Amendments Nos. 1, 164 to 166, inclusive, and 176 to 180, inclusive, are related and may be discussed together, by agreement. Is that agreed? Agreed.
Credit Union Bill 2012: Committee Stage
These amendments and the related Schedules are to provide for measures which will allow the Central Bank of Ireland greater capacity to co-operate with its counterparts in other countries. Specifically, these amendments must be enacted to permit the Central Bank to sign the International Organization of Securities Commissions multilateral memorandum of understanding, or MMOU. This must be done by year end. In light of the pressing end-of-year timeline for signing the MMOU, it has been necessary to effectively make these amendments part of this Bill. The purpose of the MMOU is to allow the Central Bank to co-operate and share information with other regulators, including other securities commissions, around the world in accordance with international best practice.
The provisions being inserted into the Bill are currently part of the Central Bank (Supervision and Enforcement) Bill 2011, which is due to go to Committee Stage in the Dáil in January. The changes envisaged include: enacting section 53 of the Central Bank (Supervision and Enforcement) Bill, so that the Central Bank may use its powers on behalf of overseas regulators; enhancing and consolidating authorised officer provisions; and related provisions for guarding the Central Bank confidentiality regime.
Given that these amendments are not related to credit unions, it is necessary to amend the Short and Long Titles of this Bill to accommodate them. I wish to emphasise that the expeditious passage of the Credit Union Bill through this House is to allow for €250 million to be contributed to the credit union fund by year end, as there is no scope in the 2013 figures for it to be done after that. This money is essential for the restructuring process to get under way. We have already discussed this matter on Second Stage.
While the International Organization of Securities Commissions, IOSCO, requirements are urgent, they are not the cause of the accelerated timetable for the Bill. I acknowledge that on Second Stage, Members asked what was the rush and the rush is to get the money in place, because the Government has made provision for it in 2012. The end of 2012 is approaching and it is important that the money be put in place as part of the restructuring process. In respect of this group of amendments, the Government simply is bringing them forward in order that this important aspect of the Central Bank's work also can be part and parcel of the Bill.
Amendments Nos. 2, 3 and 159 are related and may be discussed together.
I will speak on amendments Nos. 2, 3 and 159. Given these provisions amend the Central Bank Reform Act 2010, it is also necessary to update the citation of the Central Bank Acts and these amendments provide for this update. I might put some additional information on the record of the House in case there is any question about this. The first of these changes, as set out in amendments Nos. 1 and 180, will amend the Short and Long Titles of this Bill to provide for the inclusion of this package of measures and hence the new Title to the Bill, namely, the Credit Union and Co-operation with Overseas Regulators Bill. The net impact is the name of the Bill is being changed from being the Credit Union Bill to the Credit Union and Co-operation with Overseas Regulators Bill 2012, which I readily concede is a bit of a mouthful.
The Long Title is likewise amended to specify that the Central Bank will have revised powers in respect of co-operation with other regulators and will from henceforth have consolidated powers in respect of the appointment of authorised officers. The International Organization of Securities Commissions, usually referred to as IOSCO, co-ordinates security regulators across the globe. The great majority of IOSCO members already have acceded to the memorandum but amendments are required to enable the Central Bank of Ireland to sign it. In these amendments, the Government is simply allowing the Central Bank to sign this international amendment in order that the powers that can be given to it are clear for all to see.
The Central Bank (Supervision and Enforcement) Bill 2011 proposes measures which meet all of these requirements and it was intended that the Central Bank of Ireland would be in a position to accede to the memorandum on the enactment of that Bill. However, IOSCO members have agreed that it would issue a watch-list of those countries which had not yet signed the memorandum on 1 January 2013. This change means that the enactment of the relevant legislation provisions now is a matter of some urgency.
As for what the amendments do, the new section 54 of the Central Bank Reform Act is a general provision enabling the Central Bank to exercise its various powers in support of third-country regulators. It is important to note that the proposed power enables the Central Bank to share information with other regulators. In making a decision to share information with other regulators, the Central Bank may take into account a number of factors, including whether the breach of law concerned also would be a breach of Irish law, as well as the seriousness of the issue and the public interest in general. It also should be noted that the Central Bank can expect a financial contribution to defray the cost of the investigation by the bank, if it agrees to a request to investigate a matter on behalf of another regulator, unless European Union-related obligations are concerned.
Amendment No. 164 provides for changes to section 33AK of the Central Bank Act 1942. It removes the obligation on the bank to report information pointing to the commission of an offence to other law enforcement authorities in the State where the information concerned is received from an overseas supervisor. The reason for this is to allow the free flow of information between regulators without fear that the information shared could cause criminal prosecutions to fail as a result of the variations in the methods used to gather information in different jurisdictions. The mandatory passing of information to those charged with prosecuting criminal offences in circumstances in which Irish rules of evidence might mean that any prosecution would be contaminated, clearly is not in the interest of justice for the individual or the integrity of the criminal justice system generally.
The larger part of amendment No. 165 proposes to repeal the existing authorised officer powers under 20 different Acts and statutory instruments and replace them with a single authorised officer regime which the Central Bank may use to obtain information from all regulated financial service providers. The current authorised officer regime varies across each sector, and important powers provided for in some circumstances are absent in others. A key provision will allow for an authorised officer appointed by the Central Bank to require any person who might reasonably have information relevant to the investigation of a financial service issue to provide the information. The substance of the amendments in group 2 is to provide for that and to tidy up the existing legislation by way of a number of consequential changes.
Amendments Nos. 4 and 52 are related and may be discussed together.
We are dealing with amendments Nos. 4 and 52. These amendments mirror sections 14(6) to 14(8) of the Credit Union Act 1997 and provide for changes to the rules of credit unions that are consequential to the provisions of the Bill. Amendment No. 4 clarifies that during the first year following the commencement of this section, the rules of the credit union may be amended by a resolution of the board of directors rather than by the members of the credit union where such changes are necessary to comply with the provisions of the Bill.
Amendment No. 52 provides for a reduction in the number of board members from 15 to 11 by amendment to the rules of the credit union. This is a saving provision which continues to enforce any regulatory action taken by the Central Bank on or before the commencement of this Act under a provision which is being amended, repealed or revoked by this Act. This section also sets out a definition of regulatory actions for the purpose of this section.
During Report Stage in Dáil Éireann and Second Stage in this House I indicated that I would table an amendment to clarify that it is only legislation that already applies to credit unions that would be covered by this definition. The amendment outlined provides the clarification sought. The point was raised by Senator Byrne and a number of other Senators on Second Stage in the House.
The amendment provides that the financial services legislation definition only relates to provisions applicable to credit unions acting under any authorisation from the Central Bank as provided for by law. Such authorisation may include acting as an investment intermediary under the Investment Intermediaries Act 1995. The amendment clarifies any misunderstanding that the definition somehow applies - inappropriately - a corpus of so-called banking legislation to credit unions. I again clarify to the House that this definition does not apply financial service provisions to credit unions anew, nor could it be used for that purpose. The perception, that the definition turns on to credit unions a range of new legislative provisions from the wider financial services area, is mistaken.
The point was made that we would table an amendment that would be clearer in terms of what credit unions can and cannot do. A number of Members indicated that credit unions frequently do other things, in particular in terms of intermediaries legislation, which is not clarified in other legislation in terms of a definition. We were asked by colleagues in the Dáil and in this House to bring forward a clearer definition of what exactly applies to credit unions under the section.
The amendment provides a better definition and greater clarity in that regard.
This amendment clarifies that the secretary is a member of the board, unlike, for example, the position of a company secretary. We were asked to make the position clear in the Bill and are pleased to do so.
I move amendment No. 7:
In page 9, before section 7, to insert the following new section:
“7.—The Principal Act is amended by the insertion of the following new subsection after section 6(5):
“(6) Nothing in the foregoing will prevent a credit union from providing certain services, to be prescribed by the Bank, to a credit union or a member of another credit union registered under this Act.”.”.
I welcome the Minister of State. Our interaction with him and his responses to questions have been positive and I hope the debate will continue in a positive vein today. While progress has been made on the Bill, we are still slightly short of the line.
The amendment has been moved because insufficient movement has been made on the issue of shared services. Amendments Nos. 7 and 8 would allow for member level service sharing among credit unions. This is technologically feasible and there is no reason the sharing of services should not be permitted in the Bill.
On Second Stage, the Minister of State referred to a report on shared branches, which is expected to be released in mid-2013, and indicated the Bill could not provide for shared services. He also noted that the issue of services had not been addressed in the report of the Commission on Credit Unions. That the commission engaged in significant discussion of member level shared services is reflected on pages 87 to 89, inclusive, of its final report.
Amendment No. 7 makes clear that any shared services would only commence with the explicit agreement of the Central Bank and where the credit unions in question have demonstrated a capacity to deliver such services. We have made obtaining the approval of the Central Bank a precondition for commencing shared services because a number of technical issues must first be addressed. The amendment does not propose to allow shared branching. It would, however, allow credit unions to avail of a shared services facility at member level and I urge the Minister of State to accept it.
Before commenting, I ask the Minister of State to respond to the points made by Senator Reilly.
Amendment No. 7 relates to shared branching, which involves credit unions providing front-of-house services to each others' members. Shared branching is an activity that operates primarily in the credit union system of the United States. It was not considered by the Commission on Credit Unions and does not form part of the commission's final report. Moreover, in the public consultation process shared branching was not a key issue in the submissions received from credit unions or other stakeholders, nor did it emerge from the survey returns from the credit unions.
In simple terms, shared branching would allow one credit union member to use the service of another credit union. For this facility to work securely, it is important that certain procedures are put in place beforehand. First, a settlement system is needed as a person could withdraw his or her savings several times from different credit unions if safeguards were not in place to prevent such a practice. Second, an underwriting process is needed to establish proper assessment of ability to repay at the credit union issuing the loan on behalf of the member's home credit union. It would also need to be made clear who would be held responsible should a loan go into arrears. Would it be the member's credit union or the credit union which issued the loan? Third, an accompanying prudential framework would be needed to ensure, for example, that proper liquidity management practices are in place to guard against large, unpredictable withdrawals at small credit unions which are connected to larger credit unions. Furthermore, shared branching raises fundamental questions about the common bond, notwithstanding the commission's recommendations that the common bond remain unchanged.
The fact that shared branching apparently operates successfully in other jurisdiction indicates that it is certainly worth considering. I consider that it would be premature to enshrine shared branching in legislation in the absence of the supporting infrastructure and prudential framework developed in consultation with all the relevant credit union stakeholders and the Central Bank. The Minister has written to the Credit Union Advisory Committee to ask it to examine this issue and to report back to him by the end of the second quarter of next year. I think I also mentioned this on Second Stage. The committee's report will involve an assessment of the current appetite for shared branching among credit unions and their members, an analysis of the framework requirements to support shared branching, an exploration of various alternatives and approaches drawing on international experience and best practice, and the recommendations of the Credit Union Advisory Committee, including any legislative changes required. The report is to be an open process involving consultation with other credit union stakeholders, including credit union representatives and the Central Bank. We do not propose to accept amendment No. 7, which has also been our position in the other House, but the Minister has asked for this report to be laid before him by the second quarter of next year. If there is an appetite for a wider application of this model, which I know is used in other jurisdictions, we can consider it in due course, but it is not appropriate to do so in the context of the current legislation.
