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Seanad Éireann díospóireacht -
Wednesday, 7 Apr 1976

Vol. 83 No. 19

Building Societies Bill, 1975: Committee Stage.

Sections 1 to 3, inclusive, agreed to.
SECTION 4.
Government amendment No. 1:
In page 5, line 39, to delete "by post in a prepaid registered letter" and insert "by ordinary prepaid post".

I recommend this amendment very strongly to the House. The section as drafted was based on a provision in the Housing Act, 1966, which calls for the serving of important statutory notices in certain circumstances. The requirement in paragraph (c) of section 4 that a notice sent through the post would mean that every notice convening a meeting of a building society would have to be either delivered to the person to be notified, left at his residence or forwarding address or else sent by registered post. This would be unduly expensive for societies and it is considered that ordinary prepaid post is adequate for the purpose, and I would ask the House to accept the Minister's amendment.

Amendment agreed to.
Section 4, as amended, agreed to.
SECTION 5.

I move amendment No. 2:

In subsection (1) (a), line 43, before "Minister" to insert "Registrar, with the consent of the".

Amendments Nos. 2 and 9 are related and may be taken together.

These amendments are in line with a number of other amendments which we have put down to this Bill and which are designed to ensure that the Registrar of Friendly Societies will be incorporated in this measure as the central administrator, both from the point of view of the policing functions and also from the point of view of monitoring the development of building societies, having regard to their financial investments, ratios, liquidity and the purposes for which funds are allocated.

In subsequent amendments we have suggested that the Central Bank should be incorporated. I would be willing to waive that. I am not insisting on that, that it be the registrar of building societies or the Central Bank, in this or any of the other amendments. I am insisting that—and a number of people who are concerned about this matter feel very strongly about it—the Minister for Finance, representing as he does the Administration, would be far better off from the Administration's point of view to be out of this sensitive area in the policing of building societies and in regard to monitoring their investments and revenues. It would be more valuable from the point of view of increasing the intake of investment not to have the Minister for Finance so directly involved.

The building societies have grown up in a very unusual way. I spoke on the Second Stage about the growth of building societies. They are now substantial, financial institutions with their own particular characteristics in our community and in the British community. It is important to remember that the British have legislation on this aspect as well, and it is since in operation. The Registrar of Building Societies in Britain is written into the Building Societies Act, 1962, in a key position. He may do A, B, C, D, E in the way of monitoring and policing building societies with the concurrence of the Chancellor of the Exchequer. That is a far better way to do it.

If the fundamental purpose of modern building society legislation is to attract more funds into building societies, there are other necessary objectives in the Bill to provide for the proper organisation of building societies, the sine qua non of the whole situation is to maintain the flow of investment; not just maintain it but enhance the flow of investment into building societies. They provide a unique and particular form of outlet for investors.

This fundamental purpose is in very great danger of being thwarted by having the Minister for Finance in the central position. We are talking about the sensitive area of money investment, of the highly sensitive area of investment in building societies which have built up their own particular reputations over the years. The Minister is now suggesting, in this section and in a number of other sections, to which we have put down amendments, that the Minister for Finance have this central position which we feel is wrong; wrong from the point of view of being insensitive to the delicate investment encouragement which is required and which, to put it bluntly, will not unfortunately be given to an organisation which appears to be bureaucratically controlled.

This is why our amendment on section 5 is very much linked with amendment No. 104 to section 85, where we seek to incorporate the registrar as a person of substance and importance who will have his own secretariat, his own expertise and administration available to him and will be in a position to police and monitor these societies. We suggest in amendment No. 104 that the registrar should be appointed by the Government and cannot be removed from office except on a motion passed by a two-thirds majority of each House of the Oireachtas and that the registrar should be provided with staff to enable him to carry out the duties and responsibilities conferred on him by this Bill.

We do not want the registrar to be a third-rate clerk in a backroom office. He should be an important, fundamental instrument for the purpose of this legislation. I do not think this legislation can be successful unless that is the Minister's approach. This amendment raises the fundamental theme which runs through all our amendments in subsequent sections. We seek to incorporate here "The Registrar with the consent of the Minister", that is, the Minister for Local Government in paragraph (a) and the Minister for Finance in paragraph (b).

In amendment No. 3 we have asked—although this is not strictly relevant to amendment No. 2—that the Central Bank be substituted for the Minister for Finance, but we are not insisting on that. What we want is an institution which is outside the Administration; an institution that has status and will be acceptable to investors and building societies; that will be seen to be apart from and independent of the Administration. That is why we suggest the registrar, in the amendment under discussion be incorporated in paragraph (a) of subsection (1) of section 5. I spent some time on this amendment, because, although the amendment probably does not warrant that much time, what I have said is relevant to practically every other amendment that stands in our name. We want to have enshrined in this legislation an authority—whether it is the registrar or the Central Bank—monitoring the building societies that will be apart from and seen to be apart from the administrative apparatus represented by the Minister for Local Government and the Minister for Finance.

I would like to support the amendment. My reason for this is that it flows from my view as expressed on Second Stage. The raison d'etre of that speech had to do with the fact that this whole area of the building society world is best left in the hands of those who understand it very well. The building societies, by the admission of the Minister himself, have done their job extremely well. If they are to continue to do the job extremely well, the greatest possible area of freedom for them is desirable. Everybody who has looked at this Bill —an extremely thoughtful, admirable and constructive Bill—has been in a sense worried about the fact that there is this extraordinary spread of ministries in regulating the activities of the building society.

Senator Lenihan, with whom I totally agree—I do not agree with the notion of giving it to the Central Bank but he is easy on that point anyway—has pointed out that in section 5 you have the Minister who is, of course, the Minister for Local Government and in paragraph (b) you have the Minister for Finance. Suddenly you have an accumulation, a confluence of ministries, closing in upon this area complicating and impeding the action of a group within our society who have been doing very well. The purpose of this Bill is to allow them to continue with their activities and to pursue them in an even more effective and admirable way.

One of the problems involved here —and I suspect it is one of the reasons why Senator Lenihan insists on raising this matter of section 5—is that the Government have generously and very intelligently yielded to a great number of suggestions on the Second Stage debate particularly with regard to section 37 and section 38. The Government amendments to sections 37 and 38 are clearly designed to give a far more central role to the registrar. If these amendments are to have their effect it is essential that section 5 be looked at again, because section 5 as it stands will subvert the intention of these amendments. Section 5 states:

(1) (a) Subject to paragraph (b) the Minister may make regulations prescribing any matter or thing referred to in this Act as prescribed or to be prescribed.

(b) For the purposes of Part IV, the Minister for Finance may make regulations prescribing any matter or thing referred to in that Part as prescribed or to be prescribed.

