asked the Minister for the Environment if his attention has been drawn to a report (details supplied) that building society profits are too high; and if he agrees with the report.
Ceisteanna—Questions Oral Answers - Building Society Profits.
I am aware of the report referred to by the Deputy, but I do not accept its validity.
In general, building societies do not aim to make profits in the accepted commercial sense. Surpluses accruing to building societies, after payment of interest to investors, taxation, management and other expenses, are put to reserve to meet any unforeseen losses that may arise—for example, through losses on mortgages or depreciation of investments. The societies do not endeavour to maximise their surpluses but endeavour to maintain them at a reasonable level in relation to their growth. Also the grant in recent years of trustee status to certain building societies was subject to the maintenance of adequate reserves.
It is the function of the Registrar of Building Societies to exercise a continuing review of the manner in which societies are operated and the Building Societies Act, 1976, gives him wide statutory powers to take any action he considers necessary in relation to their operations.
Would the Minister not agree that the level of reserves maintained by the building societies is substantially in excess of that necessary for them to retain trustee status?
The whole question of the regulation and control of the societies or their surveillance and reserve level are matters for the Registrar of Building Societies. The situation is that the Building Societies Act 1976 empowers the Minister for the Environment, on the recommendation of the Registrar of Friendly Societies, to make regulations governing the management of societies. The Act also provides for the submission by building societies of annual returns to the Registrar. Also any irregularity in a society's operations, for example, in regard to liquidity, can be identified and action can be taken to rectify it.
Would the Minister not agree that as the reserves are so large the most appropriate thing for the building societies to do in the situation would be to calculate their interest on the monthly reducer, as the trustee savings banks do, instead of on the annual reducer so that the benefit of these large reserves could be passed on to the people who are paying for mortgages?
On the contrary, my advice with regard to the reserves is that they are generally accepted to be low rather than high.
But by whom?
Would the Minister not agree that the building societies are not devoting the amount of money they should devote to building houses? Is he not aware that some of the building societies are reverting to a bad old practice of spending the money on other than building houses?
I am not so aware so far as the last part of the question is concerned but I would agree fully with Deputy Tully regarding the building societies investing their funds in housing. That would be my wish, too.
I am calling Question No. 11.
Would the Minister make inquiries in this matter with the Registrar of Friendly Societies and ask him to consider the matter?
The Minister will need to have a better look at this matter than was the case in respect of Bray Travel.