I do not think credit unions want to be a single bank or branches. This is why I referred to shared services. I know the services detailed in amendment No. 7 cannot be introduced overnight. There are issues with risk management, which the Minister of State mentioned, but it should not preclude the Bill detailing what such services could include. This is why the amendment sets out the difference between branching and shared services because there are many positives that can come out of this and because it would allow credit unions to be as efficient and responsive as possible. This is why I will be pressing amendment No. 7.
On Second Stage I argued that it is important that credit unions move into the electronic age, which is, effectively, the concern of Senator Reilly's amendment. I heard what the Minister of State said but perhaps there should be some flexibility for credit unions. For somebody not to have the ability to remove cash from his or her credit union account through another credit union ATM seems akin to when one could only remove cash from a bank with a particular card. There is a lack of flexibility. Looking at some of the other services that have been discussed and the organisation of services, it is eminently sensible for it to happen with respect to research and marketing services. Could some of those be considered and could the Minister of State have a look at that?
I support this amendment, which is very similar to one we produced but which has not been tabled for discussion for technical reasons. However, I intend to table it on Report Stage. I agree with Senators D'Arcy and Reilly that more flexibility is required, especially when we look at the consolidation of the banking network. I am not saying the credit unions are not in the electronic age but we want to allow developments like electronically enabled payment accounts. It was the understanding of the credit union movement that this was agreed by the commission, but it seems to have been omitted from the Bill. While I accept a large part of the Minister of State's response, there are other issues to get over.
It is not sufficient to state that there will be a further report by the second quarter of next year. There is nothing to preclude this from being part of the Act. The Minister of State need not initiate that part but it can be laid down in law.
My colleagues have covered why this is important. We are facing a degree of consolidation within the credit union sector in any case, so credit union customers will require access to accounts, ease of payment and so forth. It is for the future viability of credit unions, when one considers the additional services that are also being offered by the post office network, which is a good thing. We support this amendment and I intend to table a similar amendment on Report Stage if the Minister of State does not accept it.
We support the general thrust of the amendment but it is probably a little premature in light of what the Minister of State said about the lack of a set up and system. As the amendment appears to mix up the concepts of shared branching and shared services, we cannot support it.
I will clarify this because we appear to be mixing up two things. Shared branching is an internationally recognised term for the way in which credit unions can operate in a joined-up system of prudential risk whereby money can be taken out of one credit union applicable to another or loans can be taken out of one credit union applicable to another. That was not a recommendation from the commission. It recommended an aggressive form of shared services, which is already provided for in the Bill. The Senators are confusing one with the other.
If there is an appetite for shared branching, which is the essence of the co-operative banking system in America and other countries, the Minister, Deputy Noonan, is open to that. However, we must tease out the potential prudential risks and the implications for big and small credit unions and for deposit ratios, which are very clear in terms of what the Central Bank can issue to credit unions.
Senator Reilly spoke about shared services. There is nothing in the Bill to prevent that from happening. However, to take the next step and decide to integrate the entire credit union movement in a way that has hitherto not come before us in legislation or by way of a specific recommendation of the commission is one we cannot take. We are open to examining this and I am not closing down debate on it. The view of the Minister for Finance is that in asking that this matter be brought before him by the end of the first half of next year he demonstrates his intent to both Houses of the Oireachtas to look at this in a constructive way, if there is support for it. However, we need to hear from the credit union and hitherto that has not been its position.
We are confusing both matters. The Government is at one with Senator Reilly with regard to what she wants to do here, but there is nothing in the existing legislation that prevents us from doing what she wants us to do. However, I believe she is mixing this up with shared branching, which is a step too far at this stage. We are open to it if there is support for it in the future.
I move amendment No. 8:
In page 9, before section 7, to insert the following new section:
“7.—The Principal Act is amended by the insertion of the following new section after section 26:
“26A.—(1) A credit union may, once the approval of the Bank has been secured and the necessary capacity and infrastructure put in place, promote, invest in, loan to, and/or contract with a credit union service organisation approved by the Bank (on such terms as the bank considers appropriate) and engaged in activities and services of the credit union service organisation related to the routine daily operations of credit unions.
(2) Nothing in this section or the following provisions of this Part affects the operation of any enactment which is not contained in this Act and which, in whole or in part, relates to the provision of credit union service organisation activities or services.
(3) Credit union services organisation activities or services may include but are not limited to the following:
(a) clerical, professional and management services:
(i) accounting services;
(ii) internal audits for credit unions;
(iii) credit union risk and compliance;
(iv) management and personnel training and support;
(v) marketing services;
(vi) research services;
(vii) procurement related services;
(viii) debt collection services;
(b) electronic transaction services:
(i) automated teller machine (ATM) services;
(ii) debit card services;
(iii) electronic fund transfer (EFT) services.”.”.
This amendment follows on from amendment No. 7 and details the type of shared services that could be made available to members when the required capacity and support of the Central Bank has been secured. The Commission on Credit Unions in its report clearly supported a new regime for the provision of additional services. It is clear from that section of the report that the meaning includes both member level and back end shared services. I will not labour the point we have discussed, but these are some of the services we envisage being shared. I ask the Minister of State to accept the amendment to facilitate the empowerment of credit unions to meet their members' demands.
Amendment No. 8 is consequential on amendment No. 7.
Were we to accept amendment No. 7, we would accept amendment No. 8. Were we to reject amendment No. 7, we would automatically reject amendment No. 8.
The list of services provided by Senator Reilly is thorough but probably not exhaustive. To include so specific a list in legislation at this stage would be against the thrust of the Bill, as it could preclude elements that have not been mentioned.
It would not preclude other additional services. If Senator Gilroy read the amendment, he would see that it states, "but are not limited to the following".
In which case, why include it?
It would not limit the list to these services. I wish to give notice that we will table this amendment again on Report Stage. It was not included for technical reasons, but I intend to submit a similar amendment on Report Stage.
I thank Senator Reilly for amendment No. 8. The commission report notes that services may be shared in a number of ways, including the establishment of central credit unions, corporate credit unions, credit union service organisations - CUSOs, but we will just call them "credit union service organisations" - or local alliances. Shared service arrangements are already in operation in the credit union sector, for example, the Credit Union Services Co-operative Limited or the Irish League of Credit Unions, ILCU's own payment services. The commission recommends that the establishment of such shared service arrangements should be facilitated by legislation, where necessary.
The Government agrees that the sharing of services offers credit unions an opportunity to benefit from economies of scale and allows them to access expertise that they would not normally have the resources to engage. The latter may become increasingly important, given the increasing complexity and running costs expected in a modernised regulatory framework and enhanced service offering. The ILCU has accepted that there is no obstacle to establishing shared service arrangements at credit union level.
Subsection (3)(a) of Senator Reilly's amendment No. 8 states:
(a) clerical, professional and management services:
(i) accounting services;
(ii) internal audits for credit unions;
It also refers to marketing and research services. I am reliably informed that it is totally possible and legal to bring these services together in a shared way, as is the case in the examples I have cited. As the provision is already in place, there is no need to specify it in the legislation.
We encourage credit unions to use the shared service model. The Government is using it to save significant resources. I see Senator Barrett in the Chamber. In terms of HR, he will be glad to hear that we will save 26% next year by sharing HR services in central government. If we can do it centrally, there is no reason that groups of credit unions cannot do it locally. There is no need to put it in law, as it is already allowed.
Amendments Nos. 9, 12, 19, 29 and 34 are related and may be discussed together. Is that agreed? Agreed.
These are minor technical amendments that insert a test of certainty. Where the bank makes regulations under this section, the bank may only do what is necessary in the circumstances.
Amendments Nos. 10, 11 and 13 to 16, inclusive, are related and may be discussed together. Is that agreed? Agreed.
Amendment No. 10 inserts a new provision into section 7 to identify some of the types of conditions that the bank may impose on the registration of credit unions under subsection (1).
These include a condition that the credit union must notify the bank of significant events. There is also a condition to operate a more limited business as agreed with the bank and a condition to undertake a review of the credit union's business within 12 months of registration to ensure it is compliant with all requirements. Conditions such as these must be necessary to protect the savings of credit union members. Conditions may need to be imposed in the formative years of a new credit union, as the union may be required to build up the requirement risk management and compliance controls within the credit union. This amendment also provides that only these conditions that are necessary may be imposed as a condition of registration. Any condition imposed may be applicable by the credit union to the Irish Financial Services Appeals Tribunal. These conditions may only be imposed on new registrations, and there have been very few of these in recent years. Amendments Nos. 11 and 13 to 16, inclusive, are all consequential on amendment No. 10.
The Minister of State mentioned new registrations. The Minister of State related a number of requirements when operating a more limited business model but if the Bill is passed, could the Central Bank move with these powers on an existing credit union? Does it only apply to new registrations?
It only applies to newly formed credit unions and as I understand it, there is no application to existing credit unions. It is another layer of security where a new credit union is formed. We have not seen many of these in recent years but that is not to say that in future, this will remain the case. The proposal would only apply to new credit unions.
Amendment No. 17 will be discussed with amendments Nos 23, 26 and 28, which are related, by agreement. Is that agreed? Agreed.
Amendment No. 18 will be discussed with amendments Nos. 24, 25 and 27, which are related, by agreement. Is that agreed? Agreed.
These are minor technical amendments which allow regulations to set limits in the form of a monetary amount as well as a percentage. In the context of these minor amendments, the section gives effect to recommendation 10.3.27 of the Report of the Commission on Credit Unions. It repeals section 27 of the principal Act and replaces it with a provision allowing credit unions to raise funds by issuing shares to members or by accepting deposits.
The bank may make regulations in relation to savings limits and the amount of savings, or category of savings, a member can hold, the ratio of deposits to shares that credit unions may hold and any other requirements or limits the bank considers appropriate.
What is the ratio and what are the alterations or changes?
Deposits are limited to €100,000 per saver and savings are limited to a total of €200,000 between shares and deposits or 1% of the total assets of the credit union, whichever is the greater. The deposit guarantee scheme does not apply to credit unions. Members' savings up to €100,000 are protected under this scheme.
May I use this opportunity to seek clarification? The Minister of State answered Senator D'Arcy on amendment No. 18, but amendment No. 19 is related to it.
I do not want to delay the debate, but I would like more detail of the savings and share limits the Minister of State mentioned. He said he was replacing an existing subsection with a provision to allow the Central Bank to further restrict any credit union, because there are already restrictions, in relation to the number of deposits and shares held by a member. What is the difference between what is proposed and what is in existence?
My understanding is that they will be set out in regulations. They do not apply to individual credit unions but to classes of savers within credit unions. They will be set out in regulations.
Have those regulations already been prepared?
It is also my understanding that consultation is taking place. There is provision for that consultation and it will be set out in due course.
I do not wish to labour the point, but I find it strange that we are looking to amend the section by putting in new limits that will be set in additional regulations that do not form part of the Bill. We are being asked to vote-----
The measures are in existing legislation.
