Wednesday, 18 May 2005
Investment Funds, Companies and Miscellaneous Provisions Bill 2005 [Seanad]: Second Stage (Resumed).
The international investment funds industry, which employs approximately 6,500 people, is quite valuable to this country. A further 1,750 people are directly employed in professional advisory firms and many more indirect jobs have been created in information technology firms and other service providers. I acknowledge that the financial services sector as a whole is making an enormous contribution to employment in this country. Some 50,000 people are involved in the financial services sector in some way, for example by providing services to customers or managing funds. An important company, State Street International, employs 210 people in managing funds and administering hedge funds in County Kilkenny. It is obvious that this Bill will have a significant impact on the expansion and development of the firm, which also has a strong administration and funds management facility in the Irish Financial Services Centre.
It is forecast that employment levels in the financial services industry will grow significantly in the coming years. Ireland has developed a strong reputation as a niche market in the management and administration of specialised funds. Not only will many jobs will be created in the financial services area in 2005, but there will also be a substantial increase in the level of employment in professional advisory firms. I refer to legal and accountancy companies which are involved in the financial services sector.
Over 1,000 people are employed in financial services in places outside Dublin, including my constituency. I recently visited the operation I mentioned in County Kilkenny, which provides valuable high-skilled employment for over 200 people in this complicated sector. I hope the proportion of financial services employment located outside Dublin will increase as the industry develops. There is no need for all of the companies involved in this sector to be based in the IFSC. I hope to see regional variation in investment in this type of specialised business, which relies on technology rather than location for its success.
As the single largest creator of employment in this country's international financial services industry, the investment funds sector contributes significantly to our economy. All investment funds established in Ireland must be authorised by the Irish Financial Services Regulatory Authority. The investment managers of funds must be approved by the authority. The other people who service funds, such as the fund administrator and the custodian or trustee, must be based in Ireland and must be approved by IFSRA to act in that manner. They are subject to ongoing supervision by IFSRA. Fund regulation in Ireland is of a much higher standard than in other fund jurisdictions. We need to protect our reputation in this regard. While it is important to maintain the high standards which exist in our regulatory regime, we also need to develop the flexibility that is needed to allow the growth in this sector to continue.
This country's funds industry was developed on foot of the establishment of a legal and regulatory framework that facilitates the international investment funds industry. The innovation and responsiveness that served the funds industry well is still very much required. In an increasingly competitive marketplace, product development is more important than ever. Our reputation is a critical part of ensuring that we continue to expand in this important area of international financial services employment activity.
It is essential that we process this legislation as quickly as possible. We must deliver on our obligations to ensure that the regulatory regime has the flexibility to allow companies to deal with new fund opportunities. This is a new and complex area of business. We want companies that wish to invest here and to allow Irish people to work in a high-skill business with a good reputation to know that they will get the opportunity to do so in this jurisdiction. It is global business based in Ireland, a fact of which we should be proud.
While it is disappointing that it has taken longer than is usual for the Bill to come to the House, now that it is before the House it must be processed as quickly as possible. The industry told us some years ago that the Bill was necessary.
Part 2 will provide the legislative framework for an Irish authorised and regulated investment funds structure which will allow for the pooling of assets by institutional investors. Similar pooling structures are available in other jurisdictions and, as such, it is imperative that we continue to update our legislation so we can compete in this very competitive marketplace. Approximately two thirds of Irish funds are established as investment companies.
Investment funds constituted as companies have very distinct forms of company organisation and objectives as compared with those of ordinary companies. The company law review group report noted that owing to the unique nature of investment companies it is often inappropriate to treat them in the same way as the generality of companies. Recognising the unique nature of investment companies, Part 3 of the Bill includes two welcome and necessary provisions for the introduction of segregated liability and the facilitation of cross-investment. The introduction of Part 3 will allow the Irish fund product to be structured to include all the necessary investor protections and efficiencies to allow the industry to continue to compete in the international marketplace.
