Seanad amendment No. 1 is grouped with Seanad amendments Nos. 163 to 165, inclusive, and with Seanad amendments Nos. 175 to 179, inclusive.
Credit Union Bill 2012: From the Seanad
This grouping deals with a change to the Short Title of the Bill and with the inclusion of an area that we now intend to implement.
A number of amendments were made to section 1 on Committee Stage in the Seanad. These amendments and the related Schedules are designed 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, where enacted, permit the Central Bank to sign the International Organization of Securities Commissions', IOSCO's, multilateral memorandum of understanding, MMOU, by the end of this year. In light of the pressing end of year timeline for signing the MMOU, it has been necessary to make these amendments as part of the 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 this Bill are currently part of the Central Bank (Supervision and Enforcement) Bill 2011. Colleagues will be aware that Bill is slowly wending its way through the Houses of the Oireachtas. To cut to the chase, we are including the area contained in that Bill in this Bill because of the timeline by which we must sign the MMOU- by the end of the year. If we had to wait until the Central Bank (Supervision and Enforcement) Bill, which is due for Committee Stage in January 2013, we would miss the end of year deadline for signing the MMOU.
The IOSCO organisation is an international group of regulators, of which the Central Bank is a member on behalf of this country. One of its key functions is to control and provide information to different members on international fraud. The Central Bank of Ireland, as regulator and a member of IOSCO, requested the Government to allow it sign the memorandum and this is the reason we are bringing in section 4. Lest colleagues are concerned this might be some kind of movement two minutes from midnight, that is not the case. The case is we were asked to do this and are bringing it forward from the Bill that is currently only approaching Committee Stage.
These amendments were made in the Seanad and 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 provisions for guarding the Central Bank confidentiality regime. Given that these amendments are not related to credit unions, it was also necessary to amend the Short and Long Titles of the Bill to accommodate them. I would like to emphasise that the expeditious passage of the Credit Union Bill through the House is necessary to allow the €250 million to be contributed to the credit union fund by the end of this year, as there is no scope in the 2013 figures for this to be done after the end of this year. This money is essential for the restructuring process to get under way.
These amendments deal with a number of new sections we wish to include to deal with allowing Ireland to extend its membership of IOSCO. I believe the Central Bank would highlight some of the important benefits of membership if it had an opportunity to do so. In the circumstance where there is international fraud or an allegation of fraud through securities, for example, it should be open to member states of the organisation to pass information freely to other member states. Having this memorandum in place will have benefits for Ireland, as a signatory to the agreement, in terms of governance and international regulation. I commend this group of amendments to the House.
I thank the Minister of State for his comments on the amendments. I would like to ask an overarching question about the spirit of the Committee Stage debate on the Bill. We need to go through a lot of detail in interpreting the Bill, as amended by these 179 amendments. The fundamental question I would like to ask relates to whether the Bill, as amended, makes it clear that the current Central Bank legislation that relates explicitly to credit unions-----
I cannot hear the Deputy.
That is not my mobile phone.
My mobile phone has been turned off.
I think there are some technical problems.
My essential question relates to the application to credit unions of the existing body of Central Bank legislation. Is it made clear in the broad thrust of the amendments being introduced that only those elements of the Central Bank legislation that have related to credit unions up to now will apply as we move forward? Will the Minister of State assure the House that the Central Bank legislation will not apply to credit unions in a way that it has not applied to them before now, as an unintended consequence of the amendments?
Deputy Michael McGrath's question relates to one of our key concerns about the Bill. We are at the final stage of the debate on it. I want to commend the Minister for Finance, Deputy Michael Noonan, for the way he has engaged with the Opposition on the legislation from the start. I also commend the Minister of State, Deputy Brian Hayes, who was involved in part of the discussion on Committee Stage. It is fair to say that at all stages of the legislative process the Minister listened to the concerns of the Opposition about the effect the legislation might have on the credit union movement and all parts of the sector, especially smaller credit unions. I am glad that he introduced amendments in the Seanad after listening to us. Almost 180 amendments are being presented in the House today. It is clear that Sinn Féin would have liked further changes to be made to the Bill and we continue to have concerns about some aspects of it. We will stay in touch with the credit union movement at national and local level and I hope we will not have to return to the issue, but we will do so, if necessary. I am satisfied with the engagement that has happened. It is an example of the true engagement we should have when we are dealing with legislation. I do not want to hark back to what happened earlier other than to say that was not the way to deal with legislation. In fairness to the Minister, he commended me and other Members of the House for introducing practical suggestions. It is clear from the many amendments before the House that our concerns were listened to and I hope we will continue to see that spirit in 2013. I welcome that engagement. I do not have a concern about the group of amendments before the House.
I want to say the same. This has been a model exercise in how the Oireachtas should work. Organisations representing the credit union movement made their views known about the Bill initially proposed by the Government. Representatives of various parties listened to those concerns and brought them to the attention of the Government which took action to change the Bill as a result. That is how democracy should work. I would be interested to hear detailed explanations of some of the formulations proposed by the Government, as there may be some issues that we would still like to raise. In general, the Government has engaged genuinely with the Opposition on this matter and listened to the concerns of the credit union movement. The Bill has been improved substantially as a result. Like Deputy Pearse Doherty, I cannot help wishing the Government had engaged with the public and the Opposition on other matters, some of which we discussed earlier today and in the last week, in the same way. If it had done so, it would have enhanced the credibility of the House and politics generally to a great degree. I hope the manner in which the Bill has been approached will be the manner in which the Government will approach other Bills in the future.
This group of amendments will give the Central Bank the authority to sign the memorandum of understanding. When this issue was brought to our attention during the Seanad debate which I attended, the fundamental question I asked related to when this was brought to our attention. I appreciate the constructive remarks the Deputies have made. This is important because a watchlist of countries that have not signed the memorandum of understanding will be circulated by the International Organization of Securities Commissions by the end of the year. We did not want this country to be highlighted for not having signed the memorandum of understanding when other countries had done so. This net issue was part of the original Central Bank Bill which would have been passed. That is why we have brought it forward. I should have sent a note to my colleagues on the other side of the House when this issue was brought to the attention of the Seanad. I should apologise to the House for this, as it was my responsibility. I note the Deputies' comments that they have no difficulty with the signing of the memorandum of understanding. It is important for this country not be on some kind of blacklist of non-signatory countries as we move into next year. I appreciate the Deputies' remarks in that regard.
