Before we commence I remind Senators that a Senator may speak only once on Report Stage, except the proposer of an amendment who may reply to the discussion on the amendment. Also on Report Stage, each amendment must be seconded.
Credit Union Bill 2012: Report and Final Stages
I hope that does not apply to Senator Darragh O'Brien. He should not be allowed to speak at all.
Amendments Nos. 1 to 3, inclusive, cannot be moved.
They are ruled out of order because they were negatived on Committee Stage.
I do not wish to obstruct the business of the House but I have a question. I have only received notification in writing that one of my amendments is out of order. I refer to amendment No. 3. I received no notification that amendments Nos. 1 and 2 are out of order. That is the only information I have received.
Senator O’Brien did not table amendment No. 2.
Amendment No. 1 was tabled by me with the Sinn Féin Senators.
There was a vote on the issue on Committee Stage.
Did the Sinn Féin Senators receive notification that the amendments are out of order?
They moved the amendments.
I just wish to clarify the situation.
I identified on Committee Stage that there would be a number of Government amendments on Report Stage. This amendment corrects two incorrect cross-references in the section. A previous amendment proposed in respect of this included a reference to subsection (16) of section 53. However, this provision should refer to subsection (15) of section 53. Subsection (15) of the Bill, as amended on Committee Stage, makes provision for the appointment of directors to fill casual vacancies on the board.
Amendments Nos. 5 and 6 are related and may be discussed together by agreement. Is that agreed? Agreed.
I move amendment No. 5:
In page 19, line 25, to delete “or voluntary assistant”.
The amendment relates to the position of a voluntary assistant. Like Custer’s last stand, I will try one last time. I refer to the eligibility of volunteers to serve on boards. Yesterday, the Minister of State referred to amendment No. 127 but that was a different issue.
It related to exclusion.
Yes. There was some confusion on the matter. I still do not see why volunteers are being excluded from serving their community through membership of the board of directors. That is why I tabled the amendment deleting the words "or voluntary assistant". I also wish to delete lines 26 and 27. The issue has been brought to my attention recently. I accept that employees should not serve as a board member in their own credit union but the amendment relates to employees of a different credit union being a board member in another credit union.
Let us take the example of a volunteer of a credit union who builds up experience and expertise working in a credit union and who has gained employment in another credit union as a result. The Bill as currently set out would exclude such a person from fulfilling a role as board member because he or she works in another credit union. That would result in capable and valuable board members being excluded solely because of their employment. I know of one major credit union in Dublin where that would cause major problems. The provision is unnecessary and I hope the Minister of State will accept the amendment to prevent unnecessary problems.
I second the amendment. To follow on from what Senator Reilly said, perhaps the Minister of State could clarify that the Bill precludes someone who previously worked in a credit union from serving in another one. Today, I received a specific example of that. One of the directors of a credit union who was unemployed managed to secure a position with another credit union. He had been a credit union director for a number of years. The effect of not allowing the amendment to section 15(10)(a) would prevent him from continuing as a director of the credit union unless he leaves his employment. Had he secured employment outside of a credit union he would not be prevented from continuing as a director of the credit union. The board in that instance believes that as the person has not changed, why should his employment prevent him from continuing as a director or working in another credit union. The board also believes that the director, who has been a volunteer and a voluntary director with the credit union for a number of years, is being unfairly treated by the introduction of this restriction and by not passing the amendment tabled by Senator Reilly. The board further believes that the current conflict of interest rules and the proposed fitness and probity rules should cater for any conflict of interests that could occur in this area.
This case, about which I received details today, relates to a person in Kilsallaghan in north County Dublin, which is a fine place. Senator Reilly's amendment, if accepted, would address the issue. How does the Minister of State propose to address it? I refer him to section 15(10)(a) and ask him to clarify the position in this regard.
To respond to amendments Nos. 5 and 6 in the name of Senator Reilly, one of the core purposes of the Bill, as expressed in its Long Title, is to "change the governance requirements for credit unions by removing certain management functions from boards of directors of credit unions and providing for a separate management structure and to improve the oversight and general policy functions of such boards 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 unions' operations from day-to-day operations. These exclusions are designed to ensure people are not overseeing their own work and are not answerable to themselves. For this reason and given the core function of the board in overseeing the work of voluntary assistants, volunteers of credit unions cannot also be a director. However, there is no difficulty with volunteers becoming members of boards provided they do not remain in their role as a voluntary assistant at the same time. The Government has brought forward amendments to allow a volunteer from another credit union or family member of a volunteer to sit on the board.
Amendment No. 6 seeks to delete the second two lines of subsection (10)(a) to provide that the employee of one credit union may be on the board of another credit union. The Minister addressed this suggestion on Committee Stage in the Dáil. The Government has already shown considerable flexibility in accepting amendments on board membership where to do so would not compromise the principles of the Bill.
In respect of employees of other credit unions, credit union members must have confidence that board members are free not only from conflicts of duty but also conflicts of loyalty. A director who is making decisions about business strategy or a possible amalgamation may find it difficult to maintain sufficient objectivity where the decision may also affect the neighbouring credit union at which he or she also works.
