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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] 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.

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

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt I apologise for interrupting but I believe the Deputy is referring to amendments in the next group.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty I am sorry for that.

Deputy Brian Hayes: Information on Brian Hayes Zoom on Brian Hayes This group of amendments relate to the fitness and probity requirements.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty That is fine.

  Seanad amendment agreed to.

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt Seanad amendment No. 35 is grouped with Seanad amendments Nos. 36, 95 to 111, inclusive, 113 and 174.

Seanad amendment No. 35:

Section 15: In page 19, to delete lines 25 to 30 and substitute the following:
"(a) an employee or voluntary assistant of the credit union or an employee of any other credit union;

(b) a member of the board oversight committee of the credit union;".

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

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


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