The Minister for Finance, Deputy Michael Noonan, who ostensibly dealt with the Bill on Second and Committee Stages before I became involved gave a commitment in advance of Report Stage that he would respond in the Seanad to a range of amendments the Members opposite had introduced and teased out at the select committee. He was true to his word in considering these amendments which we have tried to reflect as far as we can in the body of amendments being introduced today. The reason it is imperative for this legislation to get over the line before the end of the year relates to the provision of half of the €250 million required for the restructuring of the credit union movement. The rest of the money will be put up through levies within the organisation. That is why it is important for this work to be done by the end of the year. We had a very fruitful discussion in the Seanad with the Members of that House about many of the ideas championed by my colleagues on the other side of this House. As we go through the amendments, I hope the Deputies in question will see how their ideas are being put into law as a result of the changes made in the Seanad.
Deputy Michael McGrath asked a specific question about the definition, with which amendment No. 5 deals. The Minister gave a commitment to amend this legislation to make it clear that only the legislation that already applied to credit unions would be covered by this definition. That will be highlighted when we reach the amendment in question. This will have an effect on what happens in the future. When we reach that amendment, the Deputies will see that the Minister's bona fides are well in tune.
As Seanad amendments Nos. 2, 3 and 157 are related, they may be discussed together.
Given that these provisions amend the Central Bank Reform Act 2010, it was also necessary to update the citation of the Central Bank Acts. The amendments provide for such an update. This simple change needs to be made as a result of the change made in amendment No. 1. This grouping is consequential on the first grouping having been passed.
As Seanad amendments Nos. 4 and 48 are related, they may be discussed together.
A number of amendments were made to section 4 on Committee Stage in the Seanad. These amendments mirror subsections (6) to (8) of section 14 of the Credit Union Act 1997 and provide for changes to the rules of credit unions consequential on 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. 48 provides for a reduction in the number of board members from 15 to 11 by amendment to the rules of the credit union.
This arises from the proceedings on Committee Stage in the Seanad. I brought forward an amendment on Committee Stage to address concerns relating to the definition of financial services legislation. During Report Stage in Dáil Éireann and Second Stage in this House I indicated that I would bring forward an amendment to clarify that it is only legislation that already applies to credit unions that would be covered by this definition. The amendment made on Committee Stage in the Seanad provides the clarification sought. I know this was an issue raised by colleagues opposite at all stages when the Bill was being discussed here.
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 a corpus of "banking" legislation to credit unions inappropriately. I again clarify that this definition does not apply financial services provisions to credit unions anew, nor could it be used for that purpose. The perception, that this definition turns on to credit unions a range of new legislative provisions from the wider financial sector, is mistaken.
As the Minister of State said, this is an issue that exercised me, my party and the credit union movement as well as many other Opposition Deputies on Committee Stage. I want to put on record that this is a sensible amendment which is appropriate and deals with the fear that the entire suite of financial services legislation, or a part of it that would not be appropriate, could be applied to the credit union movement. I welcome the Minister of State's amendment.
I very much welcome this amendment, which is very much in the spirit of the suggestions made by all sides of the Opposition and which were fully acknowledged by the Government both on Committee Stage and Report Stage. This satisfies the concerns raised by the credit union movement. I welcome the amendment and commend the Government.
That is very generous. We should bottle that.
Take it while it lasts.
This is a technical amendment which clarifies that the secretary is a member of the board, unlike, for example, the position of a company secretary.
We move to Seanad amendment No. 7. Seanad amendments Nos. 10, 15, 17, 20, 21, 24, 26, 27, 30 and 32 are related. The amendments may be discussed together.
A number of amendments were made on Committee Stage in the Seanad in order to set out the principles of regulation making power in these sections by clarifying that the Central Bank may only make regulations in respect of these sections where they are necessary to protect members' savings. These sections provide for borrowings, savings, blending and investments.
Amendment No. 20 sets out the basis on which credit unions may borrow money and links it to the purposes of the credit union's objects as set out in section 8 of the Credit Union Act 1997. These include the creation of sources of credit for the mutual benefit of members, the use and control of members' savings for their mutual benefit and the improvement of the well-being and spirit of the members community.
Amendments Nos. 24 and 26 provide that the bank may only make regulations that are necessary in respect of credit union lending practices, reporting loans to the credit union and the holding of provisions for loans or categories of loans.
Amendment No. 30 inserts a test of necessity in respect of the power of the Central Bank to make regulations under this section. This provision states that the Central Bank may make regulations prescribing the investments that a credit union may invest in, including any other matter the bank considers necessary in the circumstances.
We move to Seanad amendment No. 8. Seanad amendment Nos. 9 and 11 to 14, inclusive, are related. The amendments may be discussed together.
A number of amendments were also made on Committee Stage in the Seanad to provide for some of the types of conditions 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, 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 it 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 capable of being appealed 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. Further amendments are consequential on this amendment.
This applies into the future in respect of new credit unions. Clear powers are given to the Central Bank as a means of ensuring that people's savings, shares and deposits are well maintained.
With regard to the independent review which the Central Bank may require to be conducted in respect of a credit union, who is it envisaged would carry out such an independent review, what would be a competent body to do so and who would pay for it?
The credit unions themselves would be asked that. They could, in certain circumstances, ask an accountancy firm or some consultancy to produce a report outside of the credit union. However, the first request would come from the bank to the credit union and it would be a matter for the credit union to then furnish the bank with the requisite information.
Seanad amendment No. 13:
Section 7: In page 10, line 29, to delete “subsection (3)(b)” and substitute “subsection (4)(b)”.
Seanad amendments Nos. 16, 22, 23 and 25 are related and may be discussed together.
A number of minor technical amendments were made to section 8 which allow the regulations to set limits in the form of a monetary amount as well as a percentage. This 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 Central Bank may make regulations in regard to setting limits on the amount of savings or category of savings a member can hold, the ratio of deposits to shares the credit union may hold and any other requirement or limit on the bank consistent with that.
Amendments Nos. 23 and 25 are minor technical amendments which allow the regulations to set limits in the form of a monetary amount as well as a percentage.
Seanad amendments Nos. 18, 19 and 118 to 120, inclusive, are related and may be discussed together.
Seanad amendments Nos. 18 and 19 involve a redraft of the Bill as published. Following further consideration of the Bill, it was felt that the provisions under section 29, which propose to insert a new section 84A into the 1997 Act, would be more suitable under section 9. The latter deals with the policies, procedures and practices a credit union must have in place to ensure it is compliant with requirements imposed on it. For example, the Central Bank may make regulations imposing liquidity requirements on credit unions under section 30 of the Bill. At present, credit unions have a minimum liquidity requirement of 20%. The amendment allows the Central Bank to make regulations prescribing the operational practices, policies and procedures to be adopted by the credit unions more generally. These may include requiring credit unions to adopt monitoring procedures to ensure the 20% liquidity requirement is complied with. Regulations may also require credit unions to ensure people involved in monitoring liquidity have an understanding of the calculation of liquidity and maturity mismatches. These regulations may also deal with reporting requirements, including arrangements for reporting breaches to the board of directors of the Central Bank. A number of consequential amendments following on from amendment No. 18 were also made in the Seanad.