That is what I want to get to. Am I being asked to agree to something although I do not know what it is going to be?
My understanding is that the 1997 Act has all the details in the primary legislation. If one were to do it one would not do it in this way. It is normal to set it out by way of regulation.
Are we proposing any major changes to that?
Not as it stands, no.
The primary legislation will stand.
Is the amendment agreed to?
Could we have more clarification on this amendment? Senator Darragh O'Brien makes a fair point.
I have put the amendment, Senator Gilroy, and the Minister of State has clarified it. Senator Darragh O'Brien will have a chance to discuss this issue further on Report Stage.
We will come back to this on Report Stage, when we may get further clarification. I will not oppose the amendment at this stage.
I can put the clarification note on the record, if the Senator would like that.
If the Minister of State does not mind.
This clarification refers to savings in amendment No. 18.
The Irish League of Credit Unions raised an issue in relation to alternative forms of funding, for example deferred shares. These types of shares are different from other credit union shares in being transferable but not withdrawable and carrying no right to borrow. These are generally repayable only on winding-up or dissolution of a credit union after all creditors have been repaid. These have recently been introduced for the credit union sector in the United Kingdom. However, alternative forms of funding such as deferred shares were not recommended by the commission in its report. This did not emerge as an issue for credit unions during consultation with the credit union sector nor in the survey of credit unions undertaken by the commission.
The Minister is open to further discussions of ideas and consultation about alternative forms of funding. However, the matter is not one to be included in the current Bill.
Amendments Nos. 20, 21 and 121 to 123, inclusive, are related and will be discussed together.
Amendments Nos. 20 and 21 involve a redraft of the Bill as published. Following further consideration, it was felt that the provisions in section 29, which proposed to insert a new section 84A in the 1997 Act would be more suitable under section 9. The section deals with the policies, procedures and practices that a credit union must have in place to ensure it is in compliance with the requirements imposed on it. For example, the Central Bank may make regulations imposing liquidity requirements on credit unions under section 30. Currently, credit unions have a minimum liquidity requirement of 20%. The amendment allows the Central Bank to make regulations prescribing the operational practices, policies, procedures, etc., to be adopted by credit unions more generally. These may include requiring them to adopt monitoring procedures to ensure the 20% liquidity requirement is complied with. Regulations may also require them to ensure people involved in monitoring liquidity have an understanding of the calculation of liquidity and maturity mismatches. These requirements may also deal with reporting requirements, including arrangements for reporting breaches to the board of directors of the Central Bank.
Section 9, as amended, agreed to.
The amendment sets out the basis on which credit unions may borrow money and links it to the purposes of the credit union objects set out in section 8 of the Credit Union Act 1997. These include the creation of sources of credit for mutual benefit of members, the use and control of members' savings for their mutual benefit and the improvement of the well-being and spirt of the members' community.
SECTION 11
Amendment agreed to.
The amendment provides for a transitional arrangement whereby an approval by the Central Bank under section 35(2) of the Credit Union Act 1997 in respect of longer term lending by a credit union would continue to have effect upon commencement of this section. Amendments Nos. 25 and 27 were discussed with amendment No. 18. These are minor technical amendments which allow the regulations to set limits in the form of a monetary amount as well as a percentage amount.
This amendment is minor and corrects a cross-reference.
This amendment enhances the principles behind the regulation making power of the bank in respect of the investments that a credit union may invest in and links it to the need to avoid undue risk to members' savings.
The third amendment, No. 33, follows from the discussion on Committee and Report Stages in the Dáil where the Minister committed to examining this section to allow a credit union to invest in public projects. Members will recall a good discussion on Second Stage where a number of colleagues put forward the view that credit unions could invest in public projects. This amendment arises out of a discussion with the Office of the Attorney General on the issue and makes it clear that the power of the Central Bank to make regulations relating to the investments includes scope for making regulations in respect of investments in public projects. The Minister remains open to credit unions coming forward at an early stage to outline their proposals in respect of such investments.
I welcome the amendment. It is an opportunity for credit unions in their own facility to fund projects, whether it be a PPP with a local authority or somebody else, for which they may not be able to get funding. There is another aspect that I ask the Minister of State to consider. While it may not be a PPP project it is important to remember that credit unions are disallowed from funding limited companies. In regard to PPPs, it would be a good if a credit union from a county town was to fund a project within that town for which potentially the local authority or somebody else may be incapable of getting funding. There are many registered charitable organisations and community groups organised on the basis of a limited company that do superb work. While not a PPP, they are organised in this manner as a limited company. Credit unions are disallowed fund limited companies. The best community organisation in the country may require funding, the merits of which may only be understood by the credit union in the local town, but because of the way the community organisation is organised, formed by guarantee and formed as a limited company, a credit union is disallowed from funding it. I am not talking here about opening up credit unions to massive loans to limited companies. This is an issue that needs to be considered specifically for community organisations that are organised in this manner. It is something that would have a community gain as well as a benefit for the credit union. It would be seen as acting not only in the greater good of the individual but in the greater good via a community organisation.
It is a sensible Government amendment that follows on from the debate in the other House and Second Stage here and we will certainly support it. Senator Michael D'Arcy has mentioned a couple of points that I would have raised but it is a sensible amendment and, I hope, it will be utilised by credit unions into the future where they are able to invest in State projects.
The Bill refers to "the classes of investments the credit union may invest in;". We are now suggesting "the classes of investments including, where appropriate, any investment project of a public nature may invest in;". That is wide enough to allow for the point made by Senator Michael D'Arcy.
However, it is predicated on regulations that would follow from the Central Banks. Rather than being too prescriptive in the primary legislation, it makes more sense that this function be given to the Central Bank for the purpose of setting out the rules through which this could occur. The Government was mindful, as outlined in the debate that occurred in the other House and the one that occurred here, that there may well be very useful public projects either through limited companies or public utility companies that could form the basis of investment strategies for the credit unions in future. The purpose of amendment No. 33 is to attempt to meet Members' concerns.
My concern is that if a credit union is prescribed in legislation as being disallowed to lend to a community organisation that is organised as a limited company, I do not know whether amendment No. 33 would be sufficient to overrule that prescribed portion that might be in the primary legislation.
The Bill allows Central Bank regulations to set out the classes of investment in which a credit union may engage. This could be used to allow for investments in a company, where appropriate. The Bill will give the bank the power to set out the regulations in terms of the classes of investments that can be made. If the class is clear in the regulations, it is open for everyone to make proposals in which the credit union might want to invest.
Government amendment No. 35:
In page 19, to delete lines 1 to 5 and substitute the following:
"(6) The board of directors of a credit union shall be elected—
(a) where the organisation meeting occurs after the commencement of this provision (as amended by section 15 of the Credit Union Act 2012), by secret ballot at the organisation meeting and, subject to subsection (16) and section 57, subsequent vacancies on the board of directors shall be filled by secret ballot at an annual general meeting, and
(b) in any other case, by secret ballot at the annual general meeting first occurring after the commencement of this provision (as amended by section 15 of the Credit Union Act 2012) or, if earlier than that annual general meeting, at a special general meeting called for the purpose of such ballot and, subject to subsection (16) and section 57, subsequent vacancies on the board of directors shall be filled by secret ballot at an annual general meeting.".
This amendment makes provision for the election of a board of directors at the first AGM or SGM called after the organisation meeting of a new credit union. This amendment is necessary to ensure consistency between the board oversight and the way boards of directors are elected. The amendment provides a transitional arrangement for the election of the board of directors at the first AGM or SGM following the commencement of this section. This is necessary to give effect to the decrease in the maximum number of directors that may be appointed to the board under the Bill, a reduction from a maximum of 15 to a maximum of 11. There are incorrect cross-references in these amendments and I will introduce amendments on Report Stage to rectify these. These should refer to section 53(15) and not section 53(16).
Amendments Nos. 36, 40, 41, 44, 46 to 50, inclusive, 55 to 58, inclusive, 69, 76, 169 and 170 are related and may be discussed together.
Amendment No. 40 removes subsections (12) and (13) as these were provided for in new fitness and probity requirements which are to be rolled out for credit unions on a phased basis as recommended by the Commission on Credit Unions. Amendments Nos. 36, 41, 44, 46 to 50, inclusive, 69, 169 and 170 amend the cross-references following the deletion of subsections (12) and (13) by amendment No. 40. The majority of these amendments are simply consequential on amendment No. 40.
Amendment No. 55 amends section 17(1)(f). This section provides that a person performing management functions in a credit union must have particular knowledge, skills, experience, qualifications, competence, capacity and probity to carry out these duties effectively. This is being deleted, as it will be covered separately under the fitness and probity regime which will be rolled out for credit unions over time.
The application of fitness and probity requirements was agreed with the Commission on Credit Unions.
Amendment No. 56 deletes subsection (1)(p) as it refers to requirements set out in subsections (12) and (13) of section 53. As these subsections are being deleted, subsection (1)(p) is invalid. Amendments Nos. 57 and 58 make the consequential cross-references arising from the deletion of paragraph (p).
Amendment No. 76 deletes section 68A(5)(b) and (c) as inserted by section 21. When appointing a person as a manager, it is necessary to ensure that the person appointed complies with all legal requirements. The list of criteria which a manager must fulfil is being deleted. These are standards which will be set out under the fitness and probity requirements which will apply to credit unions in line with the recommendation of the commission. These measures will be rolled out to credit unions over time and will take account of the nature, scale and complexity of a credit union. This amendment ensures that the person appointed as manager complies with all legal requirements, including requirements prescribed by the Bank.
Amendments Nos. 169 and 170 correct the cross-references arising out of the deletion of sections 53(12) and (13), as inserted by section 15. In plain English, as a consequence of inserting in the probity section, we are amending the other parts of the primary legislation to have regard to that. This will all be tied up in the context of the standard and probity functions for managers, which are to be set out as per the recommendation of the commission.
Amendment No. 37 is a Government amendment. Amendments Nos. 37 to 39, inclusive, and 175 are related. Amendment No. 38 is an alternative to amendment No. 37. Therefore, amendments Nos. 37 to 39, inclusive, and 175 may be discussed together by agreement.
These amendments relate to eligibility for membership of the board of directors and have arisen from constructive debates with Members from both Houses of the Oireachtas in recent weeks. This was another issue that Senators Reilly, Byrne, Gilroy and Michael D'Arcy raised in terms of the membership of the board of directors and we are attempting to meet this by way of the amendment.
The effect of these amendments reduces the exclusions that would apply to the membership of the board. These exclusions were in place in the original Bill and, following consultation, the Minister has agreed to change them. Amendment No. 37 allows volunteers of other credit unions as well as a member of the board oversight committee of another credit union to be on the board of the credit union.
Amendment No. 38, from Senators Reilly, Cullinane and Ó Clochartaigh, proposes to delete a voluntary assistant from the list of exclusions from the board of directors. A number of amendments have been made to board exclusions today. However, it is not appropriate to remove volunteers from the list of exclusions on the board of directors. The core change at the centre of the governance provision in the Bill is to separate the role of the board in overseeing the credit union's operations from the day-to-day operations themselves. These exclusions are designed to ensure that persons are not overseeing their own work and answerable to themselves. I do not propose to accept this amendment.
