Central Bank and Financial Services Authority of Ireland Bill 2003: Committee Stage
Section 1 agreed to.
NEW SECTION.
I move amendment No. 1:
In page 5, before section 2 but in Part 2, to insert the following new section:
"2.—Section 33E of the Central Bank Act 1942 (as inserted by section 26 of the Central Bank and Financial Services Authority of Ireland Act 2003) is amended by the insertion of the following subsection after subsection (1):
‘(1A) At least one non-executive person with experience in consumer protection to be appointed to the Board.'.".
I welcome the Minister of State, Deputy Brian Lenihan. It is proposed in the amendment that at least one non-executive person with experience in consumer protection be appointed to the board because the adequacy of enforcement measures are of paramount importance in dealing with this Bill.
I looked at the debate in the other House, as the amendment was also tabled there. The authority has both a consumer protection and a prudential role. The problem with appointing somebody who represents a particular interest is that he or she represents that interest rather than having a more general role. I have listened to people involved in consumer protection over the years and some of them tend to be very strident and are primarily looking for publicity. It is probably better not to constrain the Minister's choice. Bearing in mind the core functions of the authority, he will be aware of the need to choose people from different backgrounds. I am not convinced of the need for the amendment.
The amendment relates to an issue that was debated in the course of the passage of last year's Central Bank and Financial Services Authority of Ireland Act. It is important to note that the board of the financial regulator is a public interest board. We are talking about the board of a regulator, not a board where one brings in representatives from different sectors. The board's responsibility as regulator is, in itself, to take a detached view of the business of financial regulation and for that reason the Minister does not consider it desirable to be prescriptive about the composition of the board in the manner suggested by the amendment.
The authority's consumer director is an ex officio member of the board and the Minister is satisfied that the board has performed very well since its appointment in regard to consumer protection.
Amendment, by leave, withdrawn.
Sections 2 to 9, inclusive, agreed to.
SECTION 10.
I move amendment No. 2:
In page 17, line 43, to delete "€5,000,000, or" and insert the following:
"either—
(i) €5,000,000, or
(ii) a sum equal to the amount involved in the financial impropriety, whichever is the greater,
or".
This amendment proposes to insert either €5,000,000 or a sum equal to the amount involved in the financial impropriety, whichever is the greater. It is a sensible amendment and I hope the Minister of State will accept it. It is preferable to setting a figure in stone. It should include the sum or whichever is the greater. The penalty should fit the crime at all times.
The effect of the amendment would be to set the maximum fine that the regulator can impose as either €5,000,000 or a sum equal to the amount involved in the financial impropriety. That is the substance of the proposal. The fine is a punitive fine, not a restitutionary fine. The fine prescribed in legislation is what the Oireachtas marks as the just punishment for a particular wrongdoing. In that sense it is different from the issue of a sum equal to the amount involved in the financial impropriety. Section 33AQ(3) already provides that one of the sanctions the regulator can impose is a direction to refund or withhold all or part of an amount of money charged or paid by a financial institution. This legislation contains a provision that the regulator can require a refund in the case of an impropriety. At present there is no legislative power to do that and civil proceedings would require to be instituted in the courts to ensure the necessary recompense took place. This legislation will confer upon the regulator an express power to require a refund. That addresses to some extent the amendment raised by the Senator.
From the point of view of a customer of a financial institution, this is the most important sanction the regulator can impose because it means the consumer is given direct financial compensation without the need to institute proceedings in the courts which may be expensive and protracted. One can easily envisage circumstances based on recent events where the cost to an institution of refunding its customers in respect of a charge incorrectly imposed could exceed in a significant way the figure of €5 million if inserted in the legislation. That is possible under this legislation once the regulator makes the necessary direction.
The question of €5 million is the amount which we propose the regulator can impose by way of exaction, irrespective of the element of wrongdoing. The Minister has power under paragraph (4)(c) to increase this maximum fine if experience suggests it is desirable. In those circumstances, the Minister is of the opinion that €5 million is a very substantial sanction, especially if it is in addition to an order to refund customers and to pay some or all of the costs of the regulator’s investigation. If experience suggests that the limit of €5 million should be increased, the Bill gives the Minister a simple mechanism to do so. I hope I have addressed the legitimate concerns raised by the Senator.
Amendment, by leave, withdrawn.