The proposed amendments to sections 37 and 38 are to give the registrar a very central and commanding role. They are both very admirable amendments and are framed so to make it possible for a registrar to allow this whole area of negotiation and calculation with regard to investments and loans to be regulated by a registrar. But as section 5 stands—in other words, if Senator Yeats' amendment is not allowed—the amendments to sections 37 and 38 will be called in question and in fact could be set at nought by the existence of the provisions in section 5.

May I urge upon the Minister Senator Yeats' formulation that "The Registrar with the consent of" be inserted. If that is found in any way repugnant I can assure the Minister that on Report Stage I will come around with another formulation to replace that. In other words, that must be amended before the Government amendments to sections 37 and 38 become meaningful.

The Senator will agree that the registrar would have no status to come before either House of the Oireachtas. The Minister would be responsible for the making of regulations. He would be responsible to both Houses of the Oireachtas. The registrar would not have that statutory position.

I see what the Parliamentary Secretary means. In other words, the Parliamentary Secretary is saying that in fact Senator Yeats' formulation—"The Registrar with the consent of"—is in fact legally inadequate? Is he saying that?

What I am referring to is the fact that the registrar would have no status whatever to come before either House of the Oireachtas in regard to regulations made by him if the amendment was accepted.

I see what the Parliamentary Secretary means. This is a very interesting point and worth dwelling on. If I understand the Parliamentary Secretary correctly he means that subsection (1) (a), as suggested to be amended by Senator Yeats, would be deficient in the following way: it would say that the registrar, with the consent of the Minister, may make regulations. The Parliamentary Secretary is saying that a registrar as such, not being a Minister, has no right to make regulations. Is that what the Parliamentary Secretary is saying?

An Leas-Chathaoirleach

If the Senator finished his contribution and we had a debate on it, it would be more orderly.

The Parliamentary Secretary seems to have a shrewd point. I think his point is that a registrar because he is not a Minister is in no position to make regulations. Is that the Parliamentary Secretary's point?

In other words, it may be necessary, therefore, to find another formulation in order to achieve the intention of this amendment. Am I right in interpreting the intervention of the Parliamentary Secretary on that?

You are not wrong.

In that case, I know at this stage it would be premature to deal with it. We have a Report Stage coming up. It might be possible to say something like this. I am speaking off the top of my head here. When the registrar, having made a direction in accordance with his powers under the Act—or something of that kind— requires a regulation to be made, he may apply to the Minister for the necessary regulation. That would perhaps be legally more congenial. Is the Leas-Chathaoirleach suggesting that this be left to Report Stage?

An Leas-Chathaoirleach

No. The Leas-Chathaoirleach is suggesting that the Senator make his point, the Parliamentary Secretary can answer and the Senator can come back on that.

I appreciate your position and yield with all due humility to your judgement.

If that formulation will not work— and it may not work in terms of legality—may I serve notice that I may be ready with another formulation when Report Stage comes around?

An Leas-Chathaoirleach

The Senator is quite at liberty to come back in again on Committee Stage.

Thank you very much, a Leas-Chathaoirleach. I would like to make the following point of principle in relation to section 5 (1) (a) and (b). They have this disadvantage. It is a philosophical disadvantage if you like to put it in that way. They bring into the arena two Departments of Government. The intention of the Bill is to make the building societies' service to our society more effective. That service to our society will be made much more effective if the entire area of their activity can be taken as far as possible outside of the political arena. In other words, I would wish that the Minister would divest himself of as much powers as possible reconcilable with the democratic process. That intention is made explicit in sections 37 and 38. But if the intention of the Minister to divest himself of unnecessary power in the matter is really sincere, then in order that the amendments to sections 37 and 38 should become effective a very close look has to be taken at section 5. Otherwise those amendments may be undermined by us not paying sufficient attention to what is there.

My idea is: let the building societies be governed by a non-political presence, by a registrar. In other words, get it as far as possible out of the day-to-day cut and thrust activities of Parliament. Perhaps the Parliamentary Secretary will come back and explain in more depth his objection to Senator Yeats' amendment. Having heard that, we may be in a better position to construct another amendment legally more satisfactory.

I feel there might be some confusion. The amendment tabled by Senator Yeats and moved by Senator Lenihan proposes that the registrar should make regulations applicable to building societies, but regulations under the Bill have to be laid before the Dáil and Seanad. Before they can be debated they must be laid before both Houses. The effect of these amendments would be to transfer to the registrar from the Minister the power of making regulations and prescribing rules. The two major aspects of building society business are (1) raising funds from investors, who must be given a return on their investment and confidence in its security, and (2) providing funds for home loan seekers. There are also the implications for the housing programme and for the economy as a whole because of the vast funds involved, this year over £80 million.

In drafting the Bill care was taken to try and strike a balance between these two somewhat divergent operations. The function of the registrar was seen and designed as an executive and supervisory one. It was not envisaged nor is it considered desirable that he should have to exercise policy functions. Policy functions must be the responsibility of the Minister. Furthermore the registrar's function must be of their nature seen to be orientated towards the investment side of the building societies' business; and open to the criticism that any regulations drafted and any rules prescribed by him would be in the interests of the society's management and their investors rather than in the interests of the home loan seekers and that of the movement as a whole.

It is again very clearly emphasised that the registrar must be an executive and must be the executive arm of control. Matters of policy must rest completely with the Minister—the Minister for Finance in relation to financial policies and the Minister for Local Government in relation to national housing policies. I recommend that these amendments be rejected.

I regret to hear the Parliamentary Secretary say that these amendments may be rejected by him. We recognise the Minister's interest in the building societies and his recognition of their work. We are anxious—we had this in mind when we put down these amendments—to try and help rather than hinder in any way. In one of the amendments when we mentioned the Central Bank it seemed at that time to be the correct choice. On consideration we feel it should be the registrar. Building societies are not banks and do not function like banks and for that reason may not be fully understood by banking people. As the Leader of the Opposition here has said, we are inclined to waive that and perhaps we could reach an area of agreement with the Minister.

All of us are anxious to produce what would be a good Bill. Much of the legislation dealing with building societies dates back to 1874. We feel we can offer suggestions and present points of view that may be helpful. We are concerned at the powers of control conferred by the Bill on so many authorities. There are too many people involved—the Minister for Local Government, the Minister for Finance, the Central Bank and the Department of Industry and Commerce. This could create a situation where differences of policy occur between Ministers. There could be differences in interpretation of a policy and this could create an atmosphere of uncertainty. It could affect decision-making and planning for the future and make things difficult for building societies.

The Parliamentary Secretary said that the registrar could not appear before the Houses of the Oireachtas to present his views. That could be amended to read: "The Minister, after consultation with the registrar, may make regulations as required".

This is one of the most important Bills that has come before the House. We are anxious to consult with the Minister in an endeavour to do what is best. We feel that there should be one central authority to deal with day-to-day matters which would have expert knowledge of building societies in such matters as ratios, investment and so forth. One central authority would be the best way of handling this. I hope the Minister will agree to what we have proposed.