Amendment No. 39 removes the prohibition on family members of volunteers of the credit union becoming directors. This also removes the express exclusion of members who are in arrears greater than 90 days and instead, provides that the credit union rules should apply with the eligibility of such a member.
Amendment No. 175 is a follow-on from amendment No. 39. This amendment provides that the rules of a credit union must set out how the credit union will deal with members of the boards of directors and board oversight committee who are in arrears greater than 90 days, and including suspension and removal of the director.
The exclusion of volunteers is an issue about which I feel strongly. I am happy to recognise some movement has been made and the prohibition has been narrowed down to voluntary assistants being on the board of their own credit union. However, there is no need for this prohibition to remain in the Bill. It will have a particularly severe impact on smaller credit unions which typically rely to a greater level on voluntary input. It is often viewed exclusively as a problem for small rural credit unions but it is equally an issue in urban areas where there are many small credit unions. The impact of these exclusions will be felt particularly by smaller credit unions as the pool of available volunteers is already quite small, as was detailed by other Senators on Second Stage. These exclusions will shrink the pool further.
Voluntary assistants help reduce the cost burden on credit unions as they provide their services at little or no cost. The use of board members as voluntary assistants provides a link between the board and the front line. Board members can see first-hand the practical impact of their decisions and can use experience of working on the coal face to generate ideas on how to improve services for members and the credit union generally. This consideration also applies to larger credit unions. The issue needs to be dealt with and it is the final hurdle in the section. The amendment is very important and I ask the Minister of State to support it now or on Report Stage.
I agree with Senator Reilly and will table the amendment again on Report Stage, if appropriate. It is unnecessarily restrictive with regard to volunteers but I welcome that the Minister of State has extended the eligibility of those who might serve. The preclusions prior to this were too restrictive and it is a way forward. What is the view of the Minister of State on smaller credit unions in rural and urban areas which depend to a large degree on volunteer support? How does the Minister of State see these being affected, particularly when it comes to the restrictions on the terms for which people are able to serve? This will have a further impact. I understand the theory behind it but I am concerned about the practice. Will the Minister of State elaborate further on this before we decide how to proceed?
As the leader of the Opposition stated, we all accept the necessity for a governance structure which is clear and transparent for everyone, and for making a distinction between operations on a day-to-day basis and the governance of the board. It is only appropriate from a prudential basis that we should attempt to put in place this distinction. My understanding is that Senator Reilly will propose an amendment with regard to where a credit union cannot get someone and whether some of these could be over-----
To be waived by the Central Bank.
We will not accept the amendment but we will put forward our own to express the Senator's position more clearly in the Bill. An argument has been put forward with regard to circumstances in which a credit union cannot get anyone, and we will make provision for it in a later amendment. I will provide the Senator with the reference to it in a moment. The exclusion issue was very hotly debated in both Houses and we have gone as far as we can in terms of reflecting the consensus position of colleagues in both Houses. The reworked section 15 on the board of directors and narrowing the exclusions will be to the benefit of the Bill. I take the point with regard to a credit union not being able to get someone and we have attempted to deal with it to express Senator Reilly's views on it. As we go through Committee Stage the Senator will see this.
Will the Minister of State read the proposed Government amendment?
It is amendment No. 127. The problem is that as we have not yet reached it, I cannot read it. I am hamstrung by the Cathaoirleach.
Amendment No. 127 is not before the House.
No, it is not, but it is relevant.
Amendment No. 127, which I am not allowed to discuss, attempts to argue for exceptional cases on term limits.
Is that in view of permanence?
To what amendment is the Minister of State referring?
Amendment No. 127.
I can grant the Minister of State discretion to speak about it, if he wants.
Excellent. Am I allowed to discuss amendment No. 127?
No, the amendments must be taken in sequence, but the Minister of State can discuss it now, if it is relevant to the group of amendments.
We will see in a minute if it is relevant.
It is. The purpose of amendment No. 127 is to allow the Central Bank to appoint a director under section 95A, even when that person may have exceeded the term limits set out in section 53(14) and section 76(N)(5). This addresses an issue raised by Deputy Pearse Doherty in the Dáil - the perfect symmetry between the Dáil and the Seanad is often explored and understood, as I know myself having been on the other side of the House - and again by Senator Reilly with amendments Nos. 43 and 115, namely, allowing for term limits not to be applied in exceptional circumstances. The amendment deals with a situation where it is necessary to enhance or improve the expertise of a board, for example, where the term limit meant it was deficient in this respect. This section provides that the bank may require the appointment of an additional director in such circumstances. It is being amended so that where a credit union is unable to source a director to meet the necessary requirements, it may nominate a director who would otherwise be excluded because of the term limits. The provision addresses the point that was raised by Deputy Pearse Doherty in the other House and Senator Reilly in this House without fundamentally compromising the core principle the Minister is looking to provide for in the Bill.
Is that just in terms of the term limit?
The terms.
Is it the detail of the terms?
Yes, the details.
Is it a term limit but restricted to the qualifications?
Yes. For the information of the House, there is also a reference to the nine-year term in section 20 which relates to the nomination committee. This will be amended to refer to the new 12-year term and I shall table an amendment to this effect on Report Stage.
Amendment No. 38 cannot be moved.
Amendments Nos. 42 and 45 are related and may be discussed together.
These amendments increase the term limits for the membership of the board of directors. During Report Stage in the Dáil, the Minister stated that he intended to bring forward an amendment, following consultation with the Office of the Attorney General, to change the term limit to 12 years in aggregate in a 15-year period. The commitment is now reflected in these amendments and it strikes an appropriate balance between promoting board rotation and protecting the volunteer ethos of credit unions. Amendment No. 43 deals with possible exceptions to term limits.
I wish to comment on amendment No. 42. The change is welcome and it was also a concern of the credit union movement. How will the Department monitor these changes? Most of the regulation is welcome and the Irish League of Credit Unions has done a good job of engaging with the Government and the Department on issues about which it is concerned. The league understands the day-to-day management of its institutions.
I am grateful that the change we called for on Second Stage has been made and that there is general consensus on it. As regards the review of how this will work, however, I do not know if the Department or the Central Bank has information on the existing directors of credit union boards concerning what the impact of this measure will be. I note the Minister of State is bringing forward another amendment that would allow for this to be set aside in exceptional circumstances. Many of the people who have served in credit unions for a long number of years have brought invaluable experience and expertise to this area. I would be greatly concerned, however, that we would lose much of that experience. What fail-safe mechanism does the Minister of State's Department and the Central Bank have in place to ensure that does not happen?
There have been issues with a small minority of credit unions, but that is a credit to the whole movement when one considers that the majority of banks got into difficulty. The vast majority of credit unions have operated extremely well in difficult times, so we should not use a sledge-hammer to crack a nut in this regard. While welcoming the changes the Government has made, I am still concerned that in a few years much of the experience and expertise will be lost. Will we see numerous credit unions applying for exemptions or exceptions with the Central Bank and, if so, will they become the rule? Does the Minister of State plan to review how this is working? What information does the Central Bank have to hand at this stage on the make-up of credit union boards?
It makes no difference now because the application of this will only emerge when the Bill has been enacted. As I understand it will be another year before the full Bill is operational, there is no retrospection. Given the fact that the 12-year rule on aggregate over 15 years would have to apply, looking forward I suspect we will have a decade to re-examine credit union legislation. It seems to be on the agenda every ten years or so. This legislation does not seek in any way to trample across the number of years people have currently served. I fully accept what the Senator is saying and we must have a common sense approach to this matter. The amendment is an attempt to gain that consensus in both Houses. In fairness to colleagues, this was flagged on all sides and the Minister for Finance is trying to reflect that fact in the amendment before us.
As regards the timeframe, once the Bill is passed it will take another year for the full legislation to have an impact. Therefore it is really-----
From there on.
-----from, I presume, January 2014 that the 12 years will apply.
The Senator's second question was whether we would see how this is operating within the next five to ten years and I think we will. It has no retrospection because one could have served 50 years.
Therefore, in 12 years time when the Minister of State is Minister for Finance, he is committed to re-examining this issue.
I suspect that Ireland will be in a much better place without me in 12 years time.
He will be Taoiseach then.
Amendments Nos. 43, 115 and 127 are related and may be discussed together, by agreement. Is that agreed? Agreed.
I have answered the Senator on this matter.
Yes. I do not propose to move amendment No. 43. Based on the Minister of State's response, I will have a look at amendment No. 127 to which he referred. The whole purpose of amendments Nos. 43 and 115 concerns the need for some kind of safety mechanism to be built into the legislation for those cases where credit unions and boards find themselves unable to meet the requirements that are set out in the Bill and need to apply for a waiver in exceptional circumstances. Such a safety mechanism will obviously have to meet with the approval of the registrar of credit unions and the Central Bank.
Based on the Minister of State's comments, I do not intend to press these amendments but I will give consideration to his amendment before Report Stage.
As I told the Senator earlier, the Government is introducing its own amendment No. 127, rather than accepting her amendments Nos. 43 and 115. The Department believes this will deal with the point she and her colleague, Deputy Pearse Doherty, have made both in this House and the Dáil in respect of the exception and makes provision for that in the Bill. The point highlighted in this House by the Senator both on Second Stage and today, as has her colleague in the Dáil, is well worth making. Notwithstanding the approval of the House, which I do not wish to second-guess, the improvement that will come about as a result of amendment No. 127 will greatly enhance the Bill in clearing up an area which the Senator and her colleague have raised. This is the reason the Minister will bring amendment No. 127 before the House later.
This is a minor technical amendment that clarifies that the secretary must inform the Central Bank where all directors intend to resign on the same day.
This amendment removes unnecessary wording, as the secretary is a board member and as such is entitled to attend board meetings.
Amendments Nos. 54, 60 to 64, inclusive, 66, 67, 70 to 75, inclusive, 87, 89, 91 and 92 are related and may be discussed together, by agreement. Is that agreed? Agreed.
Amendment No. 54 is being made to include the appointment of the risk management officer and compliance officer as one of the functions of the board. While the current wording provides these appointments as functions of the manager, such appointments are, however, more appropriate to the board itself. The deletions of subsections (4) and (5) are consequential to this amendment, as these matters now will be provided for in the new section 55(1)(e). Amendment No. 55 already has been dealt with under amendment No. 36 in section 15, as was amendment No. 56. This latter amendment deletes the famous new section 55(1)(p), as it refers to requirements set out in subsections (12) and (13) of section 53. As these subsections are being deleted, section 55(1)(p) is invalid. I believe I have already made this point to the House. Amendments Nos. 60 to 64, inclusive, 66, 67, 70 to 75, inclusive, 87, 89, 91 and 92 are consequential amendments that arise out of the changes being made to the functions of the board of directors by amendment No. 54.
Amendment No. 59 allows the board to nominate a director to present the accounts to members at the AGM. This role was previously performed by the treasurer. However, as the position of treasurer is being removed, the amendment is being introduced to maintain the reporting roles in a different way. The amendment also provides that it is the role of the board to consider any updated financial statements provided to it by the manager and mirrors the provisions in section 63A(4)(c). Other amendments are minor technical amendments that are required to correct cross-references consequential on the amendments proposed.
