The purposes of the Bill now before the House are firstly, having regard to the change in the value of money, to update certain financial limitations imposed by the Acts; secondly, to improve the controls on the operation of societies; and thirdly, to replace the existing requirement that the registrar should be a barrister with a provision enabling the Minister for Industry and Commerce to prescribe the qualifications required for the appointment.
I propose to deal with these matters separately, but before doing so, I should like to clarify a point which might lead to confusion later on in our discusion of the Bill.
Friendly societies are governed in their operations by the Friendly Societies Acts, 1896 to 1953. They should not be confused with industrial and provident societies, which have their own entirely separate code of law. Examples of industrial and provident societies are agricultural co-operatives and credit unions, and they are generally, though not always, co-operative enterprises.
Societies registered under the Friendly Societies Acts can be divided into three main groups which are (i) friendly societies themselves (ii) benevolent societies and (iii) specially authorised societies, and I propose now to give some brief background information on these three main groups.
Friendly societies themselves are generally formed for the relief of members in sickness or in old age and for the payment of sums to meet the funeral expenses of members and their wives and children. Benevolent societies, too, provide benefits but they do so in respect of persons other than members. Specially authorised societies are a different type of operation but they too have a pronounced social awareness in their objects. The biggest class within this group are specially authorised loan societies, or SALS for short. These were formed for the purpose of creating funds by monthly or other subscription to be lent out to or invested for the members or for their benefit.
The following details regarding friendly societies generally may be of interest. As at 31st December, 1975, which is the last year for which completed annual returns are available, there was a total of 173 of these societies on the register maintained by the Registrar of Friendly Societies. Total membership for the same period exceeded 150,000 persons and the total benefits paid out in respect of the year 1975, whether as sickness, mortality or other benefits, came to over £600,000. These figures will, I hope, act as indicators of the scale and usefulness of the societies we are dealing with under this Bill.
I will now proceed to enunciate the principles behind the main sections of the Bill. All societies registered under the Friendly Societies Acts are permitted by section 46 of the Principal Act of 1896 to accept deposits from and to make loans to members, subject to certain restrictions. Section 2 of the Bill now before the House is intended to allow the Minister to alter these restrictions by regulation.
The restrictions on the operation of a loan fund by a registered society are not very many or severe and take the form mainly of financial limits. All of them however were fixed on the making of the Principal Act in 1896 and they have not been changed since, mainly because until recently there was no evidence that changes were necessary. In recent times however it has been represented to the Minister that those restrictions which consist of financial limits represent an unrealistic constraint on the operations of certain societies.
The money limits concerned are a maximum investment of £200 which a member may hold in a loan fund of a society, while as regards its lending operations a society may not make any loan which together with any money owing by a member to the society exceeds £50. Having regard to the decline in money values since 1896, when these limits were fixed, they now bear no relationship to their original value and there is a justifiable case for their revision upwards.
It is proposed therefore to increase the limits to more realistic levels, and section 2 of the Bill now before the House will enable this to be done by Regulation. Rather than prescribe any specific new limits in the Bill, the value of which could again be undermined long before another legislative change is effected, the medium of regulation has been chosen to achieve this end, with a view to ensuring that any new limits now fixed can be reviewed at more regular intervals and, if appropriate adjusted more frequently in the future.
There are two other restrictions which apply to the operation of a loan fund by societies. These are, first, that a loan shall not at any time be made out of money contributed for an other purpose of the society and, second, that a society shall not hold at any one time on deposit from its members any money beyond the amount fixed by the rules, and that the amounts so fixed shall not exceed two-thirds of the total sums owing to the society by the members who have borrowed from the loan fund.
These restrictions may need to be tightened to provide better safeguards for depositors, and section 2 of the Bill will empower the Minister to alter these restrictions, also by regulation.
I might add that initially the intention is to introduce regulations under section 2 of the Bill in respect of specially authorised loan societies only because, unlike other classes of friendly societies which operate a loan fund as is borrowing and lending money, it is authorised Loan Societies were established expressly for the purpose of creating funds by monthly or other subscriptions to be lent to or invested for the members. I think the House will agree that since unlike other Friendly Societies their main business is borrowing and lending money, it is desirable that their operations should be regulated, although there are now only 15 of them on the register.
Section 3 of the Bill is intended to tighten up the accounts and auditing requirements of friendly societies generally. As matters stand, accounts of friendly societies can be audited by any two persons appointed by the societies, who need have no accountancy qualifications or background, and there are no legal requirements regarding the form of accounts for friendly societies and their branches. Under section 3 of the Bill therefore it is proposed to take power to provide by regulation for the form of accounts and records to be kept by friendly societies for matters relating to the audit of their accounts, including the qualifications necessary for persons carrying out such auditing, and for the laying of accounts before the annual general meetings of societies by their committees of management.