It is important to spend some time on this amendment because its purpose is germane to a number of other amendments to the Bill and it would save time. I am not in disagreement with the purpose behind the amendment but I question if this is the right way to approach the problem.

We are dealing with a Bill to consolidate, amend and extend the laws dealing with building societies. We, the legislators, are going to decide how the building societies will be regulated and what form of laws will circumscribe them. We are doing that in the name of the people. That is as it should be. Flowing from that decision to enact a Bill, the right to make regulations governing all building societies should rest with the Minister and the Government. A further step— the one which concerns Senators who have spoken so far—is to ensure that in the ordinary management and running affairs of a building society ministerial or governmental interference would not inhibit the effective operation of the society, and that it should be free, under a registrar, to carry on its normal function which is basically to take deposits and to use them for lending by way of mortgage to those wishing to build houses.

I understand there is a fear among the building societies about excessive ministerial involvement. Three Ministers are involved at various stages of the Bill and they fear, first of all, that it may inhibit a person from lending money because he may feel that a ministerial direction may be given to use his funds in a way in which he would not wish them to be used.

We must look on this as two problems. It is not as simplistic as a number of these amendments—beginning with the one under discussion now— would suggest. The Minister and the Government must have certain powers of control. The registrar and the building society must have freedom to run the societies as they think best. Matters such as liquidity, proper reserves and day-to-day functions, which are all important to building societies, should be handled by the people themselves and they should be given reasonable freedom to do this. They should be handled by experts in the business.

I should like to hear the Minister's comments on this because at this stage it could save a lot of discussion and misunderstanding. Some Senators consider that the Minister has overriding powers of interference which might inhibit the effective working of the societies. If the Minister considers that we can put up a better argument I am sure he will be receptive to bringing in further amendments on Report Stage. He has not been niggardly with the number of amendments he has put already into the Bill, but what both sides of the House want to see is a good Bill to protect an important industry which is playing a significant part in providing, first of all, a safe haven for small savers and, secondly, money for the building of houses. How that can best be done, is what we want to achieve.

Are the Senators opposite dealing with amendments Nos. 2 and 9 or are we including the other batch of amendments?

We are on this amendment, which is relatively unimportant, but we are trying to open up a wider area. We are giving notice that we consider that there are certain aspects of the Bill which should be fairly radically changed. The real purpose of the amendment is to emphasise the fact that the registrar should be given far more power than he has in the Bill and that not only should he be given more power but, in accordance with one of the last amendments which has been put down, that he should be a more independent and powerful person.

The Registrar of Friendly Societies is probably not in a position to exercise the authority, to give the time and provide the expertise necessary to act as the kind of registrar that the mover of this amendment has in mind. It is true, as the Parliamentary Secretary pointed out, that there is a technical problem in so far as the registrar cannot make regulations. That function is confined to the Minister, but this is something that could be dealt with by saying that the Minister will make regulations in consultation with the registrar. It is a matter of the proper way of drafting it.

The positive side of it is that there should be a much more important registrar. The negative side is that it seems ludicrous, when we look at section 7 dealing with expenses, that provision has to be made for two different Ministers to have their expenses provided. In accordance with an amendment put down by the Minister, the Minister for Industry and Commerce is also going to have expenses paid. There will be three different Ministers trying to supervise the activities of the building societies. This is almost certain to lead to difficulties of one kind or another. One, they may not agree what exactly the rules and regulations should be. That in itself is probably going to lead to a situation where, rather than clash with one another, there will be a negative approach and regulations and rules which should be introduced simply will not be because it will be difficult to get agreement between the three Departments.

It all adds up to a situation in which there is a lot to be said for having a stronger registrar and less interference by three different Ministers.

I should like to comment briefly on what the Parliamentary Secretary said when he talked about the necessity of policy in relation to the conduct of the building societies being retained by the Ministers. Policy is a wide term. It would be undesirable that the Minister should be laying down policy from time to time about how the building societies should conduct their activities. I consider that this Bill should lay down how the building societies should be supervised. The registrar or the Minister concerned being the supervisory authority, it should stipulate what his powers are. It should say in what way he could control the societies. Having laid down the principles, having laid down the kind of control the authorities have, having provided for the making of regulations, the building societies should be allowed conduct their own affairs and to have their own policy within the confines, within the principles of the Bill. The suggestion that three Ministers will be saying from time to time what the policy of the building societies should be, is extremely undesirable. I hope it is not envisaged as being an important aspect of this Bill.

There seems to be a misunderstanding here. I am glad Senators opposite feel it is the duty of the House to enact the best possible Bill. This is the whole object of this type of legislation. I am glad we started off on that note.

The purpose of the Bill is exactly what Senator Russell suggests. The regulatory powers rest with the Minister and the day-to-day supervision of the societies is discharged by the registrar. Senator Ryan referred to the question of policy. It is the policy of the Government that building society money should be spent on houses. It was not the policy before I became Minister. I am not making a political point. This is where policy comes into it. Supposing there was a change of Government, the Government might decide it was no longer necessary to insist on the money being made available. Similarly the question of interest rates and the question of subsidies arise from time to time. It is not a question of three Ministers pushing each other out of the way so that one of them could get at the building societies to try to force them to do something. In fact, there are different functions under which each Minister will deal with the building societies.

It is the responsibility of the Minister for Finance to ensure the financing. The Minister for Local Government has responsibility in regard to housing. The Minister for Industry and Commerce only comes into it because the registrar is under the Department of Industry and Commerce. If there were a clash I suppose it would be decided at the Cabinet table. In no case can I see any danger or necessity for a clash. This is simply a question of the Ministers responsible for a particular section having that responsibility and, since they are answerable to the House, and the registrar is not, and could not be, there is no other way in which this can be dealt with, except having a political head who can be asked questions in Dáil Éireann which may relate to building societies.

We went to great trouble and we consulted with the building societies to ensure that everything would be right. I am not saying the building societies agree with everything in the Bill. They did not violently disagree. In some instances they felt things might be done in another way. The Oireachtas has to decide what is best for this Bill, which is the first of its type in over a hundred years here. There is no other way. We are, in fact, changing the whole basis. If we are dealing with all the amendments—as we appear to be—the proposal in all but one of the amendments by Senator Yeats appears to be to substitute the Central Bank for the Minister for Finance where appropriate. The remaining amendment, my amendment No. 48, proposes to introduce a new subsection instead of the existing subsection (3) of section 38. In drafting the Bill, it was considered important to differentiate as between policy and executive matters where controls were necessary.