The amendment is straightforward. It proposes to delete the words “either” from the sentence concerned as its inclusion is a typographical error.
Amendment No. 68 increases the maximum consecutive term for the chair from three years to four. The term of office of the chair is for a period of one year. Currently, a chair is not permitted to serve more than three consecutive terms in the position. The Minister, Deputy Noonan, agreed on Committee Stage in the Dáil to increase the maximum consecutive term for the chair from three years to four. This will ensure continuity on the board. However, it will also be one of the responsibilities of the nomination committee to ensure board continuity. That was also an issue that arose in the select committee in the other House and from some of the contributions made in the Seanad on Second Stage. I am notching up the number of amendments accepted. It is currently six. This is one of the sensible proposals from the Opposition.
The amendment sets out new provisions concerning the suspension and removal of directors by the board oversight committee. Issues arose in the Dáil on the procedure for the suspension and removal of directors, in particular in terms of the director concerned being provided with written notification of the board oversight committee’s reasons for taking action under the section.
The Minister, on Committee and Report Stages in Dáil Éireann, and when the issue was raised on Second Stage in the Seanad, indicated his willingness to re-examine the provisions. This amendment reflects the changes necessary to address the concerns raised in both Houses. It brings the procedure for removing a director at a special general meeting convened under this section into line with the procedure for the removal of a director from office by members of a credit union, as set out in section 56 of the 1997 Act, thereby ensuring greater procedural consistency. Under this section, the board oversight committee can suspend a director where it considers that a member has taken any action or decision which is not in accordance with Part IV of the 1997 Act. The board oversight committee is required to provide written notice to the director, setting out the reasons for its decision before either suspending the director or convening a special general meeting of the credit union to consider whether to remove the director.
Where a director is suspended by the board oversight committee under this section, the suspension takes effect immediately and if the director in question has not resigned within seven days of being suspended, the committee shall convene a special general meeting to review the suspension and consider whether to remove the director. At a special general meeting convened in accordance with this section, the members may ratify or rescind the suspension or remove the director from office. This amendment provides, in a similar manner to section 56 of the 1997 legislation, that a director is entitled to written notice of a special general meeting to be held under this section not less than 21 days in advance of the meeting. The amendment also sets out the procedure for the director in question to make written representations in advance of a special general meeting and that the director has the right to be heard orally at such a meeting.
The Minister is confident that the amendment addresses the concerns raised by Members of both Houses on Second Stage. A further amendment will be tabled on Report Stage to clarify that if the director resigns, the special general meeting must be held within seven days after the 21 day period of notice to be given to members. Under the current wording, the special general meeting must be held within seven days of the decision, even though notification of the meeting must be given at least 21 days in advance.
On the key issue of the suspension or removal of the board oversight committee, the Minister has attempted to create a degree of consistency with section 56 of the original 1997 Act to provide certainty and clarity on the rights of individuals. Where the oversight committee takes this action, written notice will be given and the person in question will have a right to reply. Further, within a timeframe set out in the amendment, a special general meeting will be held at which various options placed before members.
Amendments Nos. 79 to 86, inclusive, may be discussed together.
Amendment No. 79 ensures the secretary acts at all times in a manner that is free from conflict. If this was useful in a political party, I suspect it might be useful in a credit union as well. Where a potential conflict is identified between his or her interests and those of the credit union, the secretary must declare in writing to the board the nature of his or her own interests and serve notice of that conflict on the Chair. Other amendments I have tabled are minor technical amendments that correct cross-references that are consequential on the amendment proposed. The substance of amendment No. 79 in terms of conflicts of interest is a pretty standard provision in legislation and is simply being transposed here in the same way it would be in any similar legislation.
Amendments Nos. 88 and 90 are related and may be discussed together, by agreement. Is that agreed? Agreed.
Amendments Nos. 88 and 90 reflect the changes in the functions of the board to include the appointment of a risk management officer and a compliance officer. The current wording provides that the manager of the credit union will carry out these functions. However, as these functions are proper to the board, that is why they are being separated. These amendments delete the reference to the risk management officer or compliance officer having the necessary experience to manage the functions of the role. This does not need to be provided for here as these standards will be set out under the fitness and probity regime which will be agreed with the Commission on Credit Unions. These measures will be rolled out in credit unions over time and will take account of the nature, scale and complexity of a credit union.
Amendments Nos. 93, 95 and 118 to 120, inclusive, are related and may be discussed together, by agreement. Is that agreed? Agreed.
Amendment No. 118 deletes section 76Q(1), (2) and (3) as this subsection sets out the skill requirements and training requirements for committee members. However, as noted previously, these standards will be set out separately under the fitness and probity regime. The remaining amendments in this group are minor technical amendments.
Amendments Nos. 94, 96 and 117 are related and may be discussed together, by agreement. Is that agreed? Agreed.
Amendments Nos. 94, 96 and 117 are also technical in nature and are consequential on the tabling of other amendments.
Amendments Nos. 97 to 113, inclusive, and amendment No. 116 are related and may be discussed together. Is that agreed? Agreed.
This group of amendments refers to the exclusion from the board oversight committee which is contained in section 27. There was much constructive debate in the Dáil and on Second Stage in the Seanad about the eligibility for membership of the board oversight committee. A number of amendments were proposed earlier relating to section 53(10) regarding changes to the exclusion from the board of directors. These amendments are proposed to ensure consistency between the board and the board oversight committee. The effect of these amendments reduces the exclusions that would apply to membership of the board oversight committee.
Amendment No. 97 allows volunteers of other credit unions to be on the board oversight committee of a credit union. The Minister already flagged this amendment. Amendment No. 108 removes the prohibition on family members of volunteers of the credit union becoming board oversight committee members. Amendment No. 98 allows for a director of another credit union to become a board oversight committee member. This is also something the Minister, Deputy Noonan, said he would concede. An amendment to this section will be made on Report Stage to clarify that a member of the oversight committee of the credit union cannot also sit on the board of directors of the same credit unions; this is already provided for under section 15 but I will table an amendment to clarify this on Report Stage. In error, amendment No. 98 provides that a director of the credit union be eligible also for membership of the board oversight committee of the same credit union. I intend to bring forward an amendment on Report Stage to correct this.
Amendment No. 106 makes a change to the exclusion of auditors from the board oversight committee. This exclusion will now include a person employed or engaged by that auditor. This is to guard against any conflicts of interest. Amendment No. 111 deletes section 76N(4)(q) in line with the changes for exclusions from board membership. Amendment No. 112 ensures that where a committee member falls under any exclusion provisions, that member should resign from the committee.
Following on from discussions in this House and Dáil Éireann and in line with amendments to the term limits of directors, the term limit of committee members is being extended from the proposed nine years out of an aggregate 15 years to 12 out of an aggregate 15 years. Amendment No. 115 deals with possible waivers from term limits and is grouped with amendment No. 43 in section 15. There is an incorrect cross-reference on page 51, line 26, which I will amend on Report Stage. It should refer to section 76N, not 76O.
I move amendment No. 124:
In page 59, before section 30, to insert the following new section:
"30.--The Principal Act is amended by the insertion of the following new section after section 84A (inserted by this Act):
"84B.--As soon as is practicable, the Bank shall enter into a memorandum of understanding with credit unions the form of which shall be agreed in consultation with credit unions and representatives bodies.".".
The issue to which this amendment relates has been raised by Sinn Féin on all Stages and has not been satisfactorily dealt with to date. The proposed memorandum of understanding is being confused with the consultation protocol for credit unions. What this amendment seeks is more akin to a customer charter or service level agreement in order that the parties - the Central Bank and the credit unions - know what is expected of them in their mutual dealings.
The example of lending restrictions has been highlighted. In some cases, credit unions have had restrictions and demands imposed upon them without real explanations or, more importantly, guidelines on how to remedy the situation. Credit unions expect and require clarity concerning what they need to do to have restrictions eased or removed. One credit union had a lending restriction communicated to it in writing. A part of that restriction was a complete ban on commercial lending, but it was later alleviated verbally. There is a great deal of confusion. This is of little use to the credit union in question and is certainly no way for a professional regulator to conduct business.
Simple issues such as communication, timeframes and so on could be easily addressed by way of a memorandum of understanding, which we are calling for in this amendment. Such a memorandum would be immediately beneficial, in that it would map out the rule book for the parties. We want our facilities to have the highest standards. This amendment would provide clarity and allow for a much better working relationship between the credit unions and the regulator. Will the Minister of State consider accepting it?
I thank the Senator for her amendment, which would provide for a memorandum of understanding between the Central Bank and credit unions. This issue was discussed in some detail on Committee Stage in the Lower House, when the Minister for Finance made it clear that he would be sticking with the Bill's current provisions. The bank has already published a consultation protocol for credit unions, as recommended by the Commission on Credit Unions. It is not appropriate to place the bank under a statutory obligation to enter into a memorandum of understanding.
The commission recommended that a consultation protocol should be in place between the Central Bank and credit unions. This protocol has been developed following consultation between the Central Bank, the Minister, credit union representative bodies and the Credit Union Advisory Committee, CUAC. The protocol was sent to all credit unions earlier last week and is being worked upon by all of the stakeholders, as requested under the commission's recommendation.
The protocol sets out how the Central Bank proposes to engage with credit unions in any formal consultation process prior to the introduction of new regulations, which is important. The protocol is in place and is fair in dealing with people. The protocol states that the bank is committed to having clear, open and transparent engagement with stakeholders in fulfilling its financial regulation and supervisory objectives.
The bank commits to engage formally and informally with credit union representative bodies and relevant stakeholders, as well as ensuring it complies with any relevant legal obligations relating to consultation. The bank will consult on new regulations that will have a significant impact on the business of credit unions. As part of the consultation process, the bank will invite credit unions, their representative bodies and other stakeholders to make written submissions on new regulations that will be reviewed and considered before regulations are made.
It has been suggested that a broader memorandum of understanding be agreed between the Central Bank and credit unions. I understand that one of the concerns driving this issue is an idea that the Central Bank should issue written directions. The Bill provides for this, as well as for an appeals mechanism. It is important to state that if people feel there is some unfairness in the way in which directions have been issued, there is an appeals mechanism which one could argue gives significant powers to the credit union sector if it is felt that a measure was being unfairly imposed.
I do not propose to follow the memorandum of understanding amendment and, as I stated, it was not recommended by the commission. If this issue was of significance to the commission in making its recommendations, it would have been flagged. That was not the case. We should be careful not to undermine the independence of the regulator. We have all learned enough from the financial crisis to know that the Central Bank must be able to act within its own powers when required. As a result, I do not propose to accept the amendment.
Amendments Nos. 125 and 126 are related and may be discussed together. Is that agreed? Agreed.