I move amendment No. 3:
In page 20, between lines 21 and 22, to insert the following:
"(5) Where a decision not to investigate or a decision to discontinue an investigation under this section is made, the Regulatory Authority shall——
(a) certify that the events or circumstances in question are such that do not warrant a full and complete investigation; and
(b) publish the reasons why a decision not to investigate or a decision to discontinue an investigation has been made.
(6) The exercise of powers under subsection (5) shall be in accord with the provisions of published code of practice governing the decision not to investigate or a decision to discontinue an investigation.".
There should be an explanation of the reason for a decision not to investigate or to discontinue an investigation. The amendment deals with that specific point. It is a matter of public accountability. It has been a cause of concern in light of a number of recent instances of overcharging by some financial institutions. When a decision is made to discontinue an investigation, the public has a right to know why such a course of action has been taken.
I accept that Senator Cummins raises a very interesting and difficult question. However, it is not as simple or straightforward as the Senator understandably outlined. The amendment seeks to require the regulatory authority to publicly justify a decision not to investigate or to discontinue an investigation of an alleged contravention. It addresses a concern expressed also during the debate in the other House that the regulatory authority will not use its new powers of sanction in a robust fashion for fear of damaging the reputation of a financial institution.
The key arguments against what the Senator has proposed are that the Government's policy aim is to make institutions comply with their obligations, not to punish or publicly reprimand them for contravention. The whole thrust of this legislation is to encourage a much greater culture of compliance.
It is obviously not there.
It is not there at present but the purpose of this legislation is to produce it. That fits in with the Government's general policy in recent years which is to raise the standard of corporate behaviour in business generally, particularly in the case of financial institutions who are entrusted with other people's money. The progress report published last week by the authority confirms that is the approach it is adopting in dealings with financial institutions, focusing on the probity of senior management and the adequacy of compliance arrangements.
The crucial point is the authority has to encourage a co-operative rather than an adversarial approach in this area. We need the financial institutions to be forthcoming with the regulator when they have breached their legal obligations, rather than having them adopt an unduly defensive approach. The regulator must be focused on remedying any wrong that may have been done to customers and putting systems in place to ensure that such behaviour is unlikely to occur. In those circumstances it is important that the regulator has available a discretionary power which would not exist were the Senator's amendment passed.
For example, if a financial institution commits a minor breach by some error and immediately notifies the regulator when it discovers the error, there is a case for the regulator to consider requiring the institution to make good any loss to its customers and perhaps pay a fine, but without requiring the institution to go through a drawn-out public process. This might be the case particularly if the institution had a good record of compliance. On the other hand, if the institution had a bad record of compliance or there had been a more serious breach, it might be more appropriate for the regulator to use the formal public inquiry procedure involving the right to legal representation and the further rights of appeal to the appeals tribunal and the High Court. Even when the regulator uses its discretion to act under those sections, it is obliged to publish an annual summary of its actions.
It is important that the authority has these discretionary powers not to hold formal investigations and to reach agreements with institutions without necessarily requiring an admission of fault. That allows the regulator to have a carefully calibrated response in the particular circumstances of an alleged contravention, taking into account the seriousness of the contravention and the compliance record of the institution concerned.
I do not believe the public would accept such an explanation. The public has a right to know in such situations. In most cases, the financial institutions are putting their hands up when they have been found out. It is like putting the cart before the horse because very few institutions have put their hands up without first being found out and informed of the errors and mistakes made. I do not think it would be in the public interest for the public not to be informed.
As I stated on Second Stage, this legislation effectively deals with two commercial sectors. It deals with customer banks but also with international financial services who are mostly not dealing with Irish customers. It is essential that we retain some flexibility and discretion in regulation. If we become too rigid, we will discourage very valuable international investment in this country. The amendment is based on almost a certain sort of distrust of the authority. If such authorities are established, they must be given a certain amount of discretion, flexibility and trust if they are to perform to their best.
The financial institutions are not trusted.
While recent events give rise to serious public concerns, they do not alter the strong and cogent case made by the Minister of State.
Amendment, by leave, withdrawn.
Section 10 agreed to.
Sections 11 to 15, inclusive, agreed to.
SECTION 16.
I move amendment No. 4:
In page 31, between lines 45 and 46, to insert the following:
"(iii) to provide reports on the experience of his/her office and the climate for consumers in the Financial Services Sector which would better inform policy makers within and outside the Authority of the position of consumers;".