An Leas-Chathaoirleach

Might I interrupt the Minister? We are getting confused. The House, as I understood it, agreed to discuss amendments Nos. 2 and 9 which relate to the registrar, and which brought in a central theme of the registrar. Amendment No. 3 deals with the Central Bank and does not arise yet. I know the Minister interrupted at one stage and mentioned this point. Senator Russell said it would save time if we could deal with this power of the registrar versus the Minister. I want to keep everybody clear on exactly how far we are going. It might be better if we dealt with the question of the Central Bank when we come to amendment No. 3 to which a whole number of amendments are related.

Thank you. If that is the intention that is all right. I assumed from the reply I got to the question I asked that, since they were all interrelated to a certain extent, they should be dealt with together.

I think we could take them together.

An Leas-Chathaoirleach

I do not want an argument. We have Nos. 2 and 9 related. Nos. 3, 5, 12, 18, 22, 27, 40, 43, 44, 45, 47, 48, 49, 50, are all related. If the House agrees, and it is more convenient for everybody, we can agree to take them all together.

I suggest we should.

I have no objection.

Senator E. Ryan referred to "our objection". That does not necessarily include me at all. I am not a member of the Fianna Fáil Party.

Is this a point of order? I was making a statement. If it is a point of order I will give way.

An Leas-Chathaoirleach

I interrupted to clarify the position. It is a point of order Senator Martin is raising.

It is a point of order. On Committee Stage one can speak several times. If the Minister wishes to speak I will yield to him. I reserve the right to answer him.

An Leas-Chathaoirleach

There is no question of anybody being denied the right to speak.

An Leas-Chathaoirleach

We had better let the Minister continue unless it is a point of order Senator Martin is raising. The Senator will have the right to speak when the Minister concludes as have other Senators.

I should like to make it clear that I did not interrupt the Minister.

An Leas-Chathaoirleach

I interrupted the Minister. That is quite clear.

If the Minister wishes to continue——

An Leas-Chathaoirleach

I understand we are now taking amendment Nos. 2 and 9 which are related and amendment No. 3 with the whole group that goes with it.

On a point of order. There are two groups: one dealing with the substitution of the registrar for the Minister and the second group deals with the substitution of the Central Bank.

An Leas-Chathaoirleach

I take it these two groups are being taken together.

I am willing to waive the various amendments dealing with the Central Bank instead of the Minister for Finance provided the registrar is brought in in that situation. That is the fundamental principle that we have and it runs right through what we are now discussing and through the long group of amendments referred to by the Leas-Chathaoirleach from No. 3 to No. 50. The central principle there is: however it is done, from the point of view of investment in the building societies, of attracting the sort of funds that they have been attracting recently and we hope that they will continue to attract to a greater degree, it is important to ensure that the status and standing of the registrar as being apart from, and independent of, the Administration be written firmly into the Bill. If that means the Central Bank going, I do not mind. I would have the registrar instead of the Central Bank, provided the registrar or somebody apart from the Administration is written in, in a central position.

An Leas-Chathaoirleach

It would be better to let the Minister continue after a rather lengthy interruption from the Chair and many other Members of the House.

Senator Ryan said he wants a very strong registrar. This might not suit the societies. They might not know the reasons for what he was doing or might lack any adequate appeal against his decisions. In addition, the registrar is in a much stronger position than he is, for instance, in the UK, where he is not as strong as we are making him and he can do very little without the permission of or consultation with the Treasury. That rather alters the position.

To answer Senator Lenihan's comments, as I see it the effect of the amendment would be to transfer to the registrar from the Minister the power of making regulations and prescribing rules. There are two major aspects of building societies— this was stated by the Parliamentary Secretary—that of raising funds from investors who must be given an attractive return on their investment and confidence in its security on the one hand, and that of providing funds for the home loan seeker on the other hand with whom must be coupled the implications for the housing programme and the economy as a whole, of the investment of the vast funds involved, over £80 million this year.

In drafting the Bill great care was taken to try to strike a balance as between these two somewhat divergent operations. The function of the registrar was seen and designed as an executive and supervisory one. It was not envisaged, nor is it considered desirable, that he should have to exercise policy functions. Furthermore the registrar's functions must, of their nature, seem to be orientated towards the investment side of building society business and open to the criticism that any regulations drafted and any rules prescribed by him would be in the interests of the societies' managements and their investors rather than in the interest of mortgagors and home loan seekers and of the movement as a whole.

In fact, if we did what is suggested, we might find ourselves having a registrar who would be in an impossible position. He would be asked to do two things which are almost directly opposed to each other. He would suffer criticism. If he was too severe on the societies they could not appeal against him. Secondly, if he did something which a Member of the House felt required to be questioned, he would not be answerable to the House for it. We felt, therefore, the proper way would be to deal with it in the way in which we suggested.

Let me emphasise that there is no question of three Ministers plus a registrar in competition. There is the registrar, who has his own distinctive job to do. There is the Minister for Finance, who has his job to do with regard to finance and the trustee status. There is the Minister for Local Government, whose function it is to look after the housing end of it, and that is very important. The Minister for Industry and Commerce is answerable on the question of the expenses, and so on. In fact, there are only two Ministers involved and those two have two distinctive operations.

In drafting the Bill it was considered important to differentiate as between policy and executive matters where controls were necessary. For this reason powers to make regulations which, in almost all cases, were considered to involve overall policy as well as executive considerations were given to either the Minister for Local Government or the Minister for Finance. In so far as the position of the Central Bank is concerned the following points are pertinent.

The Central Bank Act, 1971, was debated at considerable length by the Oireachtas within the past five years. It set out in detail the statutory functions of the Central Bank in relation to banking business. It specifically exempted, in section 7 (4), building societies, and certain other institutions which carry on financial business, from the requirement that the societies or the other institutions hold a licence under section 7 (1).

The Act's only requirement in so far as building societies, industrial and provident societies, credit unions, investment trust companies and unit trust schemes were concerned was that they furnish information and returns to the Central Bank mainly for statistical purposes. The intent was obviously to keep separate the banking and other financial business sectors. It is important to remember that the banks and the societies are in strong competition for investment funds.

To agree to the proposals of Senator Yeats would be to alter the principle of the Act and to extend considerably the powers of the Central Bank beyond those contained in the Act to become an independent supervisory body for not only banking business but also for the banks' major competitors—the building societies. In doing so, it is difficult to perceive how the Central Bank could be expected to give due regard to matters of overall economic housing import of which it would have little experience or expertise. Furthermore, the Central Bank's first responsibility would be to the banking institutions and the building societies would not be happy that its decisions were not coloured by this commitment to their major competitors.

The further effect would be that the supervision of the societies would be shared in the main by two non-ministerial agencies, the registrar, and the Central Bank. Senator Lenihan said one of them would do. Both areas of supervision would be generally independent of ministerial control and could be said to be almost wholly orientated towards the interests of the investor rather than the mortgagor, which is what I said a moment ago.

In drafting the Bill great care has been taken to strike a balance as between the two principal aspects of building society business, the security of the investor and the interest of the house-purchasers and of the economy as a whole in the provision of funds for housing finance.

