Cyprian Brady (Fianna Fail)

I welcome the Minister of State to the House and the publication of this Bill. As has been said previously, the Bill marks the end of an era. For many years, the first savings book that a young person received when he or she got his or her first job was a post office or a building society book. The legislation passing through the House today effectively levels the playing pitch for building societies. We have seen the changes which have taken place recently in the building industry. The construction of over 80,000 housing units year after year has completely changed the pitch. Building societies must compete for their ordinary members. We must remember that the vast majority of building society members are ordinary working people who took out mortgages or had savings with building societies. As the two previous speakers noted, the thrust of these mutual societies was aimed at everyone's mutual benefit. This fact must be remembered.

I do not know why people are surprised by this legislation. I received inquiries about what was happening from ordinary members of building societies almost over a year ago. Due to commercial sensitivities, the timing of the Bill was sensitive but it will come as no surprise to anyone. Building societies as they are now constituted must compete in what is an ever increasing competitive market. As Senator Ross noted, we need more competition in the banking market because it benefits consumers.

The legislation as it is framed is very fair. It allows building societies to decide which route it they wish to take for the benefit of their members. The different sections that deal with demutualisation, the different systems through which it will go and the conversions are subject to scrutiny by the Central Bank and the Financial Regulator before they are introduced to building society members. As the Minister of State pointed out, it is open to the members to vote on it and if they do not like it, they can vote against it. The legislation has been amended to take into account the fact that it cannot be forced through without the full co-operation of members.

The Bill leaves the decision on any changes with the society. Not only must the decision be approved by members, it must also be approved by the Financial Regulator. As we know, this legislation is largely based on the recommendations of the building society review group, which included the Financial Regulator, representatives from the three building societies and the Department. What has come out of this is very fair and balanced legislation.

The building societies looked for the options to opt out of the five-year post-conversion protection that was there. When the option to demutualise is taken, the society can be taken over, again with the full approval and to the benefit of the members. Due to the significant changes in the financial services sector recently, building societies accept that they must change. These changes are essential to enable them to compete and flourish in the current climate. It will put societies on the same footing as banks and allow them to compete.

Like previous speakers, I would like to plug credit unions in this regard. The World Council of Credit Unions, which is a meeting of delegates from around the world, will be held on 27 July 2006 in the Burlington Hotel in Dublin. This is indicative of the status of the credit union movement. As has been pointed out, there are more issues at stake than a change of legislation. It is something at which we must look.

In respect of corporate governance and how it is put into effect, it is accepted that good corporate governance is essential if a financial institution is to operate with transparency and within the regulations. This legislation does not simply deal with demutualisation. It also deals with a range of aspects in respect of how the societies will function from now on, including the loans they can provide, who can be members of the board and dealing with foreign currencies. As the legislation is currently framed, it is in the interests of societies and their members to make the decisions they want to make as regards the future role they have in the financial services sector.

I welcome the Bill, which marks the end of an era in the sense that building societies as we know them have now changed. As has been noted by previous speakers, mutual societies were set up with the aim of benefiting their members in a mutual fashion and supporting each other. The original ethos of the societies has changed over many years but the way in which this legislation is framed makes it an even-handed Bill which will enable the societies to place themselves in a highly competitive and changing market. There are obviously issues with individuals and different groups with the societies. It is open to them to put measures to the floor when they hold their general meeting, which is the appropriate forum for this kind of decision. I welcome this legislation because building society members have been contacting me for over a year to find out what was happening.

As the Minister of State noted, we have seen examples of carpetbaggers taking advantage of these situations. The measures in this Bill will prevent this from happening. There will be a two-year requirement for someone seeking to open an account or secure a loan or mortgage with a building society. The legislation is very even-handed and fair and will benefit building society members in the future, irrespective of whether they want their societies to become private institutions or maintain their status as building societies. Once this option is open to them and if they can compete fairly and equally with other institutions, it will be in their interest to allow for this situation. I welcome this legislation.