To address Senator Darragh O'Brien's point, the recommendations the Government is following are those made in the report of the Commission on Credit Unions and we are being honest to the recommendations. A potential conflict arises where a person is employed and serving on another board. The Senator asked about a person who had previously worked in this area. This scenario does not present a difficulty because the provision would not apply to such a person on the basis that he or she is not in his or her current employment. As such, the issue the Senator raises does not create a difficulty because the person is not currently employed in the relevant area.
As far as the Government is concerned, we are being loyal to and consistent with the recommendations of the commission's report, while showing a degree of flexibility towards the amendments Senators tabled yesterday.
Tá
- Bacik, Ivana.
- Bradford, Paul.
- Brennan, Terry.
- Burke, Colm.
- Clune, Deirdre.
- Coghlan, Paul.
- Comiskey, Michael.
- Conway, Martin.
- Cummins, Maurice.
- D'Arcy, Jim.
- D'Arcy, Michael.
- Gilroy, John.
- Harte, Jimmy.
- Hayden, Aideen.
- Healy Eames, Fidelma.
- Henry, Imelda.
- Higgins, Lorraine.
- Keane, Cáit.
- Kelly, John.
- Landy, Denis.
- Mac Conghail, Fiach.
- Moloney, Marie.
- Moran, Mary.
- Mulcahy, Tony.
- Mullins, Michael.
- Noone, Catherine.
- O'Keeffe, Susan.
- Quinn, Feargal.
- Sheahan, Tom.
- Zappone, Katherine.
Níl
- Byrne, Thomas.
- Cullinane, David.
- Leyden, Terry.
- Mooney, Paschal.
- Ó Clochartaigh, Trevor.
- Ó Murchú, Labhrás.
- O'Brien, Darragh.
- O'Sullivan, Ned.
- Reilly, Kathryn.
- Wilson, Diarmuid.
I move amendment No. 7:
In page 21, line 6, after "union." to insert the following:
"The requirement of this section may be waived by the Bank in exceptional circumstances upon application by the credit union.".
I have a few questions for the Minister of State in respect of the exclusions or exceptional circumstances. He tabled amendment No. 127 yesterday on Committee Stage, which I read. I might not be the sharpest in respect of these matters but could the Minister of State explain clearly how amendment No. 127 provides for the exceptional terms we asked for and which amendment No. 7 provides for? How does amendment No. 127 allow exceptions to be granted to credit unions who, through not fault of their own, cannot meet the terms of the Bill?
I second the amendment.
On Committee Stage in the Dáil, the Minister for Finance stated that he would look at a mechanism whereby an exception to term limits could be allowed in exceptional circumstances. I tabled an amendment to that effect on Committee Stage in the Seanad yesterday which amends section 95A of the Bill. The purpose of that amendment is to allow the Central Bank to appoint a director under section 95A even where that person may have exceeded the term limit. 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 that it was deficient in this respect.
This section provides that the bank may require the appointment of an additional director in such circumstances. However, it has been 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 limit. I believe this addresses the point raised by the Senator's amendment without fundamentally compromising the core principle that the Minister is seeking to provide for in the Bill. On that basis, I do not propose to accept the amendment.
Is it just in terms of the term limits?
I tabled the amendment because of the limited pool of people that would be available. If it cannot meet the directors' requirements from that pool of people, could there be a waiver in exceptional circumstances? It is not necessarily related to the term limits but to that situation.
The net issue is that if there is a deficiency of numbers and the experienced people are required, this can be allowed on an exceptional basis. That is my understanding of it. If there is a deficiency of numbers coming forward and the credit union would need some people for their expertise, those people can remain. That is where the exclusion could kick in.
So the amendment is not necessary.
This amendment is consequential on the change in term limits for the board of directors from nine years to 12 years in aggregate in any 15-year period. We had a good debate about this yesterday. Given that the term limits are increased to 12 years under section 15, the reference to permissible limits under this Part also must be updated to refer to 12 years. This section requires the nomination committee to review the membership of board members who have served the 12 years permissible under the Bill and document the rationale for continuance of that person.
I indicated on Committee Stage that an amendment to this section was required to clarify that the reference to member in subsection (4) is a member of the board of directors, not a member of the credit union. Therefore, the reference to member in the section is being changed to director. This was done for clarity.
This amendment correlates an incorrect reference. Section 76N provides for the election of members of the board oversight committee either during the organisation meeting or a general meeting of the credit union.
Amendment No. 11 follows commitments given by the Minister in the Dáil by allowing for a director of one credit union to be on the board oversight committee of another. A number of amendments have been made to committee exclusions. This amendment mirrors the provisions in section 15 relating to exclusions from board membership. It also provides for consequential numbering changes.
Amendment No. 12 is negatived in the Committee of the House and is out of order.
This amendment replaces the definition of "maturity mismatch". The proposed definition clarifies the definition used in the Bill.