In the case of segregated liability, an investor who invests in a particular sub-fund should ideally be in the same position as if that sub-fund was itself a limited liability company. However, the investor should be subject only to investment risks and liabilities incurred in the pursuance of the investment strategy attributable to that sub-fund in which it has chosen to invest and should not be exposed to potential liability as a result of activities in other sub-funds. Failure to implement segregated liability sub-funds would severely impact on our nation's competitive position in the financial services sector. France and Luxembourg have two of the largest fund markets in the EU. They have already introduced amendments to their legislation to provide for segregated liability for sub-funds. The changes made there will be achieved in Ireland through the amendment of Part XIII of the Companies Act 1990, as the Minister of State has outlined.
With regard to cross-investment, the 1990 Act will also be amended to provide for cross-investment by investment companies, and the UCITS regulations will be amended to provide for cross-investment by investment companies established as UCITS. These amendments would facilitate investment by one sub-fund of an umbrella fund into another sub-fund of the same umbrella fund. This is currently permitted in investment funds which are structured as unit trusts but is not possible in investment companies because the legislation provides that shares which are purchased by an investment company must be cancelled. This means that an investment company cannot purchase shares in itself and hold these for the benefit of the investors in a particular sub-fund. The proposed amendments as set out by the Minister of State are aimed at removing this prohibition.
The foundation on which the funds industry was built was the establishment of a legal and regulatory framework to facilitate the international investment funds industry. That innovation and responsiveness has served the industry well. We must continue to monitor legislative change and fund management change in other jurisdictions so Ireland is able to keep up to date with the competition elsewhere in Europe and throughout the world.
The Bill will provide the legislative framework for an Irish authorised and regulated investment funds structure which will allow the pooling of assets by institutional investors. Similar pooling structures are available in other jurisdictions and we must be up there with the best of them to ensure that we continue to have a high reputation but also a high level of engagement in investment in this important industry.
With regard to the miscellaneous provisions, the Minister of State has made a number of changes to consumer policy. I welcome the belated acceptance by the Government that we have encountered many difficulties in regard to the cost of living in recent years, during which many indirect taxes and charges were imposed. These taxes and charges are catching up with us as a country, making us less competitive in the small business sector, costing more of consumers' disposable income and feeding into job losses in the manufacturing sector. Unfortunately, companies are voting with their feet by relocating to other jurisdictions, particularly in eastern Europe and the far east.
We must be continually mindful of the cost base of the industrial sector. All Members acknowledge that if there is not a strong manufacturing base, there will not be the necessary spin-off employment in the services sector to sustain many communities. Ireland can only have so many manufacturing bases. If any major manufacturing base were to close, it would have major ramifications not just for that business but in indirect knock-on effects for the services sector.
Consumers have sought an opportunity to put in place an independent system through which they can seek the right of redress and make complaints about excessive overcharging in the economy. I was admonished in recent years for highlighting this matter by Ministers who seem out of touch, particularly the Ministers for Arts, Sport and Tourism and Enterprise, Trade and Employment. I am glad there has been a conversion on the part of the Government which recognises the necessity of an overhaul of the office of the Director of Consumer Affairs.
One agency, not two, is needed to overhaul the definition of responsibilities that have not been updated since the Sale of Goods and Supply of Services Act 1980. Moreover, penalties must be increased in line with what we would expect to be an appropriate sanction almost 30 years after that Act was passed. This would mean that retailers or any stakeholders in the economy which excessively charge consumers are brought to book and that appropriate penalties exist. In this day and age, a fine of €127 for non-display of prices is out of line with what would frighten any retailer who is of a disposition to rip off consumers.
I welcome the Minister of State's announcement today that he will implement many of the recommendations of the consumer strategy group. It has taken a long time for the Government to realise this point, but it is welcome nevertheless. The Minister of State's review of the groceries order is also important. However, I am sure he will be mindful of other opportunities that arose, particularly during the term of office of his predecessor, the Tánaiste, Deputy Harney, who reviewed this order and came to certain conclusions at the end of 2001, after a long consultation.
While some commentators believe that the litmus test of consumer policy is the ministerial attitude to the groceries order, I do not subscribe to that view. Many other facets of life which have a major impact on household budgets must also be considered, including the impact of the legal, pharmacy, banking and other professions. Such issues have as great an impact as the implementation of the groceries order on the grocery sector. It will be interesting to examine the submissions that will be made and the outcome of the deliberation.
