed together.

Government amendment No. 102:
In page 47, to delete lines 42 to 44.

As drafted, the Bill provides for directors' liability for losses in one instance only, namely, losses which occurred on second mortgages. The matter has now been reconsidered. It is thought appropriate to provide in the general penalty section, section 92, for directors' liability for losses on any loans issued in contravention of the Act. This is dealt with in amendment No. 107.

Amendment agreed to.
Section, as amended, agreed to.
Sections 81 to 83, inclusive, agreed to.
SECTION 84.
Government amendment No. 103:
In page 49, between lines 9 and 10, to insert the following:
"(5) Where in relation to registered land within the meaning of the Registration of Title Act, 1964, all moneys intended to be secured by a mortgage given to a society have been fully paid or discharged, the society may issue to the registered owner of the estate a receipt under the seal of the society, which shall, for the purposes of section 65 of that Act, be sufficient proof of the satisfaction of the mortgage."

It is necessary to make separate provision for the discharge of a mortgage of registered lands. Strictly speaking, it is only possible to charge registered lands and mortgage applies only in the case of unregistered lands. In the definition in section 2 (1) "mortgage" is defined as including "charge". The amendment has been drafted with the advice of the Land Registry.

Amendment agreed to.
Section, as amended, agreed to.
NEW SECTION.

I move amendment No. 104:

Before section 85, to insert a new section as follows:

"(1) The Registrar shall be appointed by the Government and shall not be removed from office except on a motion passed by a two-thirds majority of each House of the Oireachtas.

(2) The Registrar shall be provided with staff to enable him to carry out the duties and responsibilities conferred upon him by this Act."

This is a matter to which I have adverted already in discussion of other amendments and sections. The Minister can see what we have in mind. It is really to set up a registrar with authority who will have proper staff, expertise and so on, who will be appointed by the Government, and we suggest that he shall not be removed except on a motion passed by a two-thirds majority, although that may be too much. In subsection (2) of the amendment it is provided that he should be provided with the proper staff to carry out the duties and responsibilities.

The whole thinking behind that is to have a registrar who will be in a central effective position vis-á-vis the building societies and who will carry an office that will keep him reasonably independent of political or departmental pressures. Charged with this responsibility, he should be enabled to function effectively with building societies. As the Minister rightly said earlier, we are not just talking in this Bill on behalf of building societies. The registrar should also exercise and discharge his functions in an independent capacity in the interests of the public at large and ensure that the legislation we are passing here is properly administered, that proper sanctions are imposed on building societies, that the proper procedures are adopted, and that the organisation of building societies is properly controlled and monitored by an independent office not subject to the day in, day out, administrative political pressures that would arise in respect of a registrar and his office that would be merely functioning as a sub-office of a Government Department.

The effect of the amendment would be that the registrar of building societies would be appointed by the Government and only removable from office by a resolution of both Houses of the Oireachtas. The amendment, therefore, envisages the registrar of building societies being an official on a par with the Judiciary or the Comptroller and Auditor General. If all the powers the Senator's amendment proposes were accepted the powers and status of the registrar might require that the method of his appointment and dismissal be reconsidered but since they are not this is a different situation.

It is not clear whether the amendment envisages that he would be a person other than the registrar of friendly societies although subsection (1) of the amendment would not appear to prevent the Government, if the amendment were adopted, from appointing the registrar of friendly societies to be the registrar for the purpose of the Act.

The proposal in section 85, that the registrar of friendly societies be the registrar of building societies, was decided on by the Government. In this connection, the Department of Industry and Commerce are at present preparing amending legislation regarding the registrar of friendly societies. It is hoped to introduce a Bill in the near future. That Department are also updating legislation on industrial and provident societies. This is the point Senator Lenihan was making when he was talking about a proper office with proper staffing. The necessary provisions are being made to have this done. The Department of Industry and Commerce are fully alive to the need for a more active role for the registrar and for the appointment of a full-time officer adequately qualified for the job with adequate back-up facilities.

I would prefer if the amendment were withdrawn because I do not think the person concerned would be on a par with the Judiciary. I feel that if he is a registrar of friendly societies, as the Government have decided, he would be able to carry on his job properly and independently. He will have adequate back-up facilities without which it would be impossible to carry on the job.

As long as I have the assurance from the Minister that the registrar's position, status and office is being updated in new legislation being proposed by the Minister for Industry and Commerce, I will go along with that. As I said on earlier sections, I would like to see him having far more powers than the Minister is willing to give him under this legislation. If the office is updated, properly staffed and backed-up, that is half the battle. I will withdraw the amendment: I put it down to highlight the matter. I think it is important that we have a meaningful and active registrar with a meaningful and active office if his functions under this legislation are going to mean anything. I take it the Minister goes along with that and the Minister for Industry and Commerce as well.