Amendment No. 125 provides a more specific definition of "liquid assets", which is always very useful in these types of Bills. Amendment No. 126 ensures that the proportion of liquid assets to be kept by a credit union will take account of the nature, scale and complexity of a credit union, thus ensuring that a one size fits all approach is not taken and that the composition and maturity of the credit union's assets and liabilities would also be taken into consideration. This is in line with the commission's recommendations regarding a tiered regulatory approach. This measure was in the Bill as published but mistakenly removed in the Bill as amended on Committee Stage in the Dáil. A further amendment may be required to clarify the definition of "maturity mismatch" and I intend to bring this about on Report Stage.
Amendment No. 126 appears to be vague, although I understand the Minister of State will follow up with regulations. Is the wording imprecise? The insertion would state: "The proportion of assets kept in liquid form shall take into account the nature, scale and complexity of the credit union, and the composition and maturity of its assets and liabilities.” Will the Central Bank have a role after the legislation is implemented in drawing up a detailed list of obligations with which credit unions must comply?
Section 30(3) indicates:
The Bank may prescribe the minimum liquidity requirements that a credit union is required to maintain as well as conditions on the application of the minimum liquidity requirements. Regulations made by the Bank for the purpose of this section may deal with other matters
One of the recommendations from the commission was on this idea of a tiered regulatory approach and the objective was that due regard would have to be given to the size of credit unions. As I stated in my reply, a one size fits all approach is not taken on the argument that they are all the same size and all have the same deposit ratios and lending rations because it is not realistic. To have regard to that recommendation from the commission, the power is now being given to the Bank to prescribe the liquidity requirements.
It is important that amendment No. 126 ensures that the proportion of liquid assets to be kept by a credit union will take account of the nature, scale and complexity of a credit union because it allows the Central Bank to do it in a scaled way having regard to that recommendation made by the commission. This is something that will be useful for credit unions, large and small, because the Central Bank must have regard to the liquidity ratio and principles because of the size and scale of credit unions.
I thank the Minister of State.
I raised the matter on Second Stage as well when I pointed out that probably the only financial sector that was lending into the economy was the credit union movement, for which it must be applauded. While the banks massage figures to suggest that they are lending, the reality is that they are transferring loans from, perhaps, bridging loans into other types of loan. The banks are only restructuring loans instead of providing new loans.
While I am cognisant of the fact that the credit unions, the directors and the movement must be protected, all credit unions would acknowledge that they do not want to be so restricted that they will not be in a position to lend into the economy. I say that taking full cognisance of what the Minister of State stated on the need to protect the sector as well. A balance must be struck and I ask him to bear that in mind in whatever regulations are to be drawn up.
I am grateful to Senator Ó Domhnaill for raising this matter. It is worth pointing out, as one looks down through section 30 which deals with this question of liquidity and stress-testing, that as we have become aware of the principle of stress-testing within the banking system, the same principle should logically apply within the credit union sector. If that principle had not applied up until now, provision is being made for it now purely on the basis of ensuring that credit union members' deposits and shares are properly held. One cannot have one without the other. Liquidity and stress-testing are two sides of the one coin. The Minister for Finance made it clear in his contributions in the other House that he does not want these provisions to be used as a hammer to crack over the heads of smaller credit unions which, by definition, scope and size, are in a different league to larger ones. One cannot compare apples and oranges. There is an argument of scale here. It is the Minister's view that the imposition of this section, section 30, in terms of liquidity and stress-testing, and amendment No. 126, will make that argument for the existing diversity of credit unions.
This amendment clarifies that sections 27B, 27G and 27H of the Central Bank Act 1997 continue to apply to credit unions. These sections relate to the duties of auditors to provide reports for the Central Bank. Section 27B already makes reference to section 122 of the Credit Union Act 1997. It relates to auditor management and statutory duty declarations. I should emphasise that this amendment is not applying any new provision on credit union auditors; it is simply reflecting provisions that already apply but does so in a more precise way.
This amendment provides for the inclusion of a definition of "stabilisation support" in section 39, referring to the definition of "stabilisation support" which already appears in section 62 of the Bill.
Amendments Nos. 130 and 131 are related and may be discussed together, by agreement. Is that agreed? Agreed.
Amendment No. 130 consolidates the provisions relating to ReBo's power to carry out certain functions. The power to appoint staff is provided for in section 54 and the power to organise meetings is set out in section 50. As a result, unnecessary references in this section to those powers are being removed by this amendment.
Amendment No. 131 deletes section 44(3). Subsection (3) is not required as subsection (2) already provides that ReBo may do anything which it considers necessary to enable it to perform its functions.
Amendments Nos. 132, 148, 153 and 154 are related and may be discussed together, by agreement. Is that agreed? Agreed.
Amendments Nos. 132, 148, 153 and 154 are technical amendments which provide for consistency in the references to "financial support" to be provided from the credit union fund under Parts 3 and 4. Financial support may take the form of a payment, a loan, a guarantee, an exchange of assets or any other kind of financial accommodation or assistance. This is consistent with both the Credit Institutions (Financial Support) Act 2008 and the Central Bank and Credit Institutions (Resolution) Act 2011.
This amendment provides that the ReBo levy which is to be paid by credit unions will be paid into the credit union fund rather than paid into or disposed of for the benefit of the Exchequer. The expenses incurred by ReBo will be paid out of the credit union fund and, therefore, it is appropriate that the levy received to recoup those expenses should be paid into the credit union fund.
As the expenses of the credit union restructuring board, ReBo, are to be paid from the credit union fund, section 49 is no longer required and, therefore, I propose its deletion.
Does that mean the credit union sector will have to advance in order to set up the fund?
Sorry.
This concerns advances by the Minister in order to set up the ReBo. Does that mean the sector will have to advance the money?
Some 50% will come from the sector and the other 50% will come from the Exchequer. The expenses will come from the fund.
Amendments Nos. 134 and 136 are related and may be discussed together, by agreement. Is that agreed? Agreed.
Amendment No. 134 removes a typographical error in section 51(1)(a) and amendment No. 136 corrects a typographical error in section 51(4).
This amendment provides that employees of auditors engaged by ReBo are subject to the non-disclosure of information provisions in this section. This amendment ensures consistency in the application of the non-disclosure provisions which the Bill currently applies to employees of agents, consultants and advisers appointed by ReBo.
Amendments Nos. 137 and 138 are related and will be discussed together, by agreement. Is that agreed? Agreed.
Amendment No. 137 removes the requirement for the Minister for Finance to obtain the consent of the Minister for Public Expenditure and Reform before approving the appointment of staff by ReBo. The staff of ReBo will be paid out of the credit union fund and as a result, the consent of the Minister for Public Expenditure and Reform to their appointment is no longer required. ReBo can, therefore, with the approval of the Minister for Finance, appoint such staff and at such grades as it may determine.
Amendment No. 138 makes the provisions relating to the appointment of the staff of ReBo consistent with those relating to the appointment of the chief executive of ReBo. Section 54 will now mirror the provisions concerning the appointment of the chief executive set out in section 53. Subsection (2)(a) restates section 54(2) as included in the Bill as published following Committee Stage in the Dáil, and provides that the terms of appointment of the staff of ReBo may be determined by the Minister with the consent of the Minister for Public Expenditure and Reform, subject to the Public Service Management (Recruitment and Appointments) Act 2004. Subsection (2)(b) as provided for in this amendment sets out an alternative means for determining the terms of appointment of ReBo staff. Those terms may be determined by the board of ReBo, subject to the approval of the Minister with the consent of the Minister for Public Expenditure and Reform.
My question also relates to the section as it regards remuneration for board members and their status as employees. Will they be public sector workers, for example? The Minister of State has mentioned public sector pay grades. I do not imagine the Minister of State has details of full staffing levels but with the establishment of NAMA by the previous Government, there were issues, as well as matters relating to pay and pension arrangements in the National Treasury Management Agency, NTMA. I am not suggesting that ReBo will be in that sphere.
What will happen with pension arrangements and are the terms and conditions of the staff contracts exactly the same as other workers in the public sector? The NTMA may be a bad example but when it was at one stage effectively a pseudo-State corporation as it was set up with a defined contribution pension arrangement and the board decided to change it to a defined benefit pension arrangement that required no permission from the Minister for Finance of the time. Against the advice of the Committee of Public Accounts and various Members across the Houses, the agency set its own terms and conditions regarding pay and pensions.
I understand if the Minister of State does not have all the detail to hand but I am flagging this as a potential issue. Perhaps he will tell me it is not an issue and the matter is being dealt with. I would appreciate any comment in that regard.
I will read the speaking note relating to the section and return to the specific issues raised by the Senator. This section provides that ReBo may appoint as many members of staff and at such grades as it deems appropriate. The current text provides that ReBo must obtain the approval of the Minister, given with the consent of the Minister for Public Expenditure and Reform, before taking on staff. However, I intend to bring forward an amendment today which will remove the requirement to obtain the consent of the Minister for Public Expenditure and Reform.
The current text also provides that the appointment of staff is to be on such terms as the Minister determines, with the consent of the Minister for Public Expenditure and Reform, and is subject to the Public Service Management (Recruitment and Appointments) Act 2004. I will bring forward an amendment today to provide for additional, alternative terms of appointment for ReBo staff, determined by the board of ReBo and approved by the Minister with the consent of the Minister for Public Expenditure and Reform. This amendment would make this section consistent with section 53 relating to the appointment of the chief executive of ReBo.
Effectively, these people will be part of the wider public service because of the requirements of the 2004 Act. The Minister for Public Expenditure and Reform is effectively being involved as a triple lock to ensure any agreement will be consistent with an appropriate number of staff and the terms and conditions which go with that. It is fair to say that the establishment of ReBo - we do not yet have anyone and we must have the power to act - is important in operating a new restructured credit union service. We all appreciate the necessity for this restructuring, which must be done on a professional basis. As I understand it, there will be an effective triple lock between the board, the Minister for Finance and the Minister for Public Expenditure and Reform. The terms and conditions will be no different to the terms and conditions pertaining in the Public Service Management (Recruitment and Appointments) Act 2004, which governs recruitment and appointments.
This amendment provides that the board of ReBo may direct the chief executive to undertake certain functions relating to the accounts of ReBo. This amendment reflects the fact that the board of ReBo and not the chief executive is responsible for keeping the accounts of ReBo and submitting those accounts to the Comptroller and Auditor General. Therefore, it is appropriate for the chief executive to act under the direction of the board of ReBo rather than the agreement of the board.
It is a standard provision.
Amendment No. 140 is a Government amendment. Amendment Nos. 140 and 171 are related and may be discussed together.
Amendment No. 140 splits section 57(1) into two subsections to provide greater clarity regarding the effect of disclosure of information by ReBo on any duty of confidentiality or in any obligation under the Data Protection Acts. The proposed section 57(1) provides that a credit union which discloses information to ReBo does not breach any applicable duty of confidentiality and the new section 57(2) which will be created by this amendment sets out that a credit union may disclose to ReBo personal data within the meaning of the Data Protection Acts. This amendment ensures that there is a legal gateway between credit unions and ReBos for the disclosure of information.
Amendment 171 inserts a new paragraph (h) into section 71(2) of the 1997 Act which will allow officers of a credit union to disclose confidential information to the ReBo and facilitates the sharing of information between the credit union and ReBo. ReBo will protect the confidentiality of information shared under section 51 of the Bill.