The regulatory environment has been a subject of much recent discussion. I take the view that we are over-regulated; we are taking a sledgehammer to crack a nut. I welcome the Minister of State's decision to review some of the regulations and refer them to the company law review group. I hope there will be an early investigation of these matters and an early report from the review group to the Oireachtas on how the Minister of State is progressing in reviewing these matters.
There were many complaints from individuals, in particular those with small businesses, about the way many of the impositions affect people, whether unwittingly or otherwise. The Minister of State was well warned about the directors' compliance statement in the context of the implementation of the Companies (Auditing and Accounting) Act 2003. I am glad representations made to the Minister of State are being fed to the top man in Government who has a particular interest in the matter in recent times. Once the Taoiseach takes a view on the issue he will not ignore it. I am glad it is not being ignored with regard to the review being carried out.
Complaints received were referred to and the company law review group with regard to the insurance and banking sectors should perhaps take these into account. The manner of implementation of a proper regulatory environment by IFSRA does not come under the remit of this legislation. However, in the context of the review of our regulatory regime we must have proper regulatory systems in place. We have seen many examples around the world and do not want a similar situation in Ireland.
I am not tying down the Minister of State and he knows where I am coming from because he has taken a particular view. I am pointing out to him that matters were brought to his attention before, but we now have the same agenda. The brokers and financial institutions must be regulated. However, I know from experience of the insurance sector that there is no need for all of the paperwork, some three or four pages of material, to be sent to each policyholder when he or she receives a renewal notice. In an age of information technology we should have removed paper from the system, but there is more than ever in the context of consumer regulation and legislation matters. The intermediary investment fund and banks Acts should be examined to see how the system might be more user friendly while achieving the same objectives.
I welcome the legislation. There is a very large miscellaneous section, but the most important aspect is the implementation of a strong investment funds regulatory and legislative framework that will allow the financial services industry to continue in a strong position and generate high-quality employment for the people of Ireland.
The Labour Party welcomes the Investment Funds, Companies and Miscellaneous Provisions Bill, which has been promised by this Government for a long time. However, for reasons best known to itself, it seems to need ten years in which to do anything.
A number of questions arise. The IFSC is now a significant employer in Ireland and the financial services sector has the capacity to continue as such, particularly in respect of highly qualified Irish graduates and also of people who come to work in Ireland from around the world and have specialist skills. It was therefore appropriate that the Minister of State at the Department of Foreign Affairs, Deputy Conor Lenihan, saw fit to apologise to the House for the comments he made here this morning. Workers from around the world, regardless of their diet, make an important contribution to Irish economic life and many of them are very highly qualified and have been head-hunted by Irish institutions. The allusion made to Turkish people and their diet was unfortunate and unworthy of the general standard of Members of the House. This is the national Parliament and not a derelict shopping centre where corner boys throw out abuse in the evening as people pass by. I am glad the Minister of State apologised.
The financial services sector employs more than 50,000 people and 17,000 work in the IFSC. It is important that the sector be seen to be regulated. The Minister has said we are in competition with countries around the globe for this type of business and we want to be involved in financial services in a positive manner. There are centres in terms of internationally traded financial services in different parts of the globe that are regarded as homes for hot money, laundering and tax evasion and avoidance on a very wide scale. Most Irish people would not want our financial services sector to be associated with that.
Inquiries made by the New York attorney general relating to Cologne Re, AIG and other companies, as well as inquiries made in Australia, led to the financial services sector. I have discussed the issue with IFSRA, which is a very young organisation and is very well funded and endowed. However, reputation is crucially important in the financial services sector in terms of confidence, not only on the part of banking organisations including the Central and European Bank, but on the part of consumers.
