Seán Sherlock (Cork East, Labour) | Oireachtas source

I thank the Senators for putting forward the amendment.
Section 5, which the Senators are proposing to amend, provides for a significant change to the Friendly Societies Act 1896. That is the cessation of registration of any new societies under section 8 of the legislation. The rationale for the change, as I set out on Second and Committee Stages, is twofold. First, the lack of demand for the friendly society model, evidenced by the fact that there have been just three new entrants in the past nine years. That gives a clear indication that the friendly society model is no longer favoured by newly-establishing organisations.
Second, current legislation does not provide for prudential supervision of friendly societies by any public authority. This is a source of some concern because there is some potential risk to the interests of certain members of the public where societies offer financial services.
Section 8 the 1896 Act sets out the types of society that may be registered. There is currently nothing in the section which would preclude a society from seeking the authorisation of the Central Bank, under the Central Bank and Financial Services Act 2003, to carry on a regulated business as defined in that Act.
The Central Bank Acts provide specific exemptions for friendly societies from the requirements that relate to banking. Under sections 7 and 8 of the Central Bank Act 1971 a friendly society is exempt from the requirement to hold a banking licence.
Under section 29(a) of the Central Bank Act 1997, a friendly society is exempt from the requirement to hold an authorisation as a retail credit firm.
I believe, therefore, that the amendment is unnecessary, and does not add to the Act in terms of clarity. There are no references to a "regulated business" in the Friendly Societies Acts and no definition of what is intended by the term. Introducing such a concept in the manner proposed by the amendment is not practical. Further, the amendment as drafted refers to "a person who wishes to carry on a regulated business" when the Act refers to societies, not persons. In the circumstances, I do not propose to accept the amendment because I do not believe it to be a workable amendment, as currently constituted.