SECTION 58
This amendment adds a number of purposes for the credit union fund to those listed in section 50(2). This amendment sets out that discharging the expenses of ReBo, the cost of collecting levies due under the Act, and the expenses of the bank in exercising its functions are purposes of the credit union fund. It sets that out in the context of amendment No. 141.
Amendment No. 142 is a Government amendment. Amendments Nos. 142, 143 and 145 to 147, inclusive, are related and may be discussed together.
Amendment No. 142 is a technical amendment to improve the consistency of terminology in this Part of the Bill by removing the references to "restructuring purposes" and replacing it with "for the purposes of restructuring under this Part".
Amendment No. 143 removes the obligation on the Minister to obtain the bank's approval of an amalgamation or transfer of engagement under section 131(6)(a) of the 1997 Act before providing financial support for the purposes of restructuring. This amendment sets out that the provision of such support may be conditional on the bank giving its approval under that section rather than requiring the approval before the support is provided. This will permit the bank to consider the conditions proposed to be attached by the Minister to the provision of support, and the bank can decide accordingly whether to grant approval.
Amendment No. 145 is a technical amendment which updates the cross-referencing to other sections of the Bill dealing with the provisions of restructuring and restabilisation support. Amendment No. 146 clarifies that the support referred to in section 58(7) is stabilisation support. Amendment No. 147 clarifies that the conditions referred to in section 48(7) are those attached by the Minister under section 48(6) to the provision of stabilisation support.
Amendment No. 144 is a Government amendment. Amendments Nos. 144 and 163 are related and may be discussed together.
Amendment No. 144 provides that the Minister may provide stabilisation support for a credit union from the credit union fund where requested to do so by the bank. The provision for the Minister to attach terms and conditions to any support provided is retained in this amendment. Those conditions are primarily intended to relate to the recoupment of funds provided as financial support under the Act. Amendment No. 163 clarifies that the bank may request the Minister to provide stabilisation support in accordance with section 58(6).
Government amendment No. 148:
In page 74, subsection (9), line 4, after “of” to insert “financial”.
Amendment No. 149 deletes section 58(10). I am bringing forward an amendment to section 60 which provides the Minister with the power to make regulations prescribing the rate of contribution of credit unions to the credit union fund for the purposes of providing for the provision of stabilisation support under section 58(6). Stabilisation support will be made available out of funds raised through this levy, therefore, the current text in section 58(10) will no longer be required and is deleted by this amendment.
Amendment agreed to.
Amendment No. 151 is a Government amendment. Amendments Nos. 151 and 155 are related and may be discussed together.
Amendment No. 151 corrects a typographical error. Amendment No. 155 deletes unnecessary wording relating to section 61. Section 61 is a discretionary provision and, therefore, it is not appropriate to provide for an obligation to comply with that provision.
Amendment No. 152 sets out the Minister's powers to make regulations prescribing the rate of contribution or method of calculating the rate of contribution to the credit union fund by credit unions to provide the credit union fund with sufficient funds for the provision of stabilisation support.
Section 60(2) already provides that the Minister may make regulations prescribing the contribution to be made by credit unions to the credit union fund to recoup the cost of financial support provided for the purposes of restructuring. This amendment will provide a similar power in regard to stabilisation support to be provided from the credit union fund. This gives effect to recommendation 8.5.8 of the commission's report which recommended that the necessary financing of the credit union fund for the purpose of stabilisation be sourced from the credit union sector.
I propose an amendment to the Order of Business, to extend the time to 5.45 p.m. in the hope we can complete the debate on Committee Stage.
Is that agreed? Agreed.
This amendment changes the definition of "stabilisation support" to clarify that support may include funding unrelated to the reserve requirement. Such funding may be used to update the systems and controls of the credit unions and also may include the provision of financial and technical advice for the credit union. This is a recommendation of the Commission on Credit Unions at paragraph 8.5.6 of the report.
Amendments Nos. 157 and 158 are related and will be discussed together.
Amendment No. 157 amends subsection (2) by deleting the existing paragraph (b) which states that the bank may only approve stabilisation support if the credit union concerned has a shortfall in reserves caused by a short-term, non-recurring event. Instead, amendment No. 158 sets out when ReBo may recommend to the bank that a credit union should be stabilised. During the period of restructuring a credit union may not be assessed for stabilisation support unless ReBo makes a recommendation to the bank that the credit union should be stabilised. A credit union must not be part of the restructuring proposal or must have reserves greater than 7.5% before ReBo may make this recommendation. This will ensure that the restructuring process and the stabilisation process are aligned. Amendment No. 159 updates the citation of the Central Bank Acts which are amended by Part 5 of this Bill and was already discussed with amendment No. 2 to section 1.
Amendments Nos. 160 and 161 are related and will be discussed together.
Amendments Nos. 160 and 161 are minor technical amendments. Amendment No. 160 clarifies that the support referred to in paragraph (c) is stabilisation support as opposed to restructuring support. We have already discussed those amendments as part of another group. Amendment No. 161 changes the reference from "this Part" to "this Act" as stabilisation support is to be provided by the Minster under Part 3 rather than Part 4.
Amendment No. 162 clarifies that the bank must have regard to the terms and conditions that the Minister considers appropriate to attach the decision to provide stabilisation support when making a decision on the approval of stabilisation support to a credit union. These terms and conditions will deal with issues such as recoupment which may affect the Central Bank’s assessment of viability.
"PART 4
Authorised Officers
Amendments Nos. 167 and 173 are related and will be discussed together.
Amendment No. 167 is a minor amendment and inserts a reference to section 37D of the Credit Union Act 1997 which sets out the information to be included in the credit agreement notice to the credit union member. This item in the schedule is required to ensure there is consistency between the Credit Union Act 1997 and the Consumer Credit Regulations 2010, which apply to credit unions. Amendment No. 173 clarifies that the supervisory authority referred to in item 100 is the Irish Auditing and Accounting Supervisory Authority
Under the current wording the Central Bank may exempt certain additional services which involve no undue risk to the credit union. This amendment removes the reference to "undue risk" in respect of additional services that the bank may exempt from the application requirements under section 48 of the Credit Union Act 1997. The wording may be too restrictive and limit the instances where the bank can exempt certain services from the additional requirements provided in that section. Instead, the bank may exempt such services which may be for the mutual benefit of its members.
59 |
Section 71(2) |
Substitute for paragraph (g) “(g) which is made to the Bank for the purposes of its functions in relation to credit unions; or (h) which is made to the Credit Union Restructuring Board for the purposes of its functions under the Credit Union Act 2012.”. |
80 |
Section 87(2)(c) |
Substitute: “(c) that, since the registration of the credit union, the factors taken into account in granting registration have so changed that, if the society were now applying for registration, it would be refused; or (d) that the credit union has failed to comply with any terms and conditions imposed by the Bank under section 66(5) of the Credit Union Act 2012 relating to the provision of stabilisation support under this Act.” |
This amendment inserts a new paragraph (d) into section 87(2) of the 1997 Act which allows the Central Bank to impose a regulatory direction on a credit union under section 87 where that credit union fails to comply with the terms and conditions of any stabilisation support given to the credit union under the Bill. If it does not comply with terms and conditions after funding has been provided, this gives the Central Bank the power to act. This is necessary to ensure that conditions imposed in return for financial support to keep the credit union afloat are enforceable. It is a little like the powers of the troika being imposed on us. We are now giving the powers to the Central Bank for the purposes of ensuring that, if it gives out money, the terms and conditions are adhered to.
This direction, the credit unions will be glad to hear, will be appealable to the Irish Financial Services Appeals Tribunal under section 52 of the 1997 Act.
134 |
Section 182(1)(k) |
Delete. |
135 |
section 182(1)(m) |
Delete. |
This amendment removes the ministerial regulation-making powers under section 182 of the 1997 Act, as these powers conflict with the bank's regulation-making powers under the Bill and are more appropriate for the Central Bank. These relate to the registration procedures and operations of credit unions.
NEW SCHEDULES
Government amendment No. 176:
In page 93, after line 49, to insert the following new Schedule:
"SCHEDULE 2
AMENDMENTS TO CERTAIN ACTS AND STATUTORY INSTRUMENTS
PART 1
AMENDMENTS TO CERTAIN ACTS
Item (1) |
Number and year (2) |
Short title (3) |
Extent of repeal (4) |
1 |
No. 24 of 1971 |
Central Bank Act 1971 |
Section 17A |
2 |
No. 3 of 1989 |
Insurance Act 1989 |
Sections 59 and 60 |
3 |
No. 17 of 1989 |
Building Societies Act 1989 |
Section 41 |
4 |
No. 21 of 1989 |
Trustee Savings Banks Act 1989 |
Section 24A |
5 |
No. 24 of 1994 |
Investment Limited Partnerships Act 1994 |
Section 25(2) |
6 |
No. 11 of 1995 |
Investment Intermediaries Act 1995 |
Sections 9(3), 64 and 65 |
7 |
No. 8 of 1997 |
Central Bank Act 1997 |
Sections 36G, 36H, 36I, 75 and 76 |
8 |
No. 47 of 2001 |
Asset Covered Securities Act 2001 |
Section 70 |
PART 2
AMENDMENTS TO CERTAIN STATUTORY INSTRUMENTS
Item (1) |
Number and year (2) |
Citation (3) |
Extent of revocation (4) |
1 |
S.I. No. 13 of 2005 |
European Communities (Insurance Mediation) Regulations 2005 |
Regulations 28, 29, 30 and 31 |
2 |
S.I. No. 380 of 2006 |
European Communities (Reinsurance) Regulations 2006 |
Regulations 72, 73, 74 and 75 |
3 |
S.I. No. 60 of 2007 |
European Communities (Markets in Financial Instruments) Regulations 2007 |
Regulations 163, 164 and 165 |
4 |
S.I. No. 383 of 2009 |
European Communities (Payment Services) Regulations 2009 |
Regulations 99, 100, 101, 102 and 110 |
5 |
S.I. No. 183 of 2010 |
European Communities (Cross Border Payments) Regulations 2010 |
Regulations 6, 7, 8, 9, 10, 11 and 12 |
6 |
S.I. No. 183 of 2011 |
European Communities (Electronic Money) Regulations 2011 |
Regulations 62, 63, 64, 65 and 72 |
".
Amendment agreed to.
Government amendment No. 177:
In page 93, after line 49, to insert the following new Schedule:
“SCHEDULE 3
AMENDMENTS OF CENTRAL BANK ACTS
PART 1
AMENDMENTS OF CENTRAL BANK ACT 1971
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Section 2(1) |
In paragraph (d) of the definition of “related body” delete “section 17A” and substitute “Part 5 of the Central Bank Reform Act 2010”. |
2 |
Section 58(1) |
Delete “17A,”. |
PART 2
AMENDMENTS OF CENTRAL BANK ACT 1997
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Section 28 |
(a) Substitute the following for the definition of “authorisation”: “ ‘authorisation’ means an authorisation under this Part authorising a person to carry on a regulated business;”. (b) Delete the definition of “inspector”. (c) In the definition of “retail credit firm”— (i) substitute “paragraph (e)” for “paragraph (g)”, and (ii) substitute “section 2(1)” for “section 3”. |
2 |
Section 32A(5)(b) |
After “officer” insert “appointed under “Part 5 of the Central Bank Reform Act 2010”. |
".