The amendment addresses the position of consumers and calls for a report to be provided on the experience of the office and the climate for consumers. It is essential that proper reports are published in this instance as it is a matter of public concern.
The Senator will be glad to learn I may be able to help him on this amendment. The amendment does not take into account paragraph 57BB(d), for which I forgive him because the legislation is sequenced in a very difficult manner. The paragraph was inserted on Report Stage in the Dáil and is based on a similar amendment tabled by Deputy Richard Bruton. The new paragraph states that one of the objects in the Part of the Bill in question is “to improve public understanding of issues related to complaints against regulated financial service providers and related consumer protection matters.” The ombudsman has, therefore, specific obligations under other sections of this Part to publish information on her or his activities and to advise the authority on steps it might take to address persistent patterns of complaint and to improve the manner in which financial institutions deal with a complaint.
The difference between the amendment and the paragraph inserted in the Dáil on the Minister's initiative reflects the view of the Parliamentary Counsel on what is an appropriate formulation for a section setting down the objects of this Part. I hope the Senator will accept that the Minister has gone some of the way to meeting the issues raised on this subject.
Amendment, by leave, withdrawn.
I move amendment No. 5:
In page 32, line 20, after "decides" to insert ", a majority of whom shall be persons independent of ties to business engaged in the provision of financial services".
The amendment calls for the appointment to the board of persons independent of ties to business engaged in the provision of financial services.
The idea of an ombudsman council arose from the public consultation process on the Bill. The existing voluntary ombudsman schemes both have such councils and there has been no objection to the principle of such a council. The council will play an important role in setting out detailed regulations governing the ombudsman scheme and appointing the ombudsman. The Minister's intention is that there should be a broad balance between representatives of the financial services industry and consumer representatives and that the chairperson should have knowledge and experience of consumer issues. Given its central role, the Minister believes it is important the council should have the confidence of consumers and the financial services industry and the provisions for appointment are drafted accordingly.
The amendment seeks to introduce an additional requirement that a majority of the council members should be persons independent of ties to business engaged in the provision of financial services. The Bill provides that the Minister must consult his colleague, the Minister for Enterprise, Trade and Employment. In addition, he would expect to consult widely among consumer and industry bodies before making appointments to the council. It is, therefore, likely that the council, in its composition, will be broadly acceptable to industry and consumer interests and that is certainly the Minister's intention.
It could be difficult for representatives of consumer interests to meet the test that they be independent of ties to business engaged in financial services. After all, in the vindication of the consumer interest the poacher can often be the best gamekeeper. A person with knowledge, experience and connections to financial services who is independent and detached from particular interests can be the best person to vindicate the consumers' point of view. This matter occasioned considerable debate but that is the Minister's view of the amendment.
Amendment, by leave, withdrawn.
Amendment No. 13 is related to amendment No. 6 and both may be discussed together by agreement.
I move amendment No. 6:
In page 32, line 20, after "decides" to insert ", at least 40 per cent of whom shall be male and at least 40 per cent female".
The amendment addresses the composition of the board and proposes that at least 40% of its members shall be male and female, respectively. The proposal would satisfy equality legislation and the Government's stated intention as regards equality.
I am conscious the Acting Chairman probably has a particular interest in the amendment. The Government has a long-standing policy of State boards in principle having at least 40% of members of each gender. That is, however, a policy statement as opposed to a legal requirement. In the interests of flexibility, particularly in this area, I would hesitate to impose a legal requirement of this nature because it would introduce a strong element of inflexibility. This does not alter the fact that in I am in general terms supportive of Government policy in this regard or that more needs to be done to fulfil it across the board.
It is a shame I am not permitted to express my opinion.
As Senators are aware, it is Government policy to seek to have a minimum of 40% of State boards made up of members of each gender. Unfortunately, it is not always possible to achieve this objective given the pool of persons available to serve on particular boards, which varies between sectors. While I accept that criticism can be levelled at the Government in that in some sectors in which there is a degree of availability, the target has not always been reached, financial services is a particularly difficult sector. The current Central Bank and Financial Services Authority of Ireland board has one female member while the ten person IFSRA board has two female members.
In general, the Minister's view is that while he will try to ensure adequate representation of both genders on boards for which he is the appointing Minister, he cannot accept the prescriptive approach suggested by these amendments, given the many other factors he must take into account when making appointments.