Amendment, by leave, withdrawn.
Section 85 agreed to.
NEW SECTION.
Government amendment No. 105:
Before section 86 to insert a new section as follows:
"86.—The Registrar shall submit an annual report on the exercise by him of his functions under this Act to the Minister, the Minister for Finance and the Minister for Industry and Commerce, and a copy of the report shall be laid before each House of the Oireachtas."

This is merely a rearrangement of the wording. It substitutes "each House" for "both Houses". "Each House" is the more correct reference and it is in line with the reference in subsection (b), line 4.1.

Amendment agreed to.

An Leas-Chathaoirleach

Acceptance of this amendment involves the deletion of section 86.

Sections 87 to 91, inclusive, agreed to.
SECTION 92.
Government amendment No. 106:
In page 51, line 32, after "including" to insert "in either case a requirement in regulations made under this Act and including".

The reason for the amendment is to ensure that failure to comply with requirements in regulations will also be an offence within the meaning of the section.

Amendment agreed to.
Government amendment No. 107:
In page 51, after line 50, to insert the following subsection:
"(3) Where a loan is made in contravention of any requirement of or under this Act (including a requirement in any regulations made under this Act) the directors of the society who authorised the loan shall be jointly and severally liable for any loss on the loan occasioned to the society."
Amendment agreed to.
Section, as amended, agreed to.
Section 93 and 94 agreed to.
SECTION 95.
Government amendment No. 108:
In page 53, between lines 31 and 32, to insert the following subsection:
"(5) Part X of the Act of 1963 shall not apply to a society and, notwithstanding anything in that or any other Act, a society may not be wound up except in accordance with this section."

An unregistered company may be wound up under Part X of the Companies Act, 1963. A building society may be regarded as an unregistered company for the purposes of the Companies Act. It is proposed in subsection (1) to apply Part VII of the Companies Act, 1963, to the winding-up of a building society. It is not necessary to have powers under Part X for this purpose. The powers in Part X are more limited than those in Part VI. The reference in the amendment to "anything in that or any other Act" is to eliminate any doubt in relation to section 350 of the Companies Act, 1963. That section provided for winding up as a company under the Companies Consolidation Act, 1908, of any enactment repealed by that Act. A building society could be wound up as a company by the Companies Winding Up Act, 1890, an Act repealed by the 1908 Act.

Amendment agreed to.
Section, as amended, agreed to.
NEW SECTION.
Government amendment No. 109:
In page 54, before section 96, to insert the following new section:
"(1) The Minister may appoint a body which shall be known as the Building Societies Advisory Committee and is in this section referred to as the Committee.
(2) The Committee may advise the Minister in relation to any matter affecting the operation of building society business and on any other matter relating to building societies referred to it by the Minister.
(3) The Committee shall consist of such number of persons, not being more than nine, representative of the Department of Local Government, the Department of Finance, the Registrar, the Central Bank, the Irish Building Societies Association and such other bodies as he may from time to time consider appropriate, appointed for such period as the Minister thinks fit.
(4) The Minister shall from time to time nominate one member of the Committee to act as chairman thereof.
(5) The Minister may at any time remove any member (including the chairman) of the Committee from office."

Representations were made by the Irish Building Societies Association that provision should be made so that a joint advisory committee representative of all interests concerned should be established. They referred to the useful work such a committee did in the United Kingdom. It was agreed that the proposal had merit and the above amendment providing for a new section for the purpose is proposed. The intention is that it would be open to the Minister to set up such a committee, that it would consist of representatives of the Departments of Local Government, Finance, the Registrar of Building Societies, the Central Bank and the Building Societies Association and such other bodies that he might from time to time consider necessary and appropriate. The purpose of the committee would be to consider matters of importance in the building society movement in all its aspects and to make such recommendations as they considered appropriate.

I welcome this amendment. It is a very constructive and forward-looking amendment and one that we urged on Second Stage. Hopefully, the sort of consultation that will arise between the Minister and the advisory committee will get rid of some of the fears I have expressed on earlier sections.