This is particularly true with regard to pension holders who must put their money into vehicles over which they inevitably have no real control or about which they have no intimate knowledge. People make contributions, which the pension fund in their job then passes on to investment fund managers. These contributions end up in the type of funds to which the Bill refers. There are two schools of thought, namely, regulation with a light hand and detailed line by line regulation. It would be good if regulation in Ireland could be as light as is consistent with being effective. That is the balance that IFSRA must strike and its director general has said that, where possible, he would like to be able to regulate with a light hand. However, financial services around the world have suffered scandal after scandal over the past 40 years. Some of them are very well known. Many people in the UK lost all of their pension entitlements as a result of the activities of rogue financiers such as Robert Maxwell. It is inevitable that one learns by mistake in business and therefore one provides regulation to try to eliminate the errors of the past. The series of scandals that hit the city of London and the UK between the early 1970s and the late 1980s highlighted the need for regulation. Since the US crash of 1929 and its dreadful consequences for the economy there has been a great deal of regulation. However, the Enron scandal still occurred in spite of this and workers who had invested in pension related products were largely left walking the streets once the company had collapsed.
I hope we will never have a similar disaster in Ireland. However, it is important to strike a balance between the golden objective of regulating with a light hand versus very detailed regulation and we must bear in mind that the reason we need to regulate is based on the sad experience of bad financial scandals. Unfortunately, in such scandals the white-collar perpetrators often walk free. They often go to countries like Monaco, northern Cyprus or other jurisdictions where they are free to live out of reach of the regulators. It is important to remind ourselves of that background.
It might be interesting if the Minister told the Dáil the up-to-date position on the inquiries that have been made. Incidentally, Ireland was featured in The Wall Street Journal and in a number of American newspapers in regard to the inquiries by the New York Attorney General. In regard to Cologne Re, I became aware the other day that someone was suspended for working in or having an association with the financial services centre. It would be useful, in terms of upholding the integrity of the Financial Services Centre, if the Minister identified the way in which the regulations are appropriate because it was regulators from Australia and New York who tracked a problem that appeared to have implications for a company or companies in the Financial Services Centre.
The Minister may be aware of a speech made recently by Mr. David Went, the head of Irish Life, in his usually robust style to the Institute of Chartered Accountants in which he warned that too much regulation was not acceptable to bankers like him. This is the same man who had the cheek to say, when the Revenue Commissioners commenced their recent inquiry into single premium insurance policies, that they could take a hike as regards that particular company, which was once a State-owned company. It wrote to Irish investors about responsibilities they may have. I thought the company had a cheek and I will give the reason.
On single premium insurance policies, I understand the deadline for complying with the Revenue requirements is next week, 25 May, and because of the refusal of Irish Life as the biggest player in that market, Revenue has undertaken fairly widespread advertising to try to advise people. The real problem, however, is that these products were sold on a vast scale here from the 1980s onwards and the vast majority of them were fine, not just from a legal but from a taxation point of view. The vast majority of investors in those products have no problems. The Revenue Commissioners, in their preliminary overview, identified approximately 6% of the businesses as having tax issues. As an accountant, although, unlike the Minister, I no longer practise, it has always been my experience that the people who get most nervous about the Revenue Commissioners knocking on their door are those who have no problem but the people who are not compliant could not care less if they signed 20 declarations which were at odds with each other.
That is the reason I believe the managing director of Irish Life has been remiss in not co-operating for the sake of all the compliant customers of Irish Life and their families, in the case of people who have died and whose family members may have inherited from them. There is no issue if it involved a lump sum arising from retirement and the person's local friendly Irish Life office at the time suggested parking that lump sum in a particular product. They were told they would do well out of it. Whether they did is another matter, but those people have no tax issues. In an ideal world regulation would be light but in the real world we have to deal with regulation.
The Labour Party welcomes the Bill. On the ongoing development of IFSRA, we are anxious that in respect of financial services products, be they international products, as in the case of what we are talking about here, or domestic products, IFSRA and the regulatory framework should pay attention to value for money for consumers and the associated charges and fees, particularly with investment fund products because with many products the first year's contributions can take a very large slice of the investment funds, but many investors, particularly smaller investors, are not aware of that. When the products change, and complicated rules apply about Chinese walls and separating products into different divisions, investment fund managers and banking institutions can make fortunes. We cannot protect consumers from every risk but we can ensure that they are made as aware as possible of the financial charges associated with products in which they invest. It is then up to them to make a decision on whether that is suitable for them.
