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Seanad Éireann debate -
Wednesday, 25 Nov 1987

Vol. 117 No. 16

Death of Press Gallery Member. - Rialacháin na gCara-Chumann, 1987: Tairiscint.

Tairgim:

"Go gceadaíonn Seanad Éireann na Rialacháin seo a leanas ina ndréacht:—

Rialacháin na gCara-Chumann, 1987

ar leagadh cóip díobh ina ndréacht faoi bhráid Sheanad Éireann an 9 Samhain 1987.

Go raibh mait agat. Ní bheidh mé ach cúpla nóiméad, sílim. I intend to make regulations called the Friendly Societies Regulations, 1987, which will bring about a considerable improvement in the operation of friendly societies. A draft of these regulations has been laid before each House of the Oireachtas and, in accordance with the legislation governing friendly societies, each House must pass a resolution approving the draft before I can go ahead and make regulations.

Last June this House gave approval to a draft of the proposed regulations. Since then I have reconsidered the position of the limits for loans and deposits in the case of specially authorised loan societies and have decided that the limits proposed in June were not adequate even though they represented a substantial increase. Therefore, I decided on a further upward revision of the limits. Hence, I must now ask the approval of the House for the revised draft of the regulations.

The proposed regulations can, for convenience, be split into two parts. The first part deals with the position of what are called specially authorised loan societies and the second part applies to all other friendly societies. Specially authorised loan societies were originally established to take in monthly subscriptions and from these to provide loans for special family events, such as bereavements, weddings, holidays, and so on. They are small-scale operations and by law the maximum single deposit they can accept at present is £200 and the maximum loan that they can make is £50. These limits were set in 1986 and they are far too small by today's values. As can be seen we are not doing anything rash.

The original draft of the regulations proposed to raise these limits so as to fix the maximum single deposit at £3,000 and the maximum loan that could be made at £1,500. As I have explained to Senators, I now consider that the limit for a maximum single deposit should be raised to £5,000 and the maximum loan to £2,500. These limits are intended merely to reflect realistic present day values and are not in any way intended to change the nature of the societies concerned from mutual help bodies, which they are, or to permit them to carry on business in a real commercial sense. That was never the purpose of these bodies and it is not now intended either. If the House approves the draft regulations in this form I will, of course, have to ask Dáil Eireann to approve the revised draft also.

In view of these increases the regulations will also require these specially authorised loan societies to have supervisory committees. In this way there will be an extra degree of supervision for these societies now that they will have the power to handle larger sums of money. I also intend to raise the monetary limits applying to all other friendly societies in regard to certain types of assurances under mutual self-help schemes and benefits payable from these. These limits were last set in 1966 and, on reviewing them, it was considered that more realistic limits should now be considered. It is proposed to increase the maximum benefit assurable to a member, and to which a member is entitled, to a sum of £10,000 and to set a similar limit to the amount a member may dispose of on his death by nomination or distribution when a member dies intestate. The maximum amount payable on the death of a child would be £1,000. Again, these changes are not intended to permit any change in the mutual status of friendly societies.

The regulations will also provide additional safeguards for members by requiring proper accounting and auditing procedures in all friendly societies. As the amount of money handled by friendly societies has grown over the years, provisions are included in the proposed regulations requiring each society to keep proper accounts, to retain the accounts of the six most recent years, to present accounts at each annual general meeting and to have the accounts audited each year by a properly qualified auditor. I now ask Seanad Éireann to approve the draft regulations.

Go raibh maith agat. Ba mhaith liom fáilte a chur roimh an Aire san Seanad inniu.

I welcome the updating of the draft regulations for the friendly societies. I have no doubt that the Minister will agree it was a timely intervention on his behalf to update the regulations in view of the fact that the Act was passed in 1896. In June of this year, regulations were brought before the House to increase the maximum single deposit from £200 to £3,000 and the maximum single loan from £50 to £2,500. I am glad to hear the Minister has decided to increase the maximum single deposit to £5,000 and the maximum loan deposit to £2,500. This will provide people with an up-to-date alternative to other lending institutions such as banks and building societies.

Friendly societies have played a large part in the social aspect of communities by providing monetary assistance for such functions as holidays, weddings and other family events. The introduction of the regulations today has increased the value of the societies in respect of everyday life. They are now an up-to-date alternative to illegal moneylenders. We have all seen the brutal tactics by which moneylenders operate their business. They lend money at extreme rates to people who find themselves in severe financial difficulties. When these unfortunate people are unable to keep up their repayments the moneylenders use illegal and barbaric means to try to get money from them. Families and homes have been destroyed due to these moneylenders. I compliment the Minister on bringing these regulations before the House. They are up-to-date now on a financial basis; it was farcical that a loan deposit of £200 was the maximum that could be made. I welcome the Minister's initiative in this matter.

Ba mhaith liom freisin fáilte a chur roimh an Aire Stáit who has explained the position briefly. As he has pointed out, what he is doing here today is seeking the approval of the House for regulations which he has prepared and which have been laid before the Houses of the Oireachtas in draft form as he has said.

I agree totally that an updating of these regulations are long overdue. As the Minister said, the Principal Act dates back to 1896. Certainly, any changes upwards in loans and deposits at this point in time are long overdue. It is important that when we are dealing with the public and their finances we should from time to time examine — building societies, banks or whatever — any body engaged in the distribution or taking in of money. It is right and proper from time to time that we should have a look at the regulations and so on to ensure that they are up-to-date and to ensure that the consumer has adequate protection at all times.

As the Minister has rightly pointed out, the friendly societies are now, and will be in the future, handling much larger sums of money, larger deposits, larger loans. It is unthinkable that in this day and age the limits should be as he outlined to us, very low limits indeed. Now we are looking for adequate limits. It is right and proper to say that over the years this type of organisation within the financial world has played an important role in the social life of our country.

The elements of the regulations are clearly set out to us, the various substitutions from the low figures to high figures. I particularly welcome one of the regulations in the knowledge that we can have money disappearing through fraud, misappropriation of funds, or whatever. I therefore welcome the fact that the Minister laid a good deal of emphasis on a proper accounts system for the societies. In the Explanatory Note to the regulations he has clearly stipulated that the content of the accounts of all registered societies and the balance sheets should be laid before the annual general meetings of those societies and the regulations require the audit to be carried out by a public auditor. I am not sure if that provision has been there in the past but if it has not been, it is all the more welcome. In this day and age, public accountability is appropriate. That regulation in particular is one that I welcome but, overall, it is time for a change in these regulations. The Minister has acted correctly and wisely. Certainly on this side of the House there is no opposition to it — a total welcome in fact.

I thank Senators for their very warm welcome for these measures. Senator Reynolds quite rightly expressed worry about the activities of some moneylenders. That is a worry I would share, particularly coming up to the Christmas period, obviously a traumatic time for many families. It is a scandal that very many moneylenders abuse a privileged position to take advantage of many thousands of disadvantaged families. Certainly, that is something I join with the Senator in denouncing, but that is not what we are at here today. This regulation will apply in effect to 11 organisations; there are only 11 of them in existence at the moment. They have about 15,000 members and those 11 are the special, authorised loan societies to which these new limits will not apply. They are not in the moneylending category as such; they are a special category governed by the friendly societies legislation.

I can confirm to Senator Fallon that as they are not limited companies — rather they are friendly societies — the requirement to have accounts and so on properly kept has not been laid down in as strict a form as it is now being laid down. It is about time we got around to doing this. I thank the Senators for their very kind agreement to this proposal.

Cuireadh agus aontaíodh an cheist.

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