The Senator has raised an important issue, of which I have been very conscious as Minister of State. I have endeavoured in my office to have equality of representation but in my limited experience as Minister of State I have found that any prescription on the appointment of a board can lead to more difficulties than the Legislature envisages.
As regards the appointment of boards, I accept that for a long time the criticism has been voiced that where Ministers are left with wide discretion the wrong people tend to be appointed or persons who should not be appointed are slipped in. The difficulty is that when one writes limitations into law, one narrows dramatically the capacity to appoint good persons to boards. While the Government has a stated policy in this area, it is undesirable to fetter Ministers too much in legislation. The most important issue in this regard is that they must ultimately be responsible for their appointments.
I cannot accept there are not sufficient males or females in this sector with the necessary experience. It is not acceptable to have less than 40% representation of either sex. It complies with Government policy but I would prefer if he would act. Actions would be more meaningful than words in this area.
Is the 40% requirement laid down in other legislation?
No. A precedent would be established by so providing in this legislation.
Amendment, by leave, withdrawn.
Amendment No. 14 is related to amendment No. 7 and both will be discussed together.
I move amendment No. 7:
In page 32, lines 23 and 24, after "Employment" to insert "and after the advertising of positions for application by individuals and after a process of independent short listing of applicants with suitable experience".
The amendment is absolutely necessary because the short listing of applicants with suitable experience is a prerequisite in most areas. I ask the Minister to consider the amendment.
I am not sure whether these amendments would also set a precedent. I am not aware of a board, authority or council for which positions are openly advertised. Members of these bodies tend to be appointed by a Minister or by nominating bodies provided for in legislation. I am not sure this is an appropriate innovation for this legislation.
The suggestion that members of the financial services ombudsman council and the panels should be selected by a process of open recruitment is not in accordance with general practice, which is that a Minister makes such appointments following appropriate consultation. There is no reason to depart from the general practice for these appointments, particularly given the requirements in the legislation, which limit ministerial discretion. The Minister looked into the feasibility of publicly inviting expressions of interest in the council and the panels. He was unable to guarantee that the names of persons which were put forward but which were not selected would not have to be published because of the requirements of the Freedom of Information Act 1997. This severely limits the usefulness of a public advertising approach.
Amendment, by leave, withdrawn.
Amendments Nos. 8 and 9 not moved.
Amendment No. 11 is related to amendment No. 10 and both may be discussed together.
I move amendment No. 10:
In page 44, to delete lines 13 to 15.
Amendment No. 10 relates to section 16(3)(a), which the Minister introduced in the Dáil to address concerns in this area. The subsection addresses the points raised in Senator John Paul Phelan’s amendments, without trespassing on the jurisdiction of the courts. The new subsection provides that where a financial institution acts in bad faith by commencing legal proceedings to frustrate the actions of the ombudsman, he or she can still deal with the complaint. This provision goes as far as we reasonably can, without risking a legal challenge on the constitutional prerogatives of the courts.
The Bill states a consumer is not entitled to make a complaint if the conduct complained of has been the subject of legal proceedings. If a financial institution takes court proceedings to recover an amount allegedly due from a customer, there is nothing in the subsection to suggest this should prevent the customer from complaining to the financial services ombudsman that, for example, the institution had mis-sold the financial product concerned.
The spirit of the Senator's amendment is that it is important that legal proceedings cannot be used by financial institutions to prevent, delay or hinder the ombudsman from carrying out his or her duties. The Minister made an amendment, which went as far as he felt he could go constitutionally to address that concern.
Amendment No. 11 relates to dispute resolution and credit unions which have made reasonable efforts to use fully the dispute resolution options available to a consumer as a member of the union. This is an important issue for the credit union movement. Section 57BX(1)(c) lays down a general principle that before the ombudsman can consider a complaint, the consumer must have given the financial service provider concerned a reasonable opportunity to deal with it, as should be the case. The aim is that the financial service provider should avoid causes for complaint and, where complaints are made, make an effort to deal with them in a way that is satisfactory to its customers.
I expect the ombudsman council to further define what is meant by "reasonable efforts". It will want to ensure reasonable time limits are set for an institution's internal review of a complaint so that their is no undue delay from the consumer's point of view in having an unresolved complaint dealt with by the ombudsman. The same general principle applies to all financial service providers, including credit unions. I reiterate the assurance I gave in the other House that credit unions fall fully within the protection of section 57BX(6) and they are entitled to insist their members should exhaust their internal complaint procedures before recourse can be had to the ombudsman.