In that context, I draw to the Minister's attention that there is much soft advertising, particularly emanating from the United Kingdom, on television in the afternoon aimed at people who are either early retirees or retired. It is soft focus advertising normally fronted by well-known showbusiness personalities and it appears to offer an answer to everything. Because much of that advertising emanates from the United Kingdom, however, I am unclear how much of it is regulated in this country. It may need some broader EU type regulation but there is no doubt that it is very attractive to people. They get seduced by these products which are often very expensive and in some cases it can be so costly as to be very damaging to the customers who end up buying the products.
Will the Minister indicate when the Government will sign up to the UN Convention Against Corruption, which is about strengthening mutual legal assistance mechanisms for the avoidance of corruption? It must be remembered that money laundering and tax evasion fall into this corruption network. I said earlier that we want the IFSC to prosper but we want it to be the home of good and ethical investment products. I do not understand the reason this country has not signed the UN Convention Against Corruption and I would be grateful if the Minister explained that because it is essential. Post-11 September 2001, we are all aware that terrorist networks can use money-laundering devices and havens and we must be up there with the best in terms of trying to deter corruption.
The other area IFSRA still has to come back to is the question of fitness and probity in respect of people who work as directors of companies in financial services. Many of the directors of the companies in the IFSC are not Irish nationals. I am aware work is being done on a passport for people who work at very senior levels in financial services in terms of fitness and probity when they come to a country like Ireland so that they do not necessarily have to go through the whole process again. That is a good idea because I am conscious of the fact that people who are compliant are often anxious to ensure that all their obligations are fulfilled, but if somebody can show they were compliant in a country like Australia, Germany or the United States, where there is a great deal of regulation, that should make the job of our regulators in the IFSC much easier and save on a great deal of paperwork should they become directors in the IFSC.
I welcome the change of heart announced on provisions governing director's compliance pointed out by Deputy Hogan. The Minister of State is aware that many voluntary and NGO bodies in Ireland are in company format. The new type of regulation coming in was so onerous in many cases that voluntary directors of local community based companies found it quite intimidating. I welcome the fact that it will be re-examined and that the Minister is referring it for legal review. The director of a bank whether executive or non-executive, is in an entirely different situation to a director of a local voluntary organisation or community partnership.
I am glad the Minister has addressed the question of segregated liability and the facilitation of cross-investment. I hope the regulations on insider trading are successful but that is an extremely technical area and the serious crimes office in the UK has spent far more money than many of our tribunals and has not got it far. It is good that it is in the Bill but only time will tell if it is successful. I wish the Minister well with the rest of the Bill. The Labour Party broadlywelcomes it but I would like replies to my questions.
Before I go into detail on the legislation, I would like to state that Ireland was once known as the land of saints and scholars but is better known today as the land of scandals and tribunals. Politics, banking, the church, business, medicine, law and the Garda Síochána have all suffered from an erosion of public confidence in the wake of an astonishing proliferation of scandals. Moreover, Ireland has undergone rapid social, economic and political change over the past decade, which has had a profound impact on our values system. The decline in authority and influence experienced by the Catholic Church in recent years has forced many people to seek other sources for ethical and moral guidance.
At the beginning of the 21st century Ireland is a fairly prosperous country yet this creates dilemmas of its own. Difficult decisions about the distribution of resources raise awkward questions for society. How is the tension between the rights of individuals and the overall good of society to be resolved? To whom do we look for guidance? The political elite, political parties, churches, the medical and legal profession and business leaders all have had their credibility seriously tainted by damaging scandals. I raise these issues in the debate because they are all part of a modern progressive economy and society. However, we politicians should be reminded that our focus should be on the good and well-being of our society.
The Bill makes a number of changes to the existing law on investment funds, in particular it provides for a new investment vehicle, the non-UCITS common contractual funds, CCF, and will also provide for cross-investments and segregated liability for investment funds. A number of other changes to general company law are also proposed to remove existing anomalies and pave the way for the smooth transposition of certain EU directives. In addition, some minor amendments to the consumer law are proposed mainly to increase the level of maximum fines that can be imposed on parties found guilty of breaches of specific consumer legislation.