Amendment No. 19 gives the Central Bank and the registrar of credit unions broad regulatory powers. I am not objecting to that, because it is the purpose of the Bill. However, I have made the argument consistently as the legislation progressed through this House that a memorandum of understanding between the credit union movement and the Central Bank would strengthen the Bill and would be helpful in terms of identifying what each should expect of the other. I have lost the debate on that point and do not intend to re-engage in it now. However, I will make a last-ditch appeal to the Minister, Deputy Michael Noonan, to consider, after the Bill has passed, the merits of having a memorandum of understanding between the credit union movement and the Central Bank. The Minister has made positive soundings in this regard.
To echo Deputy Pearse Doherty's point, the credit union representatives to whom I spoke said they would find it very helpful if the requirements and obligations they must meet were set down in a simple and readily understandable way. The Bill has been much improved since its introduction and we have already had this particular discussion. Nevertheless, I urge the Minister to consider what is a reasonable request by the credit union sector.
I understand the Minister, Deputy Noonan, has discussed this issue with the Deputies. A consultation protocol was established two weeks ago. The Minister's view is that were he to include provision in the Bill for what the Deputies are proposing, that might tie the hand of the regulator and be too prescriptive. The Oireachtas gives the regulator powers on the basis that he or she will operate them in accordance with the independence of the office. The Minister has made clear that he has an open mind on the issue. As I said, the consultation process is now established and we will glean something from that. However, the Minister is not proposing at this stage to formalise it in the way the Deputy has suggested. We do not wish to cut across the very important work of the regulator in this matter or to tie his or her hands. I hope common sense and judgment will prevail in dealings between the Central Bank, the regulator and the credit unions, which will ensure there is no need to impose prescriptions on the regulator. A memorandum of understanding is a more formal way of specifying what we all want to see, namely, a proper protocol for dealing with these matters. We will keep a watching brief on the situation.
An amendment was made to section 11 on Committee Stage in the Seanad to provide for a transitional arrangement whereby an approval by the Central Bank under the existing 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. The amendment simply clarifies the existing position in order to put it beyond doubt.
This amendment was made on Committee Stage in the Seanad. It is a minor amendment to rectify an incorrect cross-reference in the text.
This is another of the Opposition amendments that was debated with the Minister, Deputy Noonan, at the select committee.
Amendment No. 31, made in the Seanad, follows on from the discussion on Committee and Report Stages in this House where the Minister committed to examining this section in order to allow a credit union to invest in public projects. This amendment arose out of discussion with the Office of the Attorney General on the issue, and makes clear that the power of the Central Bank to make regulations relating to 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. A further amendment to this section was made in the Seanad. What the Minister has done in the amendment we asked the Seanad to agree - as it did - is effectively to include public projects for the purposes of allowing the Central Bank to make regulations. I know that was a key concern of Members opposite.
Again, I commend the Government on this amendment. It is one of the most important moves to acknowledge explicitly in the Bill a very positive suggestion made by the credit unions. In these rather bleak times when we often argue with one another about what not to do, and desperately look around for positive suggestions about what we might do, this is a positive, forward-looking and imaginative proposal by the credit unions that can benefit everybody. Not only is it important to include it in the Bill but I urge the credit unions, as did the Minister of State, to come forward with their proposals so that we can look at them and thereby take this suggestion seriously. It seems as if some of the desperately needed investment funds we would all like to see made available to invest in employment-rich and socially valuable projects are being offered to us by an organisation whose members have the best interests of this country at heart. It is a very positive move and I hope we not only include it in the Bill but also that we take up this suggestion and seek to develop it.
I thank the Minister of State for responding positively to the request to put this amendment in the Bill, as tabled by me on Committee and Report Stages. I would have preferred a more explicit statement on State-guaranteed public projects but I recognise the wording presented by the Minister of State does not prohibit this, so I find it acceptable.
As the Bill passes into law, I acknowledge the Minister of State's comment that he is open to meeting the credit union movement. It is now up to the movement to step up to the mark. It has been seeking this amendment and therefore it should come forward with proposals. It is equally important that the Department of Finance should co-ordinate a position that can be proposed to the credit union movement. This would state the kind of investments envisaged, would point out that the credit unions had wanted the measure and note that it has been enshrined into law in terms as clear as day. It can ask them what their proposals are, ranging from small, medium and large packages. These may be the concern of the Department with responsibility for housing or the Department of Education and Skills, which can put them together with the co-ordination of the Department of Finance. It is a two-way street. I welcome this move.
I concur with the sentiments of previous speakers. This amendment is to be welcomed. It is satisfactory and gives explicit recognition to the possibility of credit unions investing in projects of a public nature, which is something they will welcome. I share Deputy Doherty's view that this option should now be explored fully by credit unions.
I hear what all the Deputies are saying. There is an opportunity here to do something imaginative. Although this section is all about ensuring that credit unions use their investments with judgment and common sense, there must be a recognition that where public projects arise that could have a mutual benefit for credit union members in communities known to credit unions, it makes sense to invest in them, having regard to any potential risks. The way we approached this in the amendment was to give power to the Central Bank to bring forward the regulations. This seemed to get over the legal hurdle that had been present up to the point when we had our discussions with the Office of the Attorney General. There is nothing to stop the Department of Finance, with other Departments, as Deputy Doherty suggested, bringing forward ideas and proposals or a scheme of ideas, in tandem with the regulations the Central Bank will make. This is positive because it is about delivering for an entire community. Such a community also looks to the future as to where its investments can best lie and how community benefit can best be obtained. They are the people who know best, and that can be tempered by a standard form of regulation which the Central Bank can stand over. I believe we are all in agreement on that.
Amendment No. 33, made in the Seanad, makes provision for the election of the board of directors at the first annual general meeting or special general meeting called after the organisation meeting of a new credit union. This amendment was necessary to ensure consistency between the ways the board oversight and the board of directors are elected. It provides a transitional arrangement for the election of the board of directors at the first agm or sgm, following the commencement of the section. This was necessary given the decrease in the maximum number of directors that may be appointed to the board under this Bill - a reduction from a maximum of 15 to a maximum of 11, which was well debated on all sides.
On Committee Stage in the Seanad I noted there were incorrect cross references in these amendments and stated I would bring forward amendments on Report Stage to rectify these inconsistencies. They should refer to section 53(15), not to section 53(16). These amendments were made on Report Stage in the Seanad and the correct cross references have now been included in subsection (6).