Amendment agreed to.
Government amendment No. 178:
In page 93, after line 49, to insert the following new Schedule:
“SCHEDULE 4
AMENDMENTS OF CERTAIN OTHER ACTS
PART 1
AMENDMENTS OF BUILDING SOCIETIES ACT 1989
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Section 119(1)(a) |
(a) In subparagraph (v) substitute “section 41A” for “sections 41 or 41A”. (b) Delete subparagraph (vii). |
PART 2
AMENDMENT OF TRUSTEE SAVINGS BANKS ACT 1989
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Section 62(1) |
Delete “24A,”. |
PART 3
AMENDMENT OF INVESTMENT LIMITED PARTNERSHIPS ACT 1994
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Section 25(4) |
In paragraph (a) delete the definition of “appropriate person”. |
PART 4
AMENDMENTS OF CONSUMER CREDIT ACT 1995
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Section 8G(1) |
(a) In the definition of “authorised officer” substitute “8M” for “8L”. (b) Delete the definition of “responsible authority”. |
2 |
Section 8M |
(a) In subsection (1) substitute “The Minister” for “A responsible authority”. (b) In subsection (3) substitute “The Minister” for “A responsible authority”. (c) In subsection (5)— (i) in paragraph (a) substitute “the Minister” for “the responsible authority concerned”, and (ii) in paragraph (c) substitute “the Minister” for “the responsible authority”. |
PART 5
AMENDMENTS OF INVESTMENT INTERMEDIARIES ACT 1995
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Section 2(1) |
Substitute the following for the definition of “authorised officer”: “ ‘authorised officer’ means a person appointed to be an authorised officer under Part 5 of the Central Bank Reform Act 2010;”. |
2 |
Section 20(6) |
Substitute “section 19 of this Act and Part 5 of the Central Bank Reform Act 2010” for “sections 19 and 65 of this Act”. |
3 |
Section 79(1) |
Substitute “21(10)” for “21(9)”. |
PART 6
AMENDMENTS OF CREDIT UNION ACT 1997
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Section 90 |
Substitute the following for section 90: “90.—(1) In this section and section 91 ‘authorised officer’ means an authorised officer appointed under Part 5 of the Central Bank Reform Act 2010. (2) The Bank may appoint an authorised officer to carry out an inspection and to provide a report of the inspection to the Bank. (3) An authorised officer may, for the purposes of carrying out an inspection, exercise any of the powers conferred on an authorised officer under Part 5 of the Central Bank Reform Act 2010.”. |
2 |
Section 91 |
(a) Substitute the following for subsections (1) and (2): “(1) If required to do so by notice in writing served by the Bank at any time— (a) a credit union, (b) any person who is or has been an officer, member, agent or liquidator of a credit union, and (c) any other person who has in his or her possession or power any books or documents relating to a credit union, shall furnish to the Bank such books or documents which relate to the credit union and are in his possession or power and such information relating to the business of the credit union as may be specified in the notice and as may be reasonably required by the Bank in the exercise of its powers under this Act. (2) If required to do so by a notice in writing served on it by the Bank, a credit union shall furnish to the Bank a financial statement or periodic financial statements in such form and containing such information as may be specified in the notice and as may be reasonably required by the Bank in the exercise of the powers of the Bank under this Act.”. (b) Substitute the following for subsection (4): “(4) The Bank may take copies of or extracts from any item produced in compliance with a notice under subsection (1) or (2) and, if so required by the Bank, the person on whom a notice under subsection (1) was served or, in the case of a statement produced in compliance with a notice under subsection (2), a person who is or has been an officer, member, agent or liquidator of the credit union shall provide any explanation which may reasonably be required of an item so produced.”. |
PART 7
AMENDMENTS OF INVESTOR COMPENSATION ACT 1998
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Section 9 |
Substitute the following for section 9: “(1) In this section ‘Act of 2010’ means the Central Bank Reform Act 2010. (2) Where the supervisory authority forms the view that an insurance intermediary may be unable to repay money belonging to a client of the insurance intermediary, the supervisory authority may appoint an authorised officer under Part 5 of the Act of 2010 to investigate whether the insurance intermediary is unable to repay money or otherwise discharge its obligations towards clients of the insurance intermediary and to make a report to the supervisory authority in respect of the insurance intermediary. (3) In relation to investment firms, an inspector appointed under the European Communities (Markets in Financial Instruments) Regulations 2007 (S.I. No 60 of 2007) shall, for the purposes of this section, have the powers conferred on an authorised officer appointed under Part 5 of the Act of 2010. (4) In relation to investment firms which are credit institutions, an inspector appointed under section 45 of the Building Societies Act 1989 shall, for the purposes of this section, have the powers conferred on an authorised officer appointed under Part 5 of the Act of 2010. (5) In relation to investment firms which are investment business firms, an inspector appointed under section 66 or 73 of the Investment Intermediaries Act 1995 shall, for the purposes of this section, have the powers conferred on an authorised officer appointed under Part 5 of the Act of 2010.”. |
2 |
Section 33(2) |
(a) Substitute “Part 5 of the Central Bank Reform Act 2010” for “the Act of 1995 and the European Communities (Markets in Financial Instruments) Regulations 2007”. (b) Substitute “Part of that Act” for “Act and those Regulations”. |
PART 8
AMENDMENT OF ASSET COVERED SECURITIES ACT 2001
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Section 98 |
In paragraph (a) delete “or any person authorised by it to perform the relevant function on its behalf,”. |
".
Amendment agreed to.
Government amendment No. 179:
In page 93, after line 49, to insert the following new Schedule:
“SCHEDULE 5
AMENDMENTS TO CERTAIN STATUTORY INSTRUMENTS
PART 1
AMENDMENTS OF EUROPEAN COMMUNITIES (DISTANCE MARKETING OF CONSUMER FINANCIAL SERVICES) REGULATIONS 2004
(S.I. No. 853 of 2004)
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Regulation 25 |
In paragraph (1) substitute “competent authority (other than the Bank)” for “competent authority”. |
2 |
Regulation 26 |
In paragraph (1) substitute “competent authority (other than the Bank)” for “competent authority”. |
PART 2
AMENDMENT OF EUROPEAN COMMUNITIES (INSURANCE MEDIATION) REGULATIONS 2005
(S.I. No. 13 of 2005)
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Regulation 3(1) |
Delete the definition of “authorised officer”. |
PART 3
AMENDMENT OF EUROPEAN COMMUNITIES (REINSURANCE) REGULATIONS 2006
(S.I. No. 380 of 2006)
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Regulation 3(1) |
Delete the definition of “authorised officer”. |
PART 4
AMENDMENTS OF EUROPEAN COMMUNITIES (MARKETS IN FINANCIAL INSTRUMENTS) REGULATIONS 2007
(S.I. No. 60 of 2007)
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Regulation 3(1) |
Substitute the following for the definition of “authorised officer”: “ ‘authorised officer’ means an authorised officer appointed under Part 5 of the Central Bank Reform Act 2010”. |
2 |
Regulation 6(7) |
Substitute “Part 5 of the Central Bank Reform Act 2010” for “Regulation 164”. |
3 |
Regulation 14(1) |
In subparagraph (b) insert “appointed under Part 5 of the Central Bank Reform Act 2010” after “authorised officer”. |
4 |
Regulation 147(1)(g)(ii) |
Substitute “Part 5 of the Central Bank Reform Act 2010” for “Regulation 164”. |
5 |
Regulation 174(1) |
Delete “an authorised officer or”. |
PART 5
AMENDMENTS OF EUROPEAN COMMUNITIES (INSURANCE AND REINSURANCE GROUPS SUPPLEMENTARY SUPERVISION) REGULATIONS 2007
(S.I. No. 366 of 2007)
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Regulation 3(1) |
Substitute the following for the definition of “authorised officer”: “ ‘authorised officer’ means an authorised officer appointed under Part 5 of the Central Bank Reform Act 2010;”. |
2 |
Regulation 9 |
(a) Substitute the following for paragraph (5): “(5) If, in a particular case, the Bank wishes to verify information concerning an insurer or reinsurer located in another Member State and the insurer or reinsurer is an associate of an insurer or reinsurer that both holds an authorisation issued by the Bank and is subject to supplementary supervision, the Bank shall request the competent authority of that other Member State to have that verification carried out by that authority or an officer appointed by it.”. (b) In paragraph (7) insert “under Part 5 of the Central Bank Reform Act 2010” after “authorised officer”. |
PART 6
AMENDMENTS OF EUROPEAN COMMUNITIES (CREDIT INSTITUTIONS)(CONSOLIDATED SUPERVISION) REGULATIONS 2009
(S.I. No. 475 of 2009)
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Regulation 20 |
Substitute the following for Regulation 20: “20. (1) Section 18 of the Central Bank Act 1971 (No. 24 of 1971) applies to and in relation to a credit institution that is subject to consolidated supervision by the Bank as if— (a) references in that section to a holder of a licence under that Act were references to the credit institution, and (b) references in that section to a related body of a holder of such a licence were references to an associated enterprise of the credit institution. (2) Section 41A of the Building Societies Act 1989 (No. 17 of 1989) applies to and in relation to a building society that is subject to consolidated supervision by the Bank as if references in that section to a related body of a building society were references to an associated body of the building society. (3) Section 25 of the Trustee Savings Bank Act 1989 (No. 21 of 1989) applies to and in relation to a credit institution that is subject to consolidated supervision by the Bank as if references in that section to a trustee savings bank were references to the credit institution.”. |
PART 7
AMENDMENT OF EUROPEAN COMMUNITIES (CROSS BORDER PAYMENTS) REGULATIONS 2010
(S.I. No. 183 of 2010)
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Regulation 2(1) |
Delete the definitions of “relevant records” and “search warrant”. |
".
Amendment agreed to.
TITLE
Government amendment No. 180:
In page 5, lines 21 to 24, to delete all words from and including "TO" in line 21 down to and including "MATTERS" in line 24 and substitute the following:
"TO PROVIDE FOR MISCELLANEOUS MATTERS RELATING TO CREDIT UNIONS; TO AMEND THE CENTRAL BANK ACTS 1942 TO 2011, TO PROVIDE FOR CO-OPERATION BETWEEN THE CENTRAL BANK OF IRELAND AND OVERSEAS REGULATORS AND TO PROVIDE FOR THE APPOINTMENT OF AUTHORISED OFFICERS BY THE CENTRAL BANK OF IRELAND; AND TO PROVIDE FOR MATTERS RELATED TO THE FOREGOING".
140 |
First Schedule |
Insert after paragraph 13: "14. Provision for dealing with directors and members of the board oversight committee who are more than 90 consecutive days in arrears under a debt obligation to the credit union up to and including the suspension or removal from the board of such directors.". |
When is it proposed to take Report Stage?
On Thursday next.
I welcome visitors from the credit union movement, Mr. Noel Madden, manager of Ballinasloe Credit Union, and Mr. Purcell of the Irish League of Credit Unions.