The objective of the investment fund provisions is to give the greatest flexibility to the funds industry while at the same time keeping appropriate controls in place. I know the industry is anxious to have a portfolio fund vehicle available which is as broad as possible to further improve our attractiveness as an international location for the establishment of investment fund companies and the Minister of State referred to that in his speech. As with other legislation governing collective investment schemes, the Central Bank and Financial Services Authority of Ireland will exercise regulatory control over the funds industry for the new non-UCITS CCFs. Furthermore, measures to clarify the tax treatment of the new vehicle have been included in this year's Finance Bill. I welcome these progressive developments.
The Bill proposes amendments to the Companies (Amendment) Act 1990 to provide for segregated liability and cross-investments for investment funds. On the issue of segregated liability, an investor in a particular sub-fund should be insulated from the challenges presented by this ever-changing global market place. I accept the funds industry operates in a highly competitive environment and the Government must continue to give all necessary support so the industry can prosper while at the same time offering clients the appropriate safeguards that one must have in this area.
The Companies (Amendment) Acts of 1990 and 1999 will also be amended to provide for cross-investment by investment companies and the UCITS regulations will be amended to provide for cross-investment by investment companies established by UCITS. These amendments will facilitate investment by one sub-fund into another of the same umbrella fund. This is permitted in investment funds structured as unit trusts but is not possible in investment companies as the legislation currently provides that shares purchased by an investment company must be cancelled. This means an investment company cannot purchase shares in itself and hold these for the benefit of investors in a particular sub-fund. The proposed amendments are aimed at removing this prohibition.
I welcome a number of other necessary provisions and amendments to the Companies Acts which are proposed. They arise from difficulties with the operation of existing provisions in the law, particularly on the Companies Registration Office and to facilitate operators using electronic technology. In addition, the proposed amendments address the need to clarify incomplete or incorrect cross-references in provisions contained in the Companies (Auditing and Accounting) Act 2003, which only came to light post-enactment when the relevant provisions were being considered for commencement.
The purpose of Part 4, which deals with market abuse, is to make enabling provisions that need to be enacted in primary law to ensure the smooth and effective transposition of the EU market abuse directive and three supplementary Commission directives. The market abuse directive covers insider dealing and market manipulation.
I strongly welcome section 29, which outlines penalties on conviction on indictment of certain market abuse offences. It provides for a maximum fine of €10 million and-or a maximum ten year imprisonment on conviction on indictment. Summary offences will be dealt with in the transposing regulations.
Section 31, which is positive and constructive, gives IFSRA the power to make supplementary rules to allow it fulfil its role as competent authority. These rules must be consistent with Irish market abuse law. IFSRA may also issue guidelines on the steps to be taken to comply with Irish market abuse law.
Part 5 deals with public offers of securities and amends the Companies Act 1963 in anticipation of transposition of the EU directive dealing with prospectuses to be published when securities are listed or offered to the public.
As one can see from the details of the legislation there are positive and progressive elements in this Bill, and I welcome them. On the broader issue of business and economics, many business people, particularly in small businesses, have made a major contribution to the development of this economy and I commend them. However, some people use loopholes to exploit others and they must be challenged at all stages. It is up to us as legislators to ensure our citizens are protected on these issues. It is essential that people and companies dealing with economic and investment issues have guidelines and structures. I am not trying to stymie any growth in developments. I always welcome those who come up with creative ideas for various projects and I commend their role in the development of the economy. Consumer safeguards are required at all times, however. Any society that does not ensure its economic policies are just will get nowhere. We can create all the wealth we want but the current debate is about how resources should be distributed in society. The debate on creating wealth is all but over when one compares the current situation to the dark 1980s.
I recall working in a north inner city school for many years during which time there was poverty, mass unemployment and a widespread drugs problem. An entire section of society was excluded from economic benefits. Since those years, the economy has developed but we must now discuss how to distribute the wealth we have created. Many people still feel excluded from an equitable distribution of national wealth. The majority of citizens, including working class people, have been excluded from the fruits of the State's economic growth. It is important to raise such issues which are important for everyone.
Government politicians from the main establishment parties have taken their eye off the ball. They think the war on poverty is over, but it is not. They also think the fight for industrial development in disadvantaged areas is over, but it is not. This point relates not only to urban areas because, even though I represent an inner city constituency, many rural areas are still excluded from the benefits of our economic growth. We must be creative, positive and radical in developing the economy of such regions.