Seanad amendments Nos. 34, 37, 38, 40, 42 to 46, inclusive, 51 to 54, inclusive, 65, 73, 91, 93, 115 to 117, inclusive, 168 and 169 are related and may be discussed together.
I refer to amendment No. 34. An amendment was made on Committee Stage in the Seanad to remove subsections (12) and (13) of section 15 as these will be provided for in a new fitness and probity regime which will be rolled out for credit unions on a phased basis, as recommended by the Commission on Credit Unions. Further amendments were also made to amend the cross references caused by the deletion of subsections (12) and (13) by amendment No. 37.
Amendment No. 51 amended paragraph (f) in section 17(1). This section previously provided that a person performing management functions in a credit union must have particular knowledge, skills, experience, qualifications, competence and probity to carry out these duties effectively. This was deleted by an amendment in the Seanad as it would be covered separately under the fitness and probity regime which will be rolled out for credit unions over time. In effect, we are removing the fitness and probity references because they are surplus to requirements given that they will be rolled out over time. The application of fitness and probity requirements was agreed by the Commission on Credit Unions and will apply, depending on the nature of the scale and the complexity of the credit union concerned.
Amendment No. 52 deleted paragraph (p), as it referred to requirements set out in subsections (12) and (13) of section 53. As these subsections were being deleted, paragraph (p) is now invalid. Amendments Nos. 53 and 54 also make the consequential cross references arising from the deletion of paragraph (p).
Amendment No. 73 deleted paragraphs (b) and (c) of subsection (5) of subsection 63A, as inserted by section 21 of the Bill.
When appointing a person as manager, it is necessary to ensure that the person appointed complies with all legal requirements. The list of requirements that a manager must fulfil has been deleted as these standards will also be set out under the fitness and probity requirements which will apply to credit unions in line with the recommendation of the Commission on Credit Unions. These measures will be rolled out to credit unions over time and they will take account of the size and scale of credit unions. This amendment ensures that the person appointed as manager will comply with all legal requirements, including those prescribed by the Central Bank. Further amendments were made on Committee Stage in the Seanad in order to correct the cross references arising from the deletion of section 53(12) and (13), as inserted by section 15 of the Bill.
I am not at all happy with amendments Nos. 35 and 95 for two reasons. The first of these reasons relates to the general exclusion which prevents voluntary assistants in credit unions from serving on the boards of those credit unions. We have been around the houses in respect of this matter on a number of occasions and I will not repeat the arguments put forward previously. This is the one major area within the legislation with which the Minister for Finance has not dealt generously.
I apologise for interrupting but I believe the Deputy is referring to amendments in the next group.
I am sorry for that.
This group of amendments relate to the fitness and probity requirements.
That is fine.
Seanad amendment No. 35 is grouped with Seanad amendments Nos. 36, 95 to 111, inclusive, 113 and 174.
This group contains the amendments about which Deputy Doherty is concerned. A number of amendments were made on Committee Stage in the Seanad which relate to eligibility for membership of boards of directors and which arose as a result of constructive debates with Deputies and Senators in both Houses in recent weeks. The effect of these amendments will be to reduce the exclusions that would apply to members of boards. There was a great deal of discussion in respect of this matter on Committee Stage and Report Stage in the Dáil and the Minister, Deputy Noonan, gave a guarantee to the effect that he would introduce amendments. These are the amendments before the House. I accept that not everyone will be satisfied with them but we have gone as far as possible.
Amendment No. 35 allows volunteers from a credit union, as well as a member of the board oversight committee of such a credit union, to serve on the board of another credit union. That is the first substantial change and it means that if a person is a volunteer with one credit union, he or she can serve on the board of another. That was the first exclusion we overturned.
Amendment No. 36 removes the prohibition under which family members of volunteers on credit unions may not become directors. This was the second exclusion, under which, if a person was a volunteer in a credit union, he or she was excluded from serving on the board. The Minister stated that he would introduce an amendment in this regard and he has done so. This amendment also removes the express exclusion of members who have been in arrears on their repayments for more than 90 days. Instead, it provides that credit union rules should deal with the eligibility of such members.
Amendment No. 174 follows on from amendment No. 36 and provides that the rules of a credit union must set out how it will deal with a member of the board of directors or board oversight committee who is in arrears of more than 90 days, up to and including suspension or removal of that member.
Amendments Nos. 95 to 111, inclusive, and 113 relate to exclusions from the board oversight committee. There was much constructive debate in the Dáil and Seanad in respect of the eligibility for membership of board oversight committees. A number of amendments were proposed in respect of section 53(10) in the context of changes to the exclusions from boards of directors. These amendments were proposed in order to ensure consistency between boards and board oversight committees. Their effect will be to reduce the number of exclusions that would have applied in respect of membership of board oversight committees.
Amendment No. 95 allows volunteers from other credit unions to be on the board oversight committee of a credit union. This matter arose on foot of Committee Stage proceedings in the Dáil. Amendment No. 106 removes the prohibition on family members of the credit union becoming members of the board oversight committee. Amendment No. 96 allows a director of another credit union to become a board oversight committee member. Amendment No. 108 clarifies that a member of the board oversight committee of the credit union cannot also sit on the board of directors of the same credit union. Amendment No. 104 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 and is designed to guard against any conflict of interest in the context of a person having worked in other credit unions or possessing information about what is occurring in another credit union. Amendment No. 109 deletes section 76N(4)(q) in line with the changes for exclusion from board membership. Amendment No. 110 ensures that where a committee member falls under any exclusion provisions, he or she should resign from the committee.
I take this opportunity to acknowledge the fact that this section has been changed to a substantial degree. There is no doubt about that. Consequently, many of the concerns that were voiced have been met. However, there is an issue outstanding in respect of the voluntary aspect. I will not rehash the debates in which we have engaged on this matter. We will monitor what occurs and if difficulties arise, we will return to this matter either in the form of a Topical Issue debate or on Private Members' business. I encourage the Minister of State and the Department to monitor this provision in order to gauge its effect. I understand what the Minister and Minister of State have been saying during the debates on the Bill in the context of ensuring that we have the best governance. However, we must also ensure that the latter does not impact in a negative way on the sector and, in particular, on smaller credit unions.
The second matter about which I am concerned relates to the exclusion of a staff member of a credit union from serving on the board of another credit union. There was a way to do this in the context of the conflict of interest provisions. Again, I will not revisit the debate on this matter. What I will say is that those who are voluntary assistants within credit unions or who serve on boards of directors may obtain employment in other credit unions as a result of the experience they have gained. The Bill will have the unintended consequence of forcing such people into making a choice between their job and their position on the board of directors. Such individuals or their parents may have been involved in the founding of the credit union in question and they will not be placed in a nice position. Cases of this nature may be few and far between but we should not put anyone in the position to which I refer. I accept, however, that it is too late to tweak the provision but perhaps we can revisit the matter in the future.