It is considered that this balance will be kept by the exercise of ministerial control—mostly involving both the Minister for Local Government and the Minister for Finance. The Minister for Finance is responsible for the overview of all the economic and monetary factors of the economy and the Minister for Local Government is responsible for housing in all its aspects. Executive management will be by the registrar, who will develop experience and build up an expertise in this field. Consultation with the Central Bank will be sought in those areas where expertise in monetary financial matters will generally be necessary.

Because of the size of the contribution made by the societies as the custodians of a substantial proportion of the people's savings, it was considered appropriate to introduce a statutory relationship with the Central Bank. In section 20, there is provision for lodgment of a deposit, with the bank. Sections 37 and 38 provide for consultation with the Central Bank in the matter of ratios and prescribed investments and the issue of Central Bank reserve bonds.

Building societies are by their nature an unique type of institution in that the investment of the funds lodged with them serves a specific and very important function in the economy. They at present provide at least half of all mortgage funds available for housing in the private sector and it is considered very important to ensure, in the prudent management of these vast funds, that overall control is properly exercised and balanced policy-wise as between the interests of investors and home loan seekers with due regard to any implications for the overall national housing programme.

In the debate on the Second Stage reference was made to the fact that neither the Department of Finance nor the Department of Local Government had the expertise necessary to understand the highly technical details of building society operations. Senator Martin made that comment. It could, of course, be just as strongly argued that the expertise of the Central Bank could be related to the financial and monetary matters only and that, in the framing of regulations and the other functions to be the responsibility of the Minister for Finance, account would have to be taken of wider issues—for example, implications, if any, for economic and housing programmes.

Apart from these considerations, it is not considered that there is any lack of expertise in the Departments concerned. A considerable body of experience and knowledge has been built up on all aspects of building society business. Furthermore, Ministers of all Departments of State have to make judgments and decide policy matters on far more complicated affairs and their advisers in the civil service have to acquire the necessary experience and expertise.

In any event, the proposal in the Bill is that the Minister for Finance would consult the Minister for Local Government, the registrar and the Central Bank which would ensure that a wider spectrum of advice would be available than if the procedure as proposed by the Senator were adopted.

Another consideration is that, in connection with the grant of trustee status on deposits with building societies, it is a matter for the Minister for Finance to lay down conditions including conditions related to liquidity and reserve ratios. Preliminary agreement has been reached on the matter of trustee status between the principal societies and the Minister for Finance. In view of the importance of trustee status to the societies, it is considered that the setting of ratios should rest primarily with the Minister for Finance.

The amendment in this group in the name of the Minister is No. 48, which proposes to substitute for the existing subsection 38 (3) a subsection that will enable the registrar rather than the Minister for Finance to set limits as to the proportion of surplus funds held in various types of investments. Under subsection (1) the Minister for Finance, after consultation with the Minister and the Central Bank, will prescribe the investments in which a society may invest their surplus funds. The registrar's powers will be exercised within the confines laid down by subsection (1).

The purpose of the amendment is to give the executive function of fixing limits to the registrar once the policy decision in the matter has been laid down by the Minister for Finance under subsection (1).

In view of those facts, there is no question of the registrar being able to exercise the functions on his own. The Minister for Industry and Commerce is only concerned because the registrar comes under his Department. The Minister for Finance and the Minister for Local Government have separate functions and they would consult with the registrar on one or two particular issues. I think the House should accept amendment No. 48 and withdraw the other.

One point, and I will make it brief. I will put this to the Minister in terms, not of an argument, but of a plea. It seems to me that the amendment as put down is legally invalid. What I would be concerned with is that the Minister's interest in increasing the role of the registrar is evident in all the amendments he has accepted. It is particularly salient in his amendments to section 37 and section 38. His goodwill in this matter is crystal clear. In section 5 the registrar is not mentioned. Whereas the formulation in the amendments will not stand up to legal scrutiny, perhaps some formulation of this kind might be better. I have just jotted it down since I came in. What I want to do is to get the office of the registrar inserted in section 5, perhaps in the following way: "When the registrar, having made a direction in accordance with his powers under the Act, requires a regulation to be made, he may apply to the Minister to make the necessary regulation."

I take the Senator's point.

This would enable the role of the registrar to be established earlier in the Bill, particularly in terms of this section of the Bill. That would seem to be in perfect harmony with the amendments the Minister has in mind for sections 37 and 38.

I feel that is not necessary. I would assume that the Minister would, if he thought it necessary, consult with the registrar. But I do not think it should be written into the Bill that it is mandatory on him to consult, because there are matters involved on which the registrar would not have even an opinion to offer. It would be unfair to him to make it mandatory that he should have to be consulted on matters in section 5.

My formulation does not amend that. It merely says that when the registrar, having made a direction in accordance with his limited powers under the Act, requires a regulation to be made, he may apply to the Minister for the necessary regulation. There is nothing mandatory on the Minister but the registrar, when he makes the ordinary day-to-day kind of directions, may apply to the Minister to have a direction made. I would like to have the office of the registrar present in that section.

I presume such consultation will take place but I do not feel it should be put in, in the way suggested. The section adequately covers it. I have a thing about putting additional words in a Bill which are unnecessary and this is one case where it would be unnecessary to include them. I take Senator Martin's point but it is adequately covered, as he will see as the Bill goes on.

My feeling is that with a Minister as affable, as genial, and as accommodating as the present Minister, there is no need for it, but God knows who will come in his place later.

It will be a long time.

The basic question centres around sections 37 and 38 and later on sections 77 and 78. The Minister has gone some of the way on amendment No. 48 to section 38. He has brought the registrar into a central position there, after consultation with the Minister for Finance and the Central Bank. What we are saying here in regard to incorporating the registrar is much more pertinent to later amendments and in particular to our amendment No. 104 to section 85 in which we give the registrar a status where he has to be appointed by the Government and cannot be removed from office except on a motion passed by a two-thirds majority of each House of the Oireachtas.

An Leas-Chathaoirleach

The Senator has now gone on to another group of amendments.

Senator Lenihan is right.

It does not arise.

He is signalling.

I propose to withdraw amendments No. 2 and 3 and we can have this debate more appropriately on later amendments.

An Leas-Chathaoirleach

The debate on amendment No. 3 is related to all the other ones I read out.

I can appreciate the point of view expressed by the Minister but I should like to emphasise again that there are three agencies involved. He has explained that Industry and Commerce comes into it because the registrar will be under the supervision of that Department. Having the Minister for Finance involved in this is senseless when you are talking about people investing money. It is a very sensitive area and beyond that I do not want to say very much. We would all like to see more saving and more investment so that there would be more money available for more houses.

