Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I thank the Deputies who have contributed. Amendments Nos. 1 to 5, inclusive, 12, 14, 15, 28 to 30, inclusive, 33, 43, 44 and 48 to 50, inclusive, which have been grouped together for the purposes of discussion, relate to the definition of financial services legislation. They are scattered throughout the Bill as they also relate to consequential amendments regarding the definition.

Before addressing the specific amendment, which is amendment No. 1, I would like to outline my intention regarding my amendments to the Bill. As I explained in my concluding remarks on Committee Stage, I am currently considering a number of amendments to the Bill. Some of these deal with the commitments I gave on Committee Stage, including in respect of issues raised on behalf of the Irish League of Credit Unions. As these issues involve substantive changes, I will need to seek formal Government approval. As this could not be done in time for Report Stage, my intention is to move the amendments in the Seanad, with a further referral of changes to this House, in accordance with existing procedures.

I will now address the grouped amendments in regard to the definition of financial services legislation. There was detailed and constructive engagement on this issue on Committee Stage, on foot of which my Department is exploring with the Office of the Attorney General whether the definition can be nuanced to clarify that it relates to the law as it already applies to credit unions. This would avoid any misunderstanding that the definition somehow inappropriately applies a corpus of banking legislation to credit unions. 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 a range of new legal provisions from the wider financial sector onto credit unions is mistaken. The definition of financial services legislation is a technical interpretation provision which is needed for references throughout the Bill to requirements that are already imposed on credit unions under various pieces of financial services legislation. One reason for this is that credit unions have secured authorisation outside the credit union sector and therefore fall under wider financial services legislation. Examples include the Insurance Mediation Regulations 2005, the Investment Intermediaries Act 1995 and the European Communities (Payment Services) Regulations 2009. The deposit guarantee scheme which protects members' savings also applies by virtue of wider financial services legislation, such as the Financial Services (Deposit Guarantee Scheme) Act 2009. The Central Bank Acts already apply widely to credit unions. For example, the Office of the Registrar is provided for in the Central Bank Act 1942.

I will now comment on amendment No. 1 and its consequential amendments. I do not consider that excising all references to financial services legislation or the Central Bank Acts is a workable solution if it fundamentally compromises what the Bill and the commission report try to achieve. I will explain by the use of two examples what would happen if the definition were deleted. Section 18 inserts a new section 55A into the Credit Union Act 1997, under which subsection 3(f) requires the chairman to conduct a performance evaluation of all directors regarding their compliance with obligations under the financial services legislation. Many credit unions are authorised under the European Communities (Payment Services) Regulations 2009. A director of a credit union who fraudulently misappropriates users' funds under these regulations commits an offence. However, if all references were deleted in the Bill this offence could not form part of the directors' performance evaluation. The term is also used in section 15 of the Bill, which replaces section 53 of the Credit Union Act 1997 with a new section 53. Deleting the reference in subsection (7) would mean that the Bill would allow a retiring director to be eligible for re-election, even where to do this would result in a breach of another legal provision which already applies to credit unions. For example, there are requirements on directors regarding fitness and competence under the Investment Intermediaries Act 1995, under which many credit unions hold an authorisation. The failure of a credit union director to meet these requirements could be grounds for an application to the High Court to remove the credit union's authorisation as an investment intermediary. Including the reference to an applicable requirement under financial services legislation means that credit union members can have confidence that directors coming before them for re-election are not doing so in a manner which would breach a legal requirement to which the credit union is already subject.

Amendment No. 2 seeks to itemise the legislation that applies to credit unions. My Department has previously explored this option with the Office of the Attorney General. The assessment is that this approach would introduce unnecessary risks to the robustness of the provision and could result in more limited application of the Bill than intended. The interconnectedness of financial services legislation is such that any inadvertent omission or misapplication of a particular provision could impede or prevent key sections of the Bill from applying in their intended form. In the case of this amendment, key legislation such as the Financial Services (Deposit Guarantee Scheme) Act 2009 and the Investment Intermediaries Act 1995, which already applies to credit unions, has been omitted.

Amendments Nos. 3 to 5, inclusive, propose that the phrase "appropriate to credit unions" be inserted into the definition. I am sympathetic to the approach in these amendments and my Department is currently exploring with the Office of the Attorney General whether a suitable formula along these lines might work. Given that my Department is already in discussions with the Office of the Attorney General on addressing the concern behind these amendments, I do not propose to accept them.

The bottom line is that there is a misunderstanding about the scope of the definition section. It only applies to legislation which already applies to credit unions, and anything in this Bill is then applicable to credit unions. What is at issue is making this clear in the definitions section with the mention of financial services etc. The Department is in contact with the Office of the Attorney General to work out a form of words which is legally enforceable to achieve this objective. I will introduce an amendment in this regard in the Seanad, following which the matter will again come before the Dáil for consideration.

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