Unlike other financial institutions, considerable detailed provisions are in place for credit unions and they have been advanced in this respect. The financial services ombudsman will always have the right to review the regulations to ensure they are satisfactory but an arrangement is in place with credit unions and, subject to a review by the ombudsman, it will meet the requirements of the legislation. I give that assurance to the credit union movement. Every effort will be made to settle a dispute internally. If a consumer is not happy with the way a credit union has dealt with a complaint, he or she should have the same right as the customers of other financial institutions to have it addressed by the ombudsman within a reasonable period.
Amendment, by leave, withdrawn.
Amendment No. 11 not moved.
I move amendment No. 12:
In page 44, line 52, after "it" to insert "and in the case of a Credit Union has made reasonable efforts to use fully the dispute resolution options which are made available to the consumer as a member of the Union".
The Minister dealt with the issue raised in the amendment in reply to previous amendments. I accept this explanation.
Amendment, by leave, withdrawn.
Section 16 agreed to.
SECTION 17.
Amendments Nos. 13 and 14 not moved.
Amendment No. 16 is an alternative to amendment No. 15 and both may be discussed together by agreement.
I move amendment No. 15:
In page 59, line 27, after "services" to insert "and that at least two members have knowledge or experience of systems for the protection of consumers".
This is similar to previous amendments. People who have knowledge and experience of systems for the protection of consumers should be appointed. Senator Mansergh said that may not be a good idea but it is important, in this instance, that people with such experience should be appointed. Amendment No. 16 relates to people who do not have ties to the financial service providers. This issue has also been raised under previous amendments.
It is essential that members of the consumer panel should have a broad knowledge of consumer issues relating to financial services. Section 57CX(3) was amended in the Dáil by the Minister and it makes clear that the key criteria for appointment are knowledge or experience as consumers of financial services. The Minister does not think it would be wise to narrow down the criteria any further. After all, knowledge and experience are the criteria for qualification on a panel in the Seanad, if I may be allowed that witticism.
Is the Minister of State suggesting that somebody——
The draftsman has clearly been inspired by the senatorial provisions into importing this amendment into the legislation. The criteria set out by the Minister are knowledge or experience as consumers of financial services. If I am right the qualification for a Seanad panel, set out in the Constitution, is not just knowledge and mere experience but knowledge and practical experience.
Every Member of the House has that.
University Senators are not obliged to have this requirement and do not have to be graduates of the college concerned. However, I am wandering.
The Minister is required by section 57CX(2) to consult both the Minister for Enterprise, Trade and Employment and organisations representing consumers before appointing members of the panel. I have no doubt that consumer organisations will support the appointment of persons with direct experience of consumer protection but, to be of most use to the authorities as a sounding board for consumer interests, it is very important that others with a contribution to make in this area should also be on the board. Here the Minister has in mind persons involved in consumer education and advocacy, including those who write on the subject.
The Minister does not think it would be helpful, as suggested by the second amendment, to exclude entirely from consideration persons with ties to providers of financial services. A consumer organisation might wish to propose the appointment of an independent financial adviser on the grounds that his or her knowledge of financial services would make him or her a suitable member of the consumer panel.
I hope Senators accept the Minister's intention that the authority can benefit from a wide range of expertise among the members of the panel, including expertise in consumer protection, but that it would not be wise to be too prescriptive, particularly given the consultative role of consumer organisations on panel membership.
We want people not to have ties to the financial institutions. This reminds me of my later father-in-law who said it was like going to court with the devil and having a jury from hell. That is what we are trying to avoid but I accept the Minister of State's assurances.
Amendment, by leave, withdrawn.
Amendment No. 16 not moved.
Section 17 agreed to.
Sections 18 to 25, inclusive, agreed to.
SECTION 26.
I move amendment No. 17:
In page 77, lines 9 to 12, to delete all words from and including "that" in line 9 down to and including "auditor" in line 12 and substitute "where, at any time during the financial year, both firms were under common ownership and control".
I may be able to assist the Senator on this issue. The text which the amendment seeks to delete was amended on Report Stage in the Dáil in response to an identical amendment tabled by Deputy Bruton. The current text has the same meaning as the replacement text proposed by the amendment. Although it does not have the same form it has the same meaning.
I thank the Minister of State for clarifying this.
