Larry Butler (Fianna Fail)

I welcome the Minister of State to the House. I also welcome the introduction of this Bill. It is overdue in terms of what has happened in our financial and banking services during the past few months. Members of the public were very annoyed at the manner in which directors' loans and so forth were dealt with. I welcome the Bill in addressing that.

It is one step to bring legislation through the House and enact it but we must act on foot of it and put the necessary governance structures in place in the banking and financial sector. That is the aspect about which I have the greatest concern. The governance structures in place up to now have not been sufficient in terms of enforcing the provisions of the existing legislation.

That was evident in Anglo Irish Bank where directors' loans were not disclosed and large amounts of money were transferred from it to another organisation. When drafting legislation we must guard against such practices happening in the future. While we can tightly draft this legislation, if there is not an authority in place to govern and enforce it, it will be worthless. While we are doing a good job today, unless we ensure the Central Bank and Financial Regulator play their role and the necessary governance structures and checks and balances in the banking sector are in place, the legislation will be worthless. I am convinced of that.

The reorganising of the banks at this time presents a great opportunity to put the necessary governance structures in place to enforce this legislation. It will cost money to do so, in the same way as it costs money to run anything, but it will be well worth it. We depend internationally on financial transactions into an out of this country and we have a large financial services sector. A great deal of ground was lost in terms of the progress made in that sector and there has been a great loss of confidence in it internationally. This legislation presents an opportunity for us to restore confidence in it internationally. We need to do that.

This Bill is necessary. It provides that future loans to directors of companies that are licensed banks will be treated in the same way as non-banking companies. Specifically, all loans above a minimum threshold to each individual named director will have to be disclosed separately in the annual accounts as opposed to the aggregate format. The maximum amount outstanding during the year, not simply the amount outstanding at the end of the financial year, will also have to be disclosed. These were the types of practices that took place in the financial services sector. The practices that were allowed to develop were loose and sloppy and the services were not doing the job for which they were set up in the first instance.

I do not have much more to say on the Bill. Previous speakers made good points. In terms of the requirement in respect of a register and a pre-AGM statement, the Bill retains the requirement for the statutory register of banks of relevant loans because of its value as a source to update the data on current loans. However, there is no value in providing duplicate information for shareholders. The Bill provides for pre-AGM statements, which are needed. Shareholders need to be informed. Unless a shareholder is given full disclosure of such matters by the chairman or managing director of the company, it is not tenable for shareholders to allow a company to continue in business. They need to be given the full picture. The effectiveness of the legislation will depend on the governance structures within a company or organisation covered by it.

I have completed what I have to say. It was brief but important. I thank the Minister of State for bringing the Bill to the House. It has been well teased out here. We have time in this House to ensure we carefully read the Bill to ensure it contains the right provisions to deal with our financial services. I impress on the Minister of State to ensure that any legislation introduced is underpinned by the necessary governance structures within an organisation.