Seán Sherlock (Cork East, Labour) | Oireachtas source

I thank the Senator for his comments. The Senator is effectively opposing the proposal to prohibit the establishment of new loan funds where a society does not currently operate a loan fund, and the Government does not agree that this section should be omitted. Section 6 places a restriction on existing societies establishing a loan fund as provided for in section 46 of the principal Friendly Societies Act 1896 where they do not already have such a fund in place. This change will not impact existing societies which currently have a fund in place. As I mentioned previously, such activity is not subject to prudential supervision by any public authority, and whereas the European Communities (Consumer Credit Agreements) Regulations 2010, in amending the Consumer Credit Act 1995, bring a small number of societies under the supervision of the Central Bank for loan purposes, I am of the opinion that societies not already active in this field should not be permitted to extend their remit.

It is very important from a consumer protection view that the provision of loans to individuals should be a regulated activity. It is not desirable that societies should be in the business of making loans without reasonable protections being afforded to the individuals accepting the loans, and this is generally accepted by societies themselves, as only three of the 47 currently operate loan funds.

The section effectively provides that where a friendly society does not at the time of the passing of this Bill operate a loan fund as provided under section 46 of the Friendly Societies Act 1896, such a society may not establish a loan fund after the coming into operation of this Bill. It does not affect the operation of an existing society currently operating a loan fund.