Earlier today the House dealt with matters concerning Dublin Airport and Aer Lingus, and I am strongly against the privatisation of the State airline. We must also be radically creative on other issues. What is wrong with developing Knock Airport as part of a social and economic agenda to assist the west, in addition to easing congestion in many urban areas? I have raised these issues as part of a broader debate, but overall I welcome the legislation and commend it to the House.
Previous contributors to the debate spoke about the lengthy period during which the ideas behind this Bill have been in gestation. While the Government certainly promised to introduce such legislation, and there were demands for it from the financial services sector, I am not sure that this Bill is what was sought. In its current format it has been produced in lightening quick time, compared to other legislation. This Bill was not on the Government's legislative programme in January this year, yet it was published in March, went to the Seanad in April and is now before this House. If all legislation was dealt with in such a satisfactory manner the Government would not have as many problems to face outside the House.
I could indicate much legislation that has remained on the Government's legislative programme since I was elected to the House, yet there is still no sign of a Second Stage debate on it. Of course, that begs the question as to what are the Government's legislative priorities. Why is a particular Bill pushed forward ahead of others? I found it curious that the press release the Minister of State issued in March was a verbatim copy of that issued by the Dublin Funds Industry Association. Perhaps some psychic process was involved between the Government and the association.
——or perhaps that industry has a particularly favoured status. On the whole, the financial services industry has obviously been beneficial for this country, not just for its own sector. The industry has had spill-over effects, especially for the use of technology in selling and trading services, not only nationally but internationally also. It should be encouraged at every level. Unfortunately, however, we cannot extrapolate the success of this industry since 1989 into the future. A number of forthcoming difficulties may limit its scope for further advancement. Several EU countries look askance at the financial services sector's favourable tax treatment here, while other EU members states have chosen to adopt some of our policies in this respect. Some have chosen to go even further, which explains some of the provisions in this Bill with which I will deal in a moment.
In the current global international climate, investment funds are unlikely to have the yield they enjoyed in recent years. This is largely because of the lack of oil stocks around the world and is also due to the weakness of internationally-traded currencies in which most of these funds are held. There is an onus on the Government to introduce such legislation in addition to putting in place a long-term policy that would recognise the risks that lie ahead. Such steps would protect the industry and allow us to see how it can progress in the new global climate. Unfortunately, the Green Party cannot see any such long-term thinking by the Government in this area.
I find the concept of segregated liability, which is at the centre of the Bill, a curious one. The Government points to the fact that it now exists in France and Luxembourg. The latter country's economy has traded widely in financial services. The Irish financial services sector obviously believes that the existence of this concept in legislation will give it a competitive advantage which it would lose if it were not enshrined in our law. The legislation also raises the potential for using the separate funds that are being created, in terms of individual liability that might accrue to the fund holder, to move funds from one area to another to escape liability. That is why I am curious as to what extent the additional features of the Bill, including improved governance, will prevent such an eventuality.
I welcome the fact that the transposition of EU directives on market abuse and prospectuses will form part of the Bill. That brings me to another curious matter which the Minister of State might explain in his concluding remarks. The Bill is higgledy-piggledy in nature and some of its elements clearly relate to the Department of Finance. The legislation seems to include elements that have been thrown in, but together they do not make much sense.
The Minister of State might also explain the status of the changes in the Companies Act which this Bill is proposing, given the Government's intention to produce a consolidated companies Bill in the not too distant future. In that case, why was there a need to introduce such provisions in this Bill?
The consumer elements of the Bill appear to have been brought out of left field. They include provisions on package holidays and the extraordinary provisions relating to the groceries order, on which, today, the Minister decided there should be some public consultation process. Other speakers have indicated that they would welcome such a consultative process and the Green Party is not opposed to such a process at any given time. However, any step to remove the groceries order would not be in the interests of consumers, regardless of the recommendations of groups such as the Consumers Association. If there are changes to the groceries order the likelihood is it will mean the closure of more corner shops and the opening of more out-of-town shopping centres. Environmentally, socially and economically that would all be to the disadvantage of consumers. Hopefully, as that consultation process progresses and eventually finishes, it will underline the need for clarity in those areas. A distinct Government policy is required to prevent a two-handed approach to consumer protection.