The registrar will be frequently in consultation with the Central Bank. This will create a lot of uncertainty within the building societies. We could avoid all that. There is an area of agreement which could be reached, because obviously the House wishes to do what is right for the investor, the borrower and the building societies in general. When we talk about building societies we are speaking about organisations which have a very honourable history. They have done so much for the country in catering for the investor and borrower. They have played a marvellous part in the building of our society. We may or may not reach this agreement across the floor of the House, but this will be continued in tomorrow's debate. Perhaps, through consultation agreement might be reached. We do not want to delay the House unnecessarily; we just want to put forward our arguments.

I am sorry, I wish I could agree. If Senator Hanafin feels that consultation would change his mind I will prepare a consulting room. We have gone very fully into this matter and as a result of comments made on Second Reading and further discussion with the building societies we reached what I would consider as the bare minimum. There is no intention—and the building societies accept this—either on the part of Finance or Local Government to interfere unduly in their affairs. It is only fair to say that any Government which would interfere would want their heads examined. I honestly believe that this regulation inserted here is the minimum acceptable. There would not be any point in trying to change it. If there was I would say so immediately, because there is no point in objecting to something for the sake of objection. I accept that the Members on the opposite side think that.

I am not saying that. The Minister says neither of these two Departments will interfere, but the only thing the Minister can say is that he will not interfere.

I said any Government would be foolish to interfere.

The fact is that they can interfere.

In what way?

There could be different policies between Ministers. There are three Ministers involved in this case.

I accept that. There is Finance and Local Government, and there could be a difference in policy between the two Ministers; there could be a difference in interpretation of policy.

No, there could not be. A matter of this importance would have to be decided by the Cabinet. If I felt one thing and the Minister for Finance felt a different interpretation of the same thing and we could not reach agreement, the matter would be cleared by the Cabinet. I would assume the same procedure would be adopted by any Government. On policy matters such as this differences that occur between Ministers must be cleared at the Cabinet table. That is an entirely groundless fear.

Perhaps. I am not too sure.

As I understand it— I hope I am not misinterpreting what I understand to be the views of some of the building societies—they pursue what most would regard as a sound conservative policy. They offer, from time to time at the insistence of the Government, attractive rates mainly to small savers. They operate on a very narrow margin, something like 1½ per cent, on which no other banking or lending institution could operate. To give them their due, I think the Minister would agree that they operate effectively on a shoestring. They lend to what they regard as sound borrowers to build good house property which is the backing for the mortgages they give out. They are concerned that, perhaps through some ministerial whim or some desire on the Minister's part to push the building of houses as a matter of policy, their choice of policy or decision in that field might be interfered with.

In what way?

In other words, because of pressure to build houses at all costs, rates of liquidity and proper reserves might be interfered with: their normal conservative policy might be interfered with by governmental or ministerial intrusion into their day-to-day affairs. As I understand it, that is the fear being expressed by some building societies to me. I put it forward because we should be frank and put our cards on the table in order to get the Minister's assurance that these fears are groundless. The Minister said that any Government that interfered with the successful sound policy of building societies over the years should have their head examined. I agree with him in that regard, but if the building societies want any further assurances not contained in the Bill I feel sure the Minister would be prepared to give them. That is one of the fears which was expressed to me. I do not know if other Senators had similar fears expressed to them.

It is agreed the Government, through the Minister, must make the regulations, but within the framework of those regulations the building societies should continue to pursue their own policies, which they believe are in the best interest of depositor and borrower.

Yes. I can understand Senator Russell. I would be glad of any way in which these matters can be brought to light. I thought I knew what the building societies wanted, but Senator Russell says they want something else. The regulations must come before both Houses of the Oireachtas.

We withdraw the amendment. We are withdrawing the amendments to section 5, that is, amendments Nos. 2, 3, 4, 5. We will take it section by section from there.

Amendment, by leave, withdrawn.
Amendments Nos. 3 to 5, inclusive, not moved.
Question proposed: "That section 5 stand part of the Bill."

I want to make one point on subsection (3). Assuming that none of the changes which we should like to see in this section are eventually passed, there seems to be a drafting point where the Minister is referred to in line 3 of subsection (3):

such ... transitional or supplementary provisions as may appear to the Minister making the regulations to be necessary...

I presume that is intended to cover either one of the Ministers, but as Minister is defined as being the Minister for Local Government, it could be argued that it does not cover the Minister for Finance.

It empowers the Minister to make any regulations necessary to give full effect and so on. It is a standard transitional provision and is similar to the provision in section 28 of the Local Government (Planning and Development Act), 1973, as passed by Dáil Éireann. Either Minister could be taken.

Could it not be a small "m"?

A Senator

It could be a small minister.

I am not pressing the point.

Question put and agreed to.
Section 6 agreed to.
SECTION 7.
Government amendment No. 6:
In page 6, between lines 28 and 29, to insert the following subsection:
"(3) The expenses incurred by the Minister for Industry and Commerce in the administration of this Act shall, to such extent as may be sanctioned by the Minister for Finance, be paid out of moneys provided by the Oireachtas".

As the Minister for Industry and Commerce will have certain functions in relation to the administration of the Act, arising out of the fact that the registrar is an officer of his Department, it is necessary to provide for the expenses of that Minister.

The proposed amendment is the standard type of provision.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 8.

I move amendment No. 7:

To add a new subsection as follows:—

"(2) A society shall have trustee status".

It may be argued that this is not necessary. Section 37 makes it fairly clear that the society do have trustee status. The purpose of this amendment is to either write that into the Bill, or to at least ask the Minister whether he is satisfied and to elaborate on whether or not it is necessary.

Section 1 of the Trustee (Authorised Investments) Act, 1958, specifies the investments which are trustee securities. Section 2 of that Act authorises the Minister for Finance to vary by addition or deletion the list of such securities. In conferring trustee status on deposits with building societies the Minister for Finance would include these deposits in the list of deposits under subsection (1).

Under the powers conferred by the Trustee (Authorised Investments) Act, 1958, trustee status can only be conferred on investment bodies which attain certain qualifications. The Building Societies Bill could not be used to override the provisions of that Act particularly with a blanket provision conferring the status on all building societies without regard to their size, financial standing, assets, liabilities, liquidity and reserve ratios and so on.

It is agreed that it is important, both for the trustees and for those building societies who can become eligible for this purpose, that trustee status should be conferred on qualified societies. The matter has been under continuing consideration and considerable progress has been made in clearing the way. It is expected that a number of provisions in the Bill when enacted will remove the last obstacles in so far as a number of societies are concerned.

Amendment, by leave, withdrawn.
Section 8 agreed to.
Section 9 agreed to.
SECTION 10.
Government amendment No. 8:
In page 7, line 29, after "resolution" to insert "(including a special resolution)".

The purpose of this amendment is to provide that the rules of a society shall specify the manner in which notice of any resolution, including a special resolution, to be moved at a meeting of a society is to be given to the members.