Amendment, by leave, withdrawn.
Amendments Nos. 18 and 19 are related and may be taken together by agreement.
I move amendment No. 18:
In page 78, line 14, after "Bank" to insert ", the Regulatory Authority or the Consumer Director".
This amendment is based on a misunderstanding. The regulatory authority is structured as a constituent part of the bank and the consumer director is a member of the regulatory authority. Section 33C of the principal Act makes it clear that it is the regulatory authority which has the function of ensuring compliance by finance institutions with their obligations under financial services legislation. It will therefore be the regulatory authority, not the bank, which will exercise the powers conferred by this Part regarding compliance statements. There is nothing to prevent the authority from giving the consumer director the authority to act in its name under this Part.
On the second amendment, section 27A already empowers the authority not only to issue guidelines on compliance statements but also more general guidelines on the governance of financial institutions. All such guidelines must be published in Iris Oifigiúil. It is very likely that the authority will wish to develop and publish such guidelines to supplement the guidance and corporate governance that have already been issued using existing powers. It would not be helpful to be too prescriptive about the content of such guidelines since the compliance statement requirement is discretionary.
It is important that any such guidelines take account of the particular features of financial institutions and the Minister does not believe we should tie the hands of the authority in this area.
Amendment, by leave, withdrawn.
Amendment No. 19 not moved.
I move amendment No. 20:
In page 82, line 13, to delete "or not".
This is a technical amendment, as is amendment No. 21.
Section 27B implements a recommendation of the review group on auditing, namely that the external auditors of a financial institution should provide an annual positive statement to the Central Bank on whether anything has come to their attention which gives rise to a legislative duty to report to the Central Bank. Subsection (2)(a) provides that within three months of the end of the financial year of a financial services provider, the auditor must provide a written report to the bank stating whether circumstances have arisen which required the auditor to report a matter to the bank under a prescribed enactment and what those circumstances are.
If this amendment were accepted it would not implement the recommendations of the review group on auditing and that would not be acceptable to the Minister. The amendment would not implement the recommendation requiring a positive statement from the auditor that no statutory duty to report arose during the financial year.
Amendment, by leave, withdrawn.
I move amendment No. 21:
In page 82, line 42, to delete "33" and substitute "33(3)".
Section 27B implements a recommendation of the review group on auditing that the external auditors of a financial institution should provide an annual positive statement to the Central Bank on whether anything has come to their attention which gives rise to a legislative duty to report it to the Central Bank. That is the same as the commentary on the last amendment.
Subsection (4) lists the financial services legislation under which an auditor has a duty to report to the bank in circumstances specified in the legislation. The list includes section 33 of the Investment Intermediaries Act 1995, which deals with auditors and their duties regarding investment business firms which are not incorporated bodies, such as brokers. This amendment would limit the application of this provision to subsection (3) only, which deals with the duty of an auditor to report to the regulator in certain circumstances. The Minister is satisfied that the duty to report should extend to the entire section, including, for example, section 7, which also imposes a duty on the auditor to report to the regulator.
Amendment, by leave, withdrawn.
I move amendment No. 22:
In page 85, line 9, after "affiliate" to insert "and that is reasonably required by the Bank for a specific purpose".
This amendment is self-explanatory.
Section 27F implements a recommendation of the review group on auditing that audit papers should be available on request to the Central Bank, which is provided for. Under the provisions of section 27, the bank may require an auditor or an affiliate of the auditor to provide it with a copy of any record relating to work carried out for the service provider that is in the possession of the auditor or the affiliate. The Minister is satisfied that the thrust and provisions of this part make it clear that the regulator will only use the powers being provided when there is an express need to do so. Adding the qualifier "and that is reasonably required by the Bank for a specific purpose" would unnecessarily create the potential for obstructive behaviour by auditors.
Amendment, by leave, withdrawn.
Section 26 agreed to.
Sections 27 to 35, inclusive, agreed to.
SCHEDULE 1.
Amendments Nos. 23 and 24 are related and may be discussed together.
I move amendment No. 23:
In Part 5, page 124, line 7, in the third column, to delete "up;" and substitute the following:
"up.
(2A) Without prejudice to the power of a supervisory authority to revoke an authorisation under subsections (1) and (2) of this section, a supervisory authority may apply to the Court in a summary manner for an order revoking the authorisation of an authorised investment business firm in any or all of the following circumstances:
(a)”.