I strongly support the other amendments that have been put forward in this regard. I refer, in particular, to amendment No. 36, which relates to circumstances in which a person is in arrears and will be excluded from the board of directors as a result. As I pointed out on Committee Stage, such members should be forced to resign with immediate effect. It is very important that this will now be the case. I thank the Minister of State for bringing forward this amendment.
This is the only part of the Bill to which I am strongly opposed. Amendment No. 35 is actually better then the provision contained in the Bill, but it does not go far enough. That is why I wish to place on record the fact that I remain opposed to the relevant exclusions. I ask the Minister of State to monitor the position with regard to voluntary assistants and to give particular consideration to the provision under which a person will be asked to choose between his or her job and his or her membership of the board of directors.
My final point relates to amendment No. 124, which is in a later group. That amendment is relevant to the matter under discussion because it deals with the exemption clause I suggested on Committee Stage and in respect of which I tabled an amendment on Report Stage. The Minister for Finance signalled that he was open to such a clause.
Amendment No. 124 deals with that issue to a certain degree.
The length of service.
It allows for the Central Bank asking the credit union to appoint an additional person and the term limits are waived.
Yes, if they can find someone.
It deals with the term limits issue in one way. I will discuss this matter further when we come to that group of amendments. However, it does not deal with the issue of a voluntary worker or a person working for another credit union. The issue of term limits could also apply in this instance. I suggest a waiver if the Minister of State is not willing to remove it altogether. Amendment No. 124 could have been expanded to include dealing with the prohibition on serving as a director in the case of voluntary assistants and staff of another credit union. It would be solely at the discretion of and with the permission of the Central Bank. This might be another way by which we could have addressed the issue. I suggest we return to it at a later stage.
I welcome the amendments which represent progress and improve the Bill. I welcome, in particular, the amendment dealing with directors who find themselves in arrears. An amendment was necessary in this case. The restrictions are unnecessarily onerous, particularly when it comes to volunteers. It is often the case that the members of a board of directors are mature in years with time on their hands. It could be argued that working voluntarily for the credit union every week enhances their role as board members and gives such individuals a greater understanding of the operation of the credit union. This restriction is unnecessary, but it remains to be seen how it will work in practice.
I agree with others that the Bill has been improved substantially by meeting some of the concerns expressed. I echo the points made about the removal of the exclusion on persons in arrears. However, the democratic principle of credit unions may be somewhat undermined - the right of members to make these decisions and judgments about the people they wish to serve on the board. I welcome the improvements, but the Minister of State should keep an ear to concerns or problems that may arise as a result of the exclusions which continue to be provided for in the Bill.
I agree with colleagues that the amendments have improved the section substantially by doing away with the more ridiculous exclusions. However, there is a fundamental distinction between a volunteer and an employee or a director. The credit union is a unique organisation which has given so much to the country. We need to arrive at the correct balance. The next group of amendments deals with the term limit - 12 years out of 15. I made the point yesterday on Report Stage in the Seanad that it was only when the Bill was passed by both Houses and became law that all these sections would apply. For example, a person may have served for 30 years, but he or she will only be appointed as a director next year. The Bill will be another transition for the credit union movement and it is certain this issue will be considered again in the next few years. I understand the point made by Deputy Pearse Doherty. The next group of amendments provides that the Central Bank is empowered to put to one side the exclusion if a credit union cannot find people because of the term limit. The Deputy has argued that the same should apply to volunteer and employees. I understand the logic of his argument. When this new regime and the transition period begin, we may need to look at any problems with the exclusion of volunteers. Beginning with the report of the commission, there has been an argument that this distinction is needed to ensure potential conflicts of interest are minimised and that the best governance system will be in place for all credit unions.
Seanad amendments Nos. 39, 41, 64, 66, 112 and 124 are related and may be discussed together.
I tabled a number of amendments on Committee Stage in the Seanad to increase the term limits of members of the board of directors. This arose from discussion with colleagues opposite on Committee and Report Stages in this House. On Report Stage the Minister for Finance had stated he intended to bring forward an amendment, following consultation with the Office of the Attorney General, to change the term limits to 12 years in aggregate in a 15 year period. This commitment is now reflected by the amendments made in the Seanad which strike an appropriate balance between promoting board rotation and protecting the volunteer ethos of credit unions. Seanad amendment No. 66 is consequential on this amendment to increase the term limits from nine to 12 years. Seanad amendment No. 64 increases the maximum consecutive term for the chairman from three years to four. The term of office of the chairman is for a period of one year. Currently, a chairman is not permitted to serve more than three consecutive terms in that post. The Minister agreed on Committee Stage to increase the maximum consecutive term for the chairman from three years to four. This will ensure continuity in the board. However, it will also be one of the responsibilities of the nomination committee to ensure board continuity. Seanad amendment No. 124 permits the Central Bank to appoint a director, even where that person may have exceeded the limit. This is the point made by Deputy Pearse Doherty when speaking on the previous group of amendments. The bank can give a credit union the power to appoint someone, even if that person is beyond the term limit.
In the course of the debate on Committee Stage and again in the Seanad a discussion ensued on a waiving of the term limits in exceptional circumstances. The Minister undertook to examine this proposal. The issue to be addressed is whether the term limits could result in a credit union being unable to attract enough suitable directors. The Bill already provides that the Central Bank can require a credit union to nominate additional directors where the board is lacking in skills or expertise. The director so nominated must be approved by the Central Bank. The Bill has been amended in order that the time served as an additional director in these circumstances is not reckoned for the purposes of the term limit. This means a director who has already served his or her 12 years in a15 year period could still be appointed to the board, but only in these exceptional circumstances, if there is a deficiency in expertise and agreed to by the Central Bank. This addresses the concern raised without undermining the core principle of the Bill on term limits.
This is reasonable. The Minister for Finance, Deputy Michael Noonan, made the point a number of times that he wanted to retain the principle of rotation. He has given some ground on the issue of the term limit moving from nine years to 12.
That is a sobering thought. Where will we be in 2025?
On the board of a credit union.
This is a considerable improvement in recognition of the concern raised by the credit unions.
Given the Minister of State has provided for exceptional circumstances, I hope that, if everybody is being reasonable, the concerns expressed by the credit unions will be addressed adequately. However, I never really received a satisfactory answer to one question, bearing in mind the importance ascribed to the principle of rotation and the imposition of term limits. If term limits are considered so important for credit unions, why are they not imposed on banks, for example? Why does the Government attach so much importance to term lmits for credit union directors? Why do we not have a problem in this regard and with certain other conditions that applied to staff who served in our banks over the years? Will the Minister of State explain this?