Special resolutions—section 56— are a new concept in building society legislation and it is desirable that the rules clearly make provision for the manner in which notice of such resolutions is to be given to members.

Amendment agreed to.

I move amendment No. 9:

In subsection (3), line 1, to delete "Minister" and substitute "Registrar".

Amendment No. 9 is on very similar lines to amendment No. 2, but this time there is an opportunity for the Minister to make a concession. The original objection to amendment No. 2 was that a registrar could not make regulations, that he would not have the statutory authority. In this case only rules are referred to and the rules are of a less far-reaching nature. They seem to be the kind of rules which it would be appropriate for the registrar to make. Under these circumstances, and in line with our general approach, the registrar, in so far as possible, should be given more importance and the Minister should not be brought into the picture unless it is absolutely necessary. In this case it would be appropriate and possible for the registrar to make these rules without the help or consent of the Minister.

I am a little bit confused. I thought that amendments No. 2 and No. 9 had been withdrawn. We discussed them together and I understand that they had been withdrawn.

No, only the amendments under section 5 are withdrawn.

Subsection (3) enables the Minister "to prescribe rules, either generally or by reference to a specified class or classes of rules or societies, denoted by reference to such matters as the Minister may consider appropriate." It is worded in such a manner as to give wide flexibility to the Minister in his implementation. The purpose is not to prescribe a set of rules for all societies but to prevent the inclusion and secure the deletion of undesirable rules. I think it is necessary.

Amendment, by leave, withdrawn.
Government amendment No. 10:
In page 8, line 1, after "rules" to insert "in respect of a matter referred to in subsection (1)".

Subsection (1) specifies the matters which must be covered by the rules of the society.

Subsection (3) empowers the Minister to prescribe the rules of a society, either generally or by reference to a specified class or classes of rules of societies.

It is the intention that the only rules which could be prescribed under the subsection would relate to matters to be included under subsection (1). It is not intended that the Minister would prescribe other rules. The purpose of the amendment is to make this clear.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 11.
Government amendment No. 11:
In page 8, line 54, before "the Minister for Finance" to insert "the Minister,".

This is to provide that the Minister for Local Government is among the persons to be notified of the registration of rules and incorporation of a new society.

Amendment agreed to.

I move amendment No. 12:

In subsection (5), lines 54 and 55, to delete "the Minister for Finance and".

The effect of this is to substitute the Central Bank for the Minister for Finance. As a result of the earlier debate, whatever our views are about substituting the registrar for the Minister, we consider that substituting the Central Bank for the Minister for Finance is not a good idea, so the amendment is withdrawn.

Amendment, by leave, withdrawn.
Section, as amended, agreed to.
Section 12 agreed to.
SECTION 13.
Government amendment No. 13:
In page 9, line 44, after "register" to insert "under subsection (3)."

The insertion of "under subsection (3)" is to keep the section in line with the wording of other sections containing similar provisions, such as section 12 (6).

Amendment agreed to.
Section, as amended, agreed to.
Section 14 agreed to.
SECTION 15.
Government amendment No. 14:
In page 10, between lines 50 and 51, to insert the following:
"(3) The use by a society, in addition to the registered name of the society, of an abbreviated version of that name, shall not be a breach of the provisions of this section."

The section requires that a society shall not use any name or title other than its registered name, that it shall display the name on its offices, have it engraved on their seal, and mention the name in letters, notices and so on.

It has been pointed out that some societies use the initials of the registered name—EBS and ICS for instance—on notices and so on and that such use would be in breach of the requirements of the section. Provision is accordingly made in the amendment for the use of an abbreviated version in addition to the registered name.

The amendment is based on section 114 (5) of the Companies Act, 1963, which deals with the use of the abbreviation "Ltd." for "Limited" by registered companies. The IBSA indicated in discussion that they were not seeking the use of the abbreviated version other than in connection with the full registered name.

Amendment agreed to.
Section, as amended, agreed to.
Section 16 agreed to.
SECTION 17.
Government amendment No. 15:
In page 11, line 24, to delete "or in arrear" and insert "and in arrear".

The purpose of this amendment is to clarify the liability of an investing member in a society. Normally the liability of an investor is limited to the amount actually paid. Where an investor is paying for his investment by way of instalment, the extent of liability is limited to the amount he is required to have paid on foot of the instalment arrangement.

As drafted, it could be construed that the liability will extend only to any arrears of instalments outstanding at the time of liquidation or winding up. The amendment will ensure that liability will extend to the amount already paid and to any instalment due but in arrear at that time.

Perhaps it is unfair to ask the Minister, because it is a drafting point, but why not just delete "or" and substitute "and"?

It could be done but it was felt it would be clearer as proposed.

Amendment agreed to.
Government amendment No. 16:
In page 11, to delete lines 28 to 31 and insert the following:
"(5) A person under the age of twenty-one years may be admitted as a member of any society the rules of which do not prohibit such admission and can give all necessary receipts, but while he is under that age he shall not be entitled to vote or to hold office."

The purpose of this amendment is to substitute "a person under the age of 21 years" for the word "minor". "Minor" has no legal connotation.

It is probable that if the law relating to the age of majority were changed, a provision would be included in that legislation which would apply generally and so render unnecessary an amendment of this subsection to keep it in line with any such change.

Amendment agreed to.
Government amendment No. 17:
In page 11, to delete lines 32 to 49.

Subsections (6) to (9) inclusive make provision, in the case of refusal of membership, whereby a society is required to furnish an explanation in writing of the reasons for refusal and also provides for an appeal to the District Court. These provisions are based on section 5 of the Credit Union Act, 1966.

The right of an applicant to obtain the reasons for refusal of membership has been reconsidered. In the Credit Union Act one of the fundamental criteria in establishing a union is the existence of a common bond of association, such as occupation, residence or employment within a particular locality, employment by a common employer or membership of a bona fide organisation. It is reasonable that a person applying for membership of a credit union should be informed of the reasons in the event of refusal of membership, because there are specific criteria for membership and if he satisfies these criteria he has a grievance if he is refused membership.

This is not the case in relation to a building society. There are many justifiable reasons where a society might wish to refuse membership and not wish to give reasons for refusing. A person might wish to invest a large amount of money which the society might have reason to think would be withdrawn within a very short period, during which they would not be able to issue it in mortgage or obtain sufficient return on it elsewhere. There might be a suspicion that the money was acquired illegally or the property of a subversive organisation. There could also be the case where the society considered that the person wishing to become a member was not in the full possession of his or her faculties mentally.

Societies are aware of a practice by which certain persons endeavour to invest very small amounts in each of the principal societies for the purpose of making trouble at meetings. It would be harmful for the movement to give disgruntled applicants for membership the right to reasons for refusal and to eventual appeal to the court, with the adverse publicity this would entail. The possibility of a society being forced to accept a person as a member in this way would also be invidious.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 18.