I feel that it is only right that members of a specially authorised loan society should have a positive say in the running of the society and section 4 of the Bill has been drafted to meet this objective.
Section 5 of the Bill deals with the appointment of the Registrar of Friendly Societies. This section is relevant not only to friendly societies but to all other forms of societies such as industrial and provident societies, including credit unions, and building societies. At present, the power to appoint the Registrar of Friendly Societies is vested in the Minister by section 1 (3) of the 1896 Act as amended by section 2 (2) (b) of the 1936 Act, while section 4 (2) of the 1936 Act contains the present stipulation that the registrar must be a barrister of not less than ten years' standing. I should emphasise of course that, notwithstanding the Minister's power to appoint the registrar, the powers and functions of the registrar himself are statutorily conferred on him and are not at all subject to the Minister's influence. Generally however these powers and functions are largely of a mechanical and recording nature.
For example, the responsibility of the registrar have mainly consisted of matters such as registration of rules, amendments to rules, resolutions for amalgamations and transfers of engagements and resolutions for conversion of societies into companies and vice versa. The registrar has also been involved in the settlement of a limited category of disputes involving societies and members and has in certain restricted circumstances power to call special meetings of societies or to appoint inspectors to investigate their affairs.
The registrar is also responsible for ensuring that the required annual returns of societies and other documents are filed and are available to the public who may wish to inspect them.
It has been found adequate in the past to fill the position on a part-time basis only, but recent developments which are altering the fundamental nature of the registrar's role will considerably strain the continuation of this working arrangement, if indeed they do not make it impossible to operate in the future.
The best example I can give of the changing nature of the registrar's role and his increased responsibilities is the Building Societies Act. Senators will be aware that this Act endows the registrar with extensive powers to supervise the building society sector. Indeed, in keeping with this general drift towards arming the registrar with active supervisory and investigatory muscle to ensure that both the rights of members and the public interest are continuously respected by various societies, I am considering the introduction of measures to empower the registrar to supervise actively as well the affairs of societies other than building societies.
I think the House will agree that there is an indisputable need for an active but independent office of registrar, firstly to ensure that all societies conduct their business in a proper fashion, secondly to better protect the rights of members who may well be interested in the affairs of their society but who find their interest frustrated, and thirdly to exercise greatly strengthened powers, with improved rights to oversee the affairs of societies.
The changing nature of the registrar's work, as manifested at present in the Building Societies Act, may well lead to the need for qualifications additional to legal expertise for the post. For example, the supervisory function envisaged for the registrar under the Building Societies Act could conceivably call for a knowledge of accountancy and financial matters which could not normally be expected of a barrister. In other words, flexibility as regards the qualifications of the registrar is imperative in circumstances where the nature and demands of the position are undergoing substantial change.
Section 5 of the Bill is therefore drafted with a view to providing the Minister with the desired flexibility in determining the qualifications for the position of registrar to meet the evolving responsibilities of the position. It will also enable him, with the consent of the Minister for the Public Service, to pitch the remuneration for the position at a level which if a full time official is eventually required, would attract a person of the requisite standing and experience.
As I mentioned earlier, sections 2 and 3 of the Bill would give the Minister power to alter certain very important requirements by regulations, but the principle of Oireachtas control is preserved by providing, in section 8, that no regulation shall be made until a resolution approving of it shall have been passed by each House. I think these arrangements avoid on the one hand the excessive rigidity which would result from embodying provisions in legislation, and on the other hand the danger that they might be given the force of law without full and democratic examination.
I have said that the intention behind section 2 of the Bill is to enable the Minister to alter by regulation certain restrictions and financial limits on the operations of friendly societies which operate a loan fund. I would hope to introduce an amendment on Committee Stage which will widen the scope of the Bill by enabling the Minister to alter by regulation the other main financial limits imposed by law on friendly societies. I also hope to table an amendment on Committee Stage to bring the penalties for offences under the Friendly Societies Acts more into line with present-day money values.
In summary however the purposes of the Bill as it now stands are, firstly, having regard to the change in the value of money, to update the financial limitations imposed by the Friendly Societies Acts on the operation of a loan fund by societies; secondly, to improve the controls on the operation of societies, and thirdly, to enable the Minister to determine the qualifications necessary for the position of Registrar of Friendly Societies so that, having regard to the evolving nature of the position, he will have the desired flexibility to appoint a person with the kind of qualifications that events will show are most suited to the position.
I commend this Bill to the House.