I do not support term limits. The credit union movement is a democratic movement. In the same way that this institution, a democratic one, does not have term limits, credit unions should not have any either. The issue is dealt with and we lost the debate but I welcome the fact that the Minister of State has extended the term limits. I welcome the exclusion, waiver or whatever the Minister of State wants to call it that I suggested on Committee Stage and furnished on Report Stage. It is basically encompassed in amendment No. 124, which deals with the term limits. The provision is not as strong as I would have liked. It refers to an additional director. I am not sure about this because I obviously have not been on the board of directors of a credit union.
Consider the circumstances if we add up the exclusions that exist in terms of voluntary assistance, employees of other credit unions and account for the real and necessary requirements we place on directors of credit unions to be fit for purpose and have knowledge and experience. In a small credit union, one could limit the pool; therefore, this is a question of additional directors and not about circumstances where a credit union cannot fill its complement. Scope is provided to allow that to happen. I hope the procedure will not be cumbersome. Under section 90, the review must be carried out by the Central Bank. One must go to the credit union nomination committee to suggest a director one feels would be fit for purpose. The bank must agree that and then the director is appointed for the period up to the next AGM. After an AGM, the procedure could take nine months, after which the director may only be in office for three months before leaving. The provision is really to ensure that the board does not lose experience and will have the necessary experience to carry out its functions properly. I am a little bit concerned but perhaps my concern is ill founded. The Central Bank will obviously have to work out the procedure. I want to ensure the process is not cumbersome.
The legislation does address my concerns in regard to the points on directors. We could have given full discretion to the Central Bank in respect of a voluntary member of staff or a member of staff from another credit union. I can understand the conflict that the Minister of State talked about in regard to a staff member of one credit union being a director of another, and the need for one to be fully aware of the books and all the various projects. If the section encompassed this, it would be up to the Central Bank to determine whether the employee of a given credit union would have a conflict of interest if he or she were a director of another. The amendment would be very safe. We cannot do anything about this at this stage but we could and should have examined it. Perhaps we will do so.
We all share the common goal of ensuring that credit unions have the requisite number of staff with suitable qualifications and skills required to do the job they are being asked to do. Deputy Doherty made a fair point in asking whether we are now accepting a pretty cumbersome set of circumstances whereby, if a credit union found it did not have the correct range of skills required on its board, it would make an application to the Central Bank, which would decide on the position, after which a name would come forward that the bank would have to sanction. If this applies, it is because the credit union makes the application to the Central Bank on the basis that it feels it does not have the requisite number of people to serve the purpose in question because of a lack of skills or expertise. This gives the credit union the power to make the first move. However, Deputy Doherty's point is important in that it is a question of what happens next. This issue is one that the Central Bank needs to be mindful of in circumstances where it is trying to expedite an application on behalf of the credit union. Certainly, any help that the Department of Finance can bring to bear on the bank to speed up the process and putting in place a code of practice in this regard would make sense.
On the remarks made by Deputy Boyd Barrett, there have been many investigations into banking but we have not had a commission yet. What we have attempted to do is put the legislative requirements in place to deal with the issues concerning credit unions. Without wishing to reopen cans of worms, I am pretty happy that the Government has addressed virtually all the issues concerning the directors who were in place in the various credit institutions, whether we own them or not, and that the institutions have a new governance system in place with new staff who will, I hope, recover the banks on behalf of us all.
Seanad amendments Nos. 47 and 49 are related and may be discussed together.
A further minor technical amendment was made on Committee Stage in the Seanad to clarify that the secretary must inform the Central Bank that all directors intend to resign on the same day. Amendment No. 49 was made on Committee Stage in the Seanad to remove unnecessary wording in section 16. The secretary is a board member and, as such, is entitled to attend board meetings.
Seanad amendments Nos. 50, 56 to 60, inclusive, 62, 63, 67 to 72, inclusive, 84, 86, 88 and 89 are related and may be discussed together.
Amendment No. 50 was made to include the appointment of the risk management officer and compliance officer as one of the functions of the board.
The current wording provides for these appointments as functions of the manager. However, they are more appropriate to the board. The substantive change to the Bill before it was amended was that they related to the manager's functions, but we considered that they were more appropriate to the board. The deletion of subsections (4) and (5) is consequential on the acceptance of this amendment. These matters will be provided for in subsection (1)(e).
Amendment No. 51 was discussed with amendment No. 39 to section 15, while amendment No. 52 was discussed with amendment 34 to the same section. The amendment deletes the famous paragraph (p) as it refers to the requirements set out in subsections (12) and (13) of section 53. As these subsections are being deleted, the famous paragraph (p) is no longer required. A number of consequential amendments arising from the changes made to the functions of the board of directors in amendment No. 50 are also made.
Amendment No. 55 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 will maintain the reporting roles, but it will do so in a different way. It also provides that it is the role of the board to consider any update on financial statements provided for it by the manager and mirrors the provisions in section 63A(4)(c). The other amendments are minor technical amendments required to correct cross-references consequential on the amendments proposed.
The amendment deletes the word "either" from the sentence concerned as its inclusion is a typographical error.
The amendment sets out new provisions concerning the suspension and removal of directors of the board oversight committee. Issues arose during the debate in the Dáil about the procedure for the suspension and removal of directors, particularly in relation to the directors concerned being provided with written notification of the board oversight committee's reasons for taking action under this section. The Minister, on both Committee and Report Stages in this House, indicated his willingness to look again at these provisions and the amendment reflects the changes necessary in order to address the concerns raised by colleagues in the House. The amendment brings the procedure for the removal of a director at a special general meeting convened under this section into line with that for the removal of a director from office by members of a credit union which is set out in section 56 of the 1997 Act, thereby ensuring greater procedural consistency from one Act to the next. Under this section, the board oversight committee can suspend a director where it considers that a member has taken an action or decision which is not in accordance with Part IV of the 1997 Act.
Deputy Richard Boyd Barrett proposed an amendment on Committee Stage in the Dáil which was accepted by the Minister and provides that the board oversight committee is required to give written notice to the director setting out the reasons for its decisions before 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 that director does not resign 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 the suspension, rescind it or remove the director from office. The amendment provides, in a similar manner to section 56 of the 1997 Act, 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 Deputies in this House.
I thank the Minister of State for accepting the amendment. It is regrettable that the constituent who raised the issue with me is not in the Visitors Gallery, as he has been here to follow some of the proceedings on the Bill. I will not say this has been a labour of love for him, but it has been an issue he has been pursuing for many years. He has specifically sought to have the word "written" inserted in the Bill. The amendment allows for a clear and transparent record to be given of the reasons provided by the board oversight committee for suspending a director of the board. It spells out the steps for proceeding with such a suspension and how the person proposed to be suspended can state his or her case. This is a good amendment and I commend the Government for taking it on board.
