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Credit Union Bill 2012: From the Seanad (Continued)

Thursday, 13 December 2012

Dáil Éireann Debate
Vol. 786 No. 3

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(Speaker Continuing)

[Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes] 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.

  Seanad amendment agreed to.

Seanad amendment No. 5:

Section 6: In page 7, line 31, after “legislation’ ” to insert the following:

“, where applicable to credit unions acting under any authorisation from the Bank provided for by law,”.

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes 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.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty 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.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett 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.

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes That is very generous. We should bottle that.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath Take it while it lasts.

  Seanad amendment agreed to.

Seanad amendment No. 6:

Section 6: In page 8, lines 23 and 24, to delete all words from and including “or” in line 23 down to and including “secretary,” in line 24 and substitute the following:

“, the secretary or any other member of the board of directors,”.

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes 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.

  Seanad amendment agreed to.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt 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.

Seanad amendment No. 7:

Section 7: In page 9, line 37, to delete "appropriate and".

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes 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.

  Seanad amendment agreed to.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt We move to Seanad amendment No. 8. Seanad amendment Nos. 9 and 11 to 14, inclusive, are related. The amendments may be discussed together.

Seanad amendment No. 8:

Section 7: In page 9, between lines 40 and 41, to insert the following:

"(2) The conditions imposed by the Bank under subsection (1) may include requiring a credit union--

(a) to notify the Bank of any events of such significance that could materially affect the credit union including any change to the strategic plan of the credit union;

(b) to operate a more limited business model agreed with the Bank;

(c) to cause to be undertaken an independent review of the credit union's business within 12 months in order to ensure that the credit union is complying with all legal and regulatory requirements.".

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes 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.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath 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?

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes 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 agreed to.

Seanad amendment No. 9:

Section 7: In page 9, line 41, to delete “(2) Any of the” and substitute “(3) Any of the”.

  Seanad amendment agreed to.

Seanad amendment No. 10:

Section 7: In page 9, line 43, to delete “appropriate and”.

  Seanad amendment agreed to.

Seanad amendment No. 11:

Section 7: In page 10, line 3, to delete “(3) Whenever the Bank” and substitute “(4) Whenever the Bank”.

  Seanad amendment agreed to.

Seanad amendment No. 12:

Section 7: In page 10, line 26, to delete “(4) Before deciding to” and substitute “(5) Before deciding to”.

  Seanad amendment agreed to.

Seanad amendment No. 13:

Section 7: In page 10, line 29, to delete “subsection (3)(b)” and substitute “subsection (4)(b)”.

  Seanad amendment agreed to.

Seanad amendment No. 14:

Section 7: In page 10, line 43, to delete “and (2)” and substitute “to (3)".

  Seanad amendment agreed to.


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