I move amendment No. 18:

In subsection (1) (a), to delete "Minister" in lines 40 and 42 and substitute "Registrar"; and to delete "Minister for Finance" in lines 40 and 41 and substitute "Central Bank".

The first part of it is still live as far as we are concerned. It is another situation in which it appears to us that this function could be carried out by the registrar and that there is no necessity to bring the Minister into it. I realise that it refers back to regulations made by the Minister so that, to that extent, it has already been decided. As far as the second part of the amendment is concerned, I am not pressing it.

Amendment, by leave, withdrawn.
Government amendment No. 19:
In page 13, line 13, after "26 or 27" to insert the following:
"or a member who had subscribed for the shares referred to in subsection (1) becomes disqualified under this Act or dies."

The purpose of the amendments Nos. 19 and 20 is to modify the requirement that the founders' shares shall not be repaid during the period of five years. As drafted, the section permits repayment only where the society is wound up or transfers its engagements. It is now proposed to permit repayments where one of the founders is disqualified or dies. Disqualification would arise if he became bankrupt.

Amendment agreed to.
Government amendment No. 20:
In page 13, between lines 13 and 14 to insert the following:
"(4) Where a member referred to in subsection (3) becomes disqualified or dies, either—
(a) the remaining members who subscribed for the shares referred to in subsection (1) shall within the period of 30 days after the disqualification or death pay to the society sums in cash equal in the aggregate to the sum subscribed by the member becoming disqualified or dying, and shall be issued with shares in the society to the value so subscribed, or
(b) another person may subscribe in cash for, and be issued with, shares in the society to a value not less than the sum subscribed by the member becoming disqualified or dying,
and the provisions of subsection (2) shall apply to shares issued under this subsection."
Amendment agreed to.
Government amendment No. 21:
In page 13, between lines 40 and 41, to insert the following:
"(8) For the purposes of this section, the shares referred to in subsection (1) shall be deemed not to be shares issued under section 22."

Subsection (1) prohibits a society incorporated on or after 5th December, 1975—or a society incorporated prior to that date but which has not commenced to carry on business at that date—from exercising any power under section 22 unless written evidence has been produced to the registrar satisfying him inter alia that the founders of the society have been issued with shares to such value as the Minister may prescribe. Section 22 (1) empowers the society to raise funds for the purpose of the society by the issue of shares. The purpose of the amendment is to ensure that the founder shares are not regarded as shares issued under section 22 (1). If they were to be so regarded, the issue of the founders' shares would also be prohibited under section 18 (1).

Amendment agreed to.
Section, as amended, agreed to.
SECTION 19.
Amendment No. 22, not moved.
Section agreed to.
SECTION 20.
Government amendment No. 23:
In page 14, to delete lines 48 to 50 and insert the following:
"(2) (a) The deposit under this section shall be such amount or such proportion of the total value of shares and deposits as the Minister, after consultation with the Minister for Finance, shall prescribe but shall not be less than £20,000 nor more than £500,000.
(b) Different amounts or different proportions may be prescribed for different classes of societies, denoted by reference to such matters as the Minister, after consultation with the Minister for Finance, may consider appropriate."

As drafted, subsection (2) provided that the amount of deposit to be lodged in the Central Bank would be 5 per cent of the total value of the society's shares and deposits and not less than £20,000 or more than £500,000.

Representations have been made by the Irish Building Societies' Association that the amount of deposit could present difficulties for at least one of its members, the assets of which amount to about £9 million. This society would be required to lodge a sum of £450,000. Although the amount would reckon in calculating the society's liquidity, in practice the society would have to maintain a much higher liquidity ratio than would otherwise be necessary. This would affect the amount the society could lend on mortgages.

Representations were also made by the Guinness Permanent Building Society and the Metropolitan Building Society to the effect that the requirement of the section as drafted would be very onerous as far as the two societies were concerned.

The amendments now proposed will provide that the Minister for Local Government, after consultation with the Minister for Finance, shall prescribe in regulations the amount of the deposit required. While the existing minimum and maximum of £20,000 and £500,000 are being retained, the regulations can specify either an amount or a proportion of the total of shares and deposits. Different amounts or different proportions can be specified for different classes of societies.

Amendment No. 23 is designed as a more flexible method to cater for the different types of societies and to meet the representations of the IBSA and the two other societies.

Amendment agreed to.
Government amendment No. 24:
In page 14, line 53, before "by reference" to insert "in accordance with subsection (2) and".

This is a consequential amendment.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 21.
Government amendment No. 25:
In page 17, to delete lines 10 to 21.

It is considered unnecessary to make the provision contained in subsections (8) and (9). Subsection (4) provides that where an order is made under subsection (2) (a)—freezing the deposit with the Central Bank —or under subsection (3)—prohibiting payments from a bank account—the society shall be deemed to be unable to pay their debts. This is one of the grounds on which a society may be wound up. It will then be open to the registrar to petition the High Court to have the society wound up.

The effect of subsection (8) was to empower the High Court of its own motion, and after giving notice, to make an order for the winding up of the society. If, under subsection (8), the High Court proposed to make an order for winding up it would have to give "such notice as it considered reasonable". Some delay would be involved in this. If, as it is now proposed, the registrar petitions the court, it is not seen that there would be any appreciable loss of time involved.

The deletion of subsection (9) is mainly a consequence of deleting subsection (8).

It is proposed to amend section 33 to provide for the winding up of a society in certain circumstances. The amendments will secure that there is a consistency of treatment in both cases.

Amendment agreed to.
Section, as amended, agreed to.
Section 22 agreed to.
SECTION 23.
Government amendment No. 26:
In page 18, line 6, to delete "financial".

This is a minor drafting amendment. Section 61 requires that a society shall display in every office "a statement in relation to the business carried on by it". Although it is the intention that the statement would probably be in the form of a balance sheet, the section does not call it a "financial statement". Hence the need to remove the word "financial" in section 23.

Amendment agreed to.
Section, as amended, agreed to.
SECTION 24.
Amendment No. 27 not moved.
Section agreed to.
Sections 25 to 27, inclusive, agreed to.
SECTION 28.
Government amendment No. 28:
In page 20, line 25, after "circulation" to insert "and circulated".

This is a minor amendment to clarify that the statement required by the section to be available to members attending a meeting of a society in connection with a union or transfer of engagements is circulated to those members.

Amendment agreed to.
Section, as amended, agreed to.
Progress reported; Committee to sit again.

The Minister has a division now and we shall be adjourning before he comes back. May I mention for the convenience of Senators that it is proposed to meet at 10.30 a.m. tomorrow. We shall be taking the B & I Bill and the Foyle Fisheries Bill before resuming on the Building Societies Bill.

The Seanad adjourned at 8.30 p.m. until 10.30 a.m. on Thursday, 8th April, 1976.

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