A person raised a related issue which probably does not come under the Bill. That person believes there is not an adequate procedure in place for individuals to make a case to the regulator where there is a dispute over the rights and wrongs of a suspension and that there is a need for the Central Bank to ensure there will be a fair procedure in place all the way up the line to allow individuals to appeal a decision in a case if they are unhappy at any stage of the process. That there is now a requirement for reasons to be given in writing will at least ensure a level of transparency about decisions that might be made in this regard.
I welcome the amendment. I am sorry the individual in question is not here to see a little bit of his idea being enshrined in law. I am sure he will be very pleased, however, and that it will have the desired effect.
I thank the Deputy for raising this issue. Natural justice requires that people would receive this notification in writing. The point the Deputy highlighted comes from a genuine case where someone felt there had been some unfairness. The fact this is now incorporated in the law puts a standard there for all credit unions to follow. I congratulate the Deputy on doing that.
This amendment clarifies that the requirement which the bank may prescribe under section 66(C)(1) of the 1997 Act relate to the form and content of the compliant statement to be provided to credit unions.
Seanad amendments Nos. 76 to 83, inclusive, are related and may be discussed together.
Seanad amendment No. 76 ensures the secretary acts at all times in a manner free from conflict. Where a potential conflict is identified between his or her own interests and the interests of the credit union, the secretary must declare the nature of his or her interest in writing to the board and service notice of that conflict on the chair.
The other amendments are minor technical amendments and are consequential to amendment No. 76.
Seanad amendments Nos. 85 and 87 are related and may be discussed together.
Seanad amendments Nos. 85 and 87 delete references to the risk management officer or compliance officer having the necessary experience to manage the functions of their role. This does not need to be provided for here as these standards will be set out under the fitness and probity regime which was agreed with the Commission on Credit Unions. These measures will be rolled out in credit unions over time and will take account of the size and scale of the credit unions.
Seanad amendments Nos. 90, 92, 94 and 114 are related and may be discussed together.
These are technical amendments.
Seanad amendments Nos. 121 to 123, inclusive, are related and may be discussed together.
Seanad amendment No. 121 provides a more specific definition of “liquid assets”. Seanad amendment No. 122 clarifies the definition of “maturity mismatch”. Seanad amendment No. 123 ensures 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, ensuring that a one-size-fits-all approach is not taken and that the composition and maturity of a credit union’s assets and liabilities is also taken into consideration.
This is line with the commission's recommendations on a tiered regulatory approach. This was in the Bill as published but was mistakenly removed from the Bill as amended on Committee Stage in the Dáil. These amendments clarify the issue and, as I noted in the other House yesterday, make it clear that the tiered approach will not compromise small credit unions or those which have a different range of depositors. That is what these three amendments are for.
Seanad amendment No. 125 clarifies that sections 27B, 27G and 27H of the Central Bank Act 1997 continue to apply to the credit union auditor. These sections relate to the duties of auditors to provide reports to 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 emphasise that this amendment does not apply any new provisions to credit union auditors but simply reflects provisions which already applied.
An amendment to section 39 was made on Committee Stage in the Seanad to provide for the inclusion of a definition of stabilisation support in section 39. It refers to the definition of stabilisation support which already appears in section 62 of the published Bill.
Seanad amendments Nos. 127 and 128 are related and may be discussed together.
Amendment No. 127 was made on Committee Stage in the Seanad. It consolidates the provisions relating to the power of the Credit Union Restructuring Board, ReBo, power to carry our certain functions. The power to appoint staff is provided for in section 54. The power to organise meetings is also set out in section 50. As a result unnecessary references to this section and to the powers were removed by the amendment.
Seanad amendment No. 128 deletes section 44(3), which is not required because section 44(2) already provides that ReBo may do anything it considers necessary or expedient to enable it to perform its functions. We are clearing up these tasks with the amendments.
Seanad amendments Nos. 129, 146, 151 and 152 are related and may be discussed together.
These are technical amendments made on Committee Stage in the Seanad to provide for consistency in the references to what we refer to as "financial support" to be provided from the credit union fund under Part 3 and Part 4 of the Bill. The definition of "financial support" may take the form of a payment, loan, guarantee, an exchange of assets or any other type of financial accommodation or assistance. This is consistent with the Credit Institutions (Financial Support) Act 2008 and the Central Bank and Credit Institutions (Resolution) Act 2009. The amendments were made for the purposes of consistency.
I brought forward an amendment on Committee Stage in the Seanad to provide that the ReBo levy 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.
I brought forward an amendment on Report Stage in the Seanad to delete section 49 because the expenses of ReBo are to be paid out of the credit union fund. Section 49 is no longer required as a consequence and, therefore, I do not propose to include this section in the Bill.
Seanad amendments Nos. 132 and 134 are related and may be discussed together.
These are straightforward. Amendments Nos. 132 and 134 were made on Committee Stage in the Seanad to correct typographical errors.
Seanad amendment No. 133 provides that employees of auditors engaged by ReBo are subject to the non-disclosure of information provisions in this section. The 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.
Seanad amendments Nos. 135 and 136 are related and may be discussed together.
Seanad amendment No. 135 made on Committee Stage in the Seanad 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. 136 made in the Seanad makes the provisions relating to the appointment of the staff of ReBo consistent with those of the appointment of the chief executive of ReBo. Section 54 now mirrors the provisions concerning the appointment of the chief executive set out in section 53. Section 54(2)(a) restates section 54(2) 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 for Finance with the consent of the Minister for Public Expenditure and Reform subject to the Public Service Management (Recruitment and Appointments) Act 2004. Section 54(2)(b) as provided for in the amendment made in the Seanad sets out an alternative means of determining the terms of appointment of ReBo staff. These terms may be determined by the board of ReBo subject to the approval of the Minister for Finance with consent from the Minister for Public Expenditure and Reform.
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 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 with the agreement of the board.
Seanad amendments Nos. 138 and 170 are related and may be discussed together by agreement.
This amendment splits section 57(1) into two subsections to provide clarity on the effect of disclosure of information by ReBo on any duty of confidentiality or on any obligation under the Data Protection Acts. Section 57(1), as amended in the Seanad, provides that a credit union which discloses information to ReBo does not breach any applicable duty of confidentiality. The new section 57(2), created by that 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 ReBo for the disclosure of information.
Amendment No. 170 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 ReBo and facilitates the sharing of information between the credit unions and ReBo. ReBo will protect the confidentiality of the information shared under section 51 of this Bill.
Amendment No. 139 adds a number of purposes of the credit union fund to those already 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.
Seanad amendments Nos. 140, 141 and 143 to 145, inclusive, are related and may be discussed together by agreement.