This amendment provides that the supervisory authority may apply to the court in a summary manner for an order revoking the authorisation of an authorised investment business firm in any or all the circumstances which have been outlined in detail in amendments Nos. 23 and 24.
These amendments will substitute the new procedure for appeals to go in the first instance to the appeals tribunal with the old system involving direct applications to the court. The amendments may have been put forward in view of an omission in the Bill, as published, which meant that the right of appeal in regard to the revocation of an intermediaries' authorisation was inadvertently eliminated. The representative body for intermediaries pointed out this error in the Bill, as published, namely, that there was no appeals mechanism. On Committee Stage, the Minister signalled his intention to repair this omission on Report Stage, which he has now done. The omission was corrected in the Dáil as approved by the insertion of section 12A on page 128. There is an appeals procedure which is a new procedure by way of appeal to the appeals tribunal established under the legislation and not the former system of a direct application to the court, as provided for in the Senator's amendment.
The appeals system was completely changed from what was originally proposed. Will the Minister of State explain why the whole process was changed? It was a complete about-face from what was originally proposed in this instance.
I gather the McDowell report recommended a revised form of appeal where a specialised appeals tribunal would be established to deal with appeals in this area. In this context, the Bill, as drafted, was flawed because it did not contain any appeals mechanism. I know there was a certain hankering for the old appeals system through the regular recourse to the court but the Minister decided to follow the McDowell recommendation in this respect and provide for appeal to an appeals tribunal.
I am glad the Minister of State explained that point.
Amendment, by leave, withdrawn.
Amendment No. 24 not moved.
Schedule 1 agreed to.
Schedule 2 agreed to.
SCHEDULE 3.
I move amendment No. 25:
In Part 11, page 184, between lines 50 and 51, in the third column, to insert the following:
"(c) the supervisory authority may prescribe circumstances in which the provisions of paragraphs (a) and (b) of this section do not apply in relation to a discontinuance of an appointment in writing.”.
This amendment would weaken the current requirement that where an insurance agency held by a broker is discontinued for any reason, such a fact should be publicised. This amendment would create a potential exclusion from this provision and that would be undesirable from a consumer protection perspective. It is not acceptable to the Minister.
Amendment, by leave, withdrawn.
I move amendment No. 26:
In Part 12, page 188, line 26, in the third column, after "loan" to insert ", save where such introduction is ancillary to or otherwise than in the ordinary course of business of the person making the introduction".
The effect of this amendment would be to exclude a major category of mortgage introducers from the new definition of "mortgage intermediary" on page 188 of the Bill. The Director of Consumer Affairs originally indicated that the practice of using mortgage introducers, namely, persons who, though not authorised as mortgage intermediaries in their own right, introduce clients to authorised intermediaries in return for a commission, was on the increase and that the lack of regulation gave scope for abuse. With the establishment of the regulatory authority, this became a matter for it rather than for the Director of Consumer Affairs. In particular, as the regulation of mortgage introducers is being introduced in this Bill on the recommendation of the Director of Consumer Affairs, the Minister is not disposed to creating such an exclusion.
Amendment, by leave, withdrawn.
I move amendment No. 27:
In Part 12, page 188, between lines 38 and 39, to insert the following:
"1A. Section 116
Substitute the following subsection for subsection (7):
‘(7) An Authorisation shall be valid from the date specified therein and shall remain valid unless it is suspended or revoked under the provisions of this Act.'. ".
This is a technical amendment inserting a new subsection in between lines 38 and 39.
The Senator's amendment seeks to change the current requirement under section 116 of the Consumer Credit Act that a mortgage intermediary secure a new authorisation each year. Such a change is already provided for in item 3 on page 189 of the Bill which was inserted on Report Stage in the Dáil on the proposal of the Minister. The amendment inserts a new section 7(a) into section 116 which gives the regulatory authority the discretion to issue an authorisation to a mortgage intermediary for longer than one year subject to compliance with additional conditions laid down by the authority.
Amendment, by leave, withdrawn.
Schedule 3 agreed to.
Schedules 4 and 5 agreed to.
Title agreed to.
Bill reported without amendment.
When is it proposed to take Report Stage?
On Thursday, 24 June 2004.
Report Stage ordered for Thursday, 24 June 2004.
When is it proposed to sit again?
Sitting suspended at 4.30 p.m. and resumed at 5 p.m.
