Fergus O'Dowd (Louth, Fine Gael)

Fine Gael wants that provision in the Act. This would make a difference to these borrowers who have been treated so appallingly. They borrowed money, went to court and won their case. The costs were awarded against the building society but it passed the costs of €100,000 onto the borrower. Before there is a transition from a mutual society to a plc company, these issues must be properly examined.

It is clear that first-time buyers get a better deal from the mutual building societies. The mutual society puts profit and effort into the service of members. The Educational Building Society is one of the most competitive societies. It is important that mutuality is retained. Studies undertaken by the House of Commons have found that where mutuality does not exist in a market, consumers are worse off, rates are higher and the executives of companies that were formerly mutual societies are higher paid. It has been found that mutuals perform better than their plc rivals in a variety of financial performance indicators. The inquiry found that substantial increases in remuneration had been enjoyed by directors of those institutions which had been demutualised but there was no corresponding improvement in performance. It found that we need diversity in the financial market, we need a challenge and we need mutuality.

That is the issue in a nutshell. This Bill is attempting to face north and south at the same time. It is allowing the Irish Nationwide Building Society to demutualise. For the last five years, there has been a condition on new members that they would have a minimum figure of €10,000. Having that money in place and having made the rule, it can go in for immediate conversion and acquisition if necessary, or conversion and takeover it that is desired.

On the other hand, the Bill is attempting to protect the only significant company that remains a mutual society. The issue is that the only main building society is the Educational Building Society. Under this proposed Act, if it wishes to demutualise, it can. It can do so in either of the ways that are currently available. If it wishes to demutualise tomorrow it will have to wait five years with regard to the rule of new members having €10,000 on deposit.

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