Amendment No. 140 is a technical amendment which improves the consistency of terminology in this Part of the Bill by removing the references to "restructuring purposes" and replacing them with "the purposes of restructuring under this Part". Amendment No. 141 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 this section rather than requiring that 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. 143 is a technical amendment which updates the cross references to other sections of the Bill dealing with the provisions of restructuring and stabilisation support. Amendment No. 144 clarifies that the support referred to in section 58(7) is stabilisation support. Amendment No. 145 clarifies that the conditions referred to in section 58(4) are those attached by the Minister under section 58(6) to the provision of stabilisation support.
Seanad amendments Nos. 142 and 161 are related and may be discussed together by agreement.
This amendment provides that the Minister may provide stabilisation support to 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 this Act. Amendment No. 161 clarifies that the bank may request the Minister to provide stabilisation support in accordance with section 58(6).
On Committee Stage in the Seanad I brought forward an amendment to delete section 58(10). I also brought forward an amendment to section 60 of the Bill which provides the Minister with the power to make regulations prescribing the rate of contribution by credit unions to the credit union fund for the purposes of the provision of stabilisation support under section 58(6). Stabilisation support will be made available out of funds raised through this levy. Therefore, section 58(10) is no longer required and was deleted by this amendment.
Amendment No. 148 makes a minor amendment to the terminology used in section 59(1)(a) and provides for the keeping of "accounts of receipts and payments of the credit union fund" rather than "all proper and usual accounts".
Seanad amendments Nos. 149 and 153 are related and may be discussed together by agreement.
Amendment No. 149 corrects a typographical error. Amendment No. 153 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. 150 sets out the Minister's powers to make regulations prescribing the rate of contributions or method of calculating the rate of contribution to the credit union fund by credit unions in order to provide the credit union fund with sufficient funds for the provision of stabilisation support. Section 60(2) already provided that the Minister may make regulations prescribing the contribution to be made by credit unions to the credit union fund in order to recoup the cost of financial support provided for the purposes of restructuring. This amendment provides a similar power in relation to stabilisation support to be provided from the credit union fund. This gives effect to recommendation 8.5.8 of the commission report, which recommended that the necessary financing of the credit union fund for the purposes of stabilisation should be sourced from the credit union sector.
Amendment No. 154, which is in the definitions section of the Bill, was moved on Committee Stage in the Seanad. It changes the definition of "stabilisation support" to clarify that such support may include funding unrelated to the reserve requirements. Such funding may be used to update the systems and controls of the credit union and may also include the provision of financial and technical advice to the credit union. This was a recommendation of the Commission on Credit Unions as set out in paragraph 8.5.6 of the report.
Seanad amendments Nos. 155 and 156 are related and may be discussed together.
Amendments Nos. 155 and 156 were also made on Committee Stage in the Seanad. Amendment No. 155 amends subsection (2) by deleting the existing paragraph (b) which states that the Bank may only approve stabilisation support caused by a short-term, non-recurring event. Instead, amendment No. 156 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 can make that recommendation. This will ensure that the restructuring process and the stabilisation process are aligned.
Amendment No. 157 updates the citation of the Central Bank Acts, which are amended by Part 5 of this Bill.
Amendments Nos. 158 and 159 are related and may be discussed together.
These are two minor technical amendments that were made to this section in the Seanad. Amendment No. 158 clarifies that the support referred to in paragraph (c) is stabilisation support as opposed to restructuring support, while amendment No. 159 changes the reference from "this Part" to "this Act" as stabilisation support is to be provided by the Minister under Part 3 rather than Part 4.
Amendment No. 160 clarifies that the bank must have regard to the terms and conditions that the Minister considers appropriate to attach to the decision to provide stabilisation support when making a decision on the approval of stabilisation support to a credit union. A previous amendment gave the Minister the right and the power to attach terms and conditions and this is simply ensuring that the Bank will make sure these terms and conditions will apply. These terms and conditions will deal with issues such as recoupment, which may affect the Central Bank's assessment of viability.
I brought forward an amendment in the Seanad to delete section 67, which provided that the cost of stabilisation support and any other support, financial or otherwise, required as a condition of stabilisation support shall be met from the credit union fund. Any moneys recouped from a credit union in respect of support provided would be paid into the fund. This section was removed, as subsection (2) is covered by section 58(6) and 58(2) and is covered also by section 58(9).
“PART 5*
38 |
No. 23 of 2010 |
Central Bank Reform Act 2010 |
Parts 3, 4 and 5 |
"PART 4
PART 5
Seanad amendments Nos. 166 and 172 are related and may be discussed together.
Amendment No. 166 is a minor amendment made on Committee Stage in the Seanad which inserts a reference to section 37D of the Credit Union Act of 1997, which sets out the information to be included in the credit agreement notice to the credit union members. This item in the Schedule is required to ensure that there is consistency between the 1997 Act and the European Communities (Consumer Credit Agreements) Regulations 2010, which apply to credit unions. Amendment No. 172 clarifies that the supervisory authority referred to in item 100 is the Irish Auditing and Accounting Supervisory Authority.
Seanad amendment agreed to.
Under the previous wording of item 37, the Central Bank could exempt certain additional services which involved "no undue risk" to the credit union. Amendment No. 167 removes the reference to "undue risk" in respect of additional services that the Bank may exempt from the application requirements under section 47 of the Credit Union Act 1997. It was felt that this wording was too restrictive and could have limited the instances where the Bank could exempt certain services from additional requirements provided in that section. Following the amendment made in the Seanad, the Bank may exempt such services which would 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 Act2012 relating to the provision of stabilisation support under this Act.”. |
Amendment 171 made in the Seanad 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 this Bill. This is necessary to ensure that conditions imposed in return for financial support to keep the credit union afloat are enforceable. These could be called the troika conditions. This direction 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 that existed 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.
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.". |
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 |
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 |
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,”. |
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”. |
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). |
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Section 62(1) |
Delete “24A,”. |
Item (1) |
Provision affected (2) |
Amendment (3) |
1 |
Section 25(4) |
In paragraph (a) delete the definition of “appropriate person”. |
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”. |
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)”. |
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.”. |
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”. |
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,”. |
“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”. |
Agreement to Seanad amendments will be reported to the House and a message will be sent to Seanad Éireann acquainting it accordingly.
I thank the Deputies opposite for the constructive role they played at all Stages of this legislation. I hope the Bill, which passes this House today and will now go to the President, ensures the great Irish credit union movement, which is a standard-bearer of volunteerism and financial support, will continue to flourish in the years ahead. The Bill is consistent with the report of the commission in setting out new standards and a roadmap for the development of the movement. I also thank the officials of the Department of Finance who have worked day and night to ensure this Bill could be passed by the end of the year.