Amendment agreed to.
Government amendment No. 110:
In page 54, to delete lines 19 to 38, and to insert the following:
"96.—(1) In so far as any order, regulation, rule, agreement, appeal, application, conveyance, decision, lease, loan, mortgage, payment or reference made or any approval, consent or direction given, requirement imposed, certificate or instrument issued or register kept, resolution passed, notice served or any other thing done under any enactment repealed by this Act could have been made, given, imposed, issued, kept, passed, served or done under a corresponding provision of this Act, it shall not be invalidated by any repeal effected by this Act but shall, if in force immediately before that enactment was so repealed, have effect as if made, given, imposed, issued, kept, passed, served or done (as the case may be) under the corresponding provision of this Act."

This amendment is intended to ensure that the saving provision of subsection (1) as originally drafted shall not operate to validate indefinitely the continuance of practices and procedures which are incompatible with the fresh statement of statutory law governing building societies made by the Bill. It is necessary to differentiate between procedures according with society rules which the Bill will require to be altered, and legal instruments, such as leases, conveyances, mortgages and so on made bona fide under existing law and which will have to be accepted as valid for the next 20 years or so

Amendment agreed to.
Government amendment No. 111:
In page 55, between lines 3 and 4, to insert the following subsections:
"(6) Where the Registrar, after consultation with the Minister and the Minister for Finance, is satisfied that it would be in the public interest or in the interest of the orderly and proper regulation of building society business to do so, he may declare a society to be an exempted society.
(7) The Registrar may not declare a society to be an exempted society under subsection (6) unless written evidence has been produced satisfying him that—
(a) the officers and members of the society are linked by trade, occupation or employment in one business undertaking,
(b) the funds of the society are used solely to enable members to acquire houses for their own occupation,
(c) no fee, emolument or other remuneration is paid to any officer of the society (other than an auditor) from the funds of the society,
(d) the society had been incorporated on or before the 5th day of December, 1965, and had begun to carry on business on or before that date,
(e) the society has not, since the 5th day of December, 1965, advertised for or otherwise solicited deposits or subscriptions for shares other than from persons in trade, occupation or employment in the business undertaking referred to in paragraph (a), and.
(f) the society is able to meet its obligations to its creditors, has not suspended any payments lawfully due by it and is not in arrears with any interest due on shares in, or deposits with, the society.
(8) Where the Registrar declares under subsection (6) a society to be an exempted society, such requirements of sections 20, 37 and 38 as he shall specify in the declaration shall not apply to the society.
(9) Where the Registrar is of opinion that all of the matters specified in subsection (7) no longer apply to a society, he may cancel a declaration under subsection (6) relating to that society and thereupon all the provisions of sections 20, 37 and 38 shall apply to that society.
(10) A declaration under subsection (6) may be varied by the Registrar after consultation with the Minister and the Minister for Finance."

The purpose of the amendment is to provide exemption from sections 20, 37 and 38 for one society, the Guinness Permanent Building Society, which has a system of operation unique in the building society movement in this country. It has been in operation since 1901. Its membership is confined to employees of the Guinness Company and its pensioners. Its committee of management is a voluntary one, representative of all grades in the employment of the company and receives no fees.

Apart from occasionally placing notices on notice boards within the brewery premises, it does not solicit funds from members of the public. Loans are issued to members for the purchase of their own houses and there is a long waiting list. The mortgage interest rate is lower than that charged by the principal societies.

Because of the fact that a number of the older mortgages are on a fixed interest basis the margins on which the society operates are very narrow. The Guinness company have subsidised its operations over the years. The society has no reserves and all its cash is invested with the Guinness company pending transfer into mortgages. Its total assets are now about £1 million. The requirements of section 20—deposit with the Central Bank—would cause difficulties for the society and result in a slowing up in the issue of mortgages. Section 37, the ratios, would also cause a problem because of its lack of reserves and equally, section 38 (3) could not be met.

The society serves a useful purpose and it would be desirbale that it be allowed to continue to operate. One of the main objects of the Bill is to protect the public at large investing with a society by providing a number of safeguards as to minimum start up capital, disclosure of management personnel, financial standing, and so on. The same detailed requirements need not apply in the case of an "in-house" society where the standing and identity of members and management are known. Because of this unique situation and because of the continuing relationship existing with the Guinness company the members of the society have benefited substantially in comparison with members of other societies. The exemption has been drafted tightly in order to ensure that other societies cannot claim exemption.

Amendment agreed to.

An Leas-Chathaoirleach

Acceptance of this amendment involves the deletion of section 96.

Schedule agreed to.
Title agreed to.
Bill reported with amendments.

An Leas-Chathaoirleach

When is it proposed to take the next Stage?

The first sitting day after the Recess.

The Seanad adjourned at 4.35 p.m. sine die.

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