Seanad debates

Thursday, 7 May 2009

Companies (Amendment) Bill 2009: Second Stage (Resumed)

 

Question again proposed: "That the Bill be now read a Second Time."

11:00 am

Photo of Brendan RyanBrendan Ryan (Labour)
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At present section 23 of the Companies Act 1990 allows a person to refuse to disclose what he or she considers to be privileged information to the Office of the Director of Corporate Enforcement. Based on this, legal privileges were claimed in the Anglo Irish Bank case and the ODCE was not permitted to appoint a retired High Court judge to adjudicate on the matter of privilege claimed. The Bill proposes a change which would enable the ODCE to seize privileged information provided it maintains the confidentiality of the information until such time as a court determines if the information is protected by legal privilege. It also allows the appointment of a suitably qualified, independent person to prepare a report on the disputed information. The Bill addresses the issues arising from the Anglo Irish Bank case so we generally welcome it. However, one area causes me some difficulty. Section 40 of the Companies Act 1990 states: "An officer of a company who authorises or permits the ... company to enter into a transaction or arrangement knowing or having reasonable cause to believe that the company was thereby contravening section 31 shall be guilty of an offence." Section 31 restricts the giving by a company of loans and guarantees to its directors. It seems that the Bill's proposed amendment to the law will make each officer of the company guilty of an offence irrespective of their actions or knowledge of any wrongdoing. As I said, I have some difficulty with the proposed change because it risks criminalising an officer of the company even if he or she had no part in or knowledge of any wrongdoing. I ask the Minister to comment on this and perhaps to reconsider it.

Under company law, companies in general and banks have different obligations for disclosure. I do not know why this is so. Section 42 of the Companies Act 1990 requires companies in general to disclose in their annual accounts details of certain transactions, including loans to directors and connected persons, but banks are only obliged to disclose aggregated data on such loans where amounts were still outstanding at the end of the financial year. The Bill removes this anomaly by providing that loans made to directors of companies that are licensed banks shall be treated in the same way as loans made by any other company. All loans above a certain threshold to individual directors will have to be disclosed separately in the annual accounts rather than in an aggregated form. This is important, as we saw with the Anglo Irish Bank and Mr. Sean FitzPatrick affair. In future, the maximum amount outstanding during the year will be disclosed and not simply the amount outstanding at the end of the financial year. These provisions are to be welcomed.

The Bill also proposes a change to the requirement that an Ireland-registered company has at least one director who is resident in Ireland. The Bill replaces this by requiring at least one director who is resident in a member state of the EEA. This change was required by the European Commission to comply with EU law. It is understandable and reasonable.

Apart from the one reservation I mentioned, which might manifest itself in an amendment on Committee Stage, I, on behalf of the Labour Party, am happy enough with the broad thrust of the Bill. Before Committee Stage, we will look closely at the detailed wording of the Bill and we will likely return with several amendments.

Photo of John CartyJohn Carty (Fianna Fail)
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I welcome the Minister of State, Deputy Billy Kelleher. He has been here a number of times already and it is my pleasure to welcome him again today. I also welcome the Bill, which contains a number of sensible provisions that will clear up grey areas in the law on loans to company directors and some other areas of company law. The Opposition parties welcome the Bill because they recognise it is good and necessary legislation.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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Always obliging.

Photo of John CartyJohn Carty (Fianna Fail)
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In the light of the recent controversy at Anglo Irish Bank, much more transparency is needed in loans that companies make to their directors and associates. Section 2 of the Bill places the onus on the company director to declare any interest he or she has in actual or proposed contracts with their company. This information is to be held in a book of declarations which the Director of Corporate Enforcement can access at any time. I hope the book will be looked at and checked out regularly. Currently, directors are not required to show any contractual interests they have, so the proposal is a welcome development. Politicians in the Seanad and the other House are subject to a requirement to fill in a questionnaire each year about what property, shares etc. we have and this information is put in the public domain. We have to go before our peers every four to five years and they judge what we have or have not done and whether we have got moneys illegally or otherwise. When we consider the amount of money the State spends on inquiries, tribunals etc., it beggars belief that people in financial institutions handle a lot more money without anybody knowing about it. If it was not for the global downturn and recession, we would probably never hear or know anything about it. The Bill will, for the first time, put loans made to directors of licensed banks on an equal footing with loans made by non-banking companies. There is a strong argument to be made that this should always have been the case, but it is nevertheless a positive step forward. To prevent any future misrepresentation of the loan amounts owed by directors of licensed banks, annual accounts will show the maximum amount outstanding during the year and not simply the sum owed at the end of the year, as has been the case previously.

The Bill also covers connected persons. Previous events have shown that friends and associates of those in licensed banks can be privy to soft loans with unusually lenient terms and conditions. It has created tremendous anger among the people that such practices have gone on. People in high places got loans at very low interest rates while smaller borrowers had to give huge commitments to the banks and other lending institutions. Indeed, people had to hand over all their documentation regarding their ownership of their property. I can only say that sharp practices went on. I note from Senator O'Toole's comments yesterday that, back in the middle ages, guys in Venice and other parts of the civilised world at the time would probably have been hung for dealing with getting loans and borrowing money in this way. The Bill increases the amount of information connected persons are required to disclose. Like directors, they are required to disclose the maximum amount outstanding during the year.

I welcome the fact that the Bill gives the Director of Corporate Enforcement the right to access the register of loans to directors and connected persons so enforcement action can be taken if necessary. Section 9 requires licensed banks to prepare an annual statement that relates to their register of loans to directors. This statement must be made available before the company's AGM. It is important that people have access to this information. This is a sound provision because it will ensure that all relevant shareholders are informed about the position with directors' loans. It will be an offence for companies, banks and their directors not to comply with the requirement of disclosure of loans to directors and connected persons. The Bill clarifies the Director of Corporate Enforcement's right to access third party records that relate to a company under investigation. The Director of Corporate Enforcement will also be able to seek from the court an extension of the period of a search warrant, and the Bill provides for the removal of paper and electronic information from premises that are searched. I hope these measures will not have to be called for too often, but they are essential if the Director of Corporate Enforcement is to carry out the duties of that office effectively.

We are aware that a wide-ranging analysis of company law is well advanced and the Minister intends to publish significant legislation containing 1,250 sections next year. I hope this will happen and that all aspects of the Companies (Amendment) Bill will be included in it. I welcome the Bill and look forward to the larger one when it comes to the House next year.

Photo of David NorrisDavid Norris (Independent)
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I thank my colleague, Senator Coghlan, for yielding to me. I welcome the Bill which is appropriate and timely. It brings us into the computer age and takes into account all the outflow of these terrible financial scandals but it is a bit late in the day. It is a pity we did not wake up earlier and act in this regard previously, in particular in respect of this shameful business of loans. Much of this comes after the Anglo Irish Bank debacle.

I was a director of a number of companies but never took anything out of them even though they were commercially successful. I had loans but the loans in which I was involved were ones I made to keep the companies afloat. I eventually got them back. It is quite extraordinary that there is a complete lack of regulation and that people are allowed to launder loans by taking them off the books for a period of time to conceal them. That is very close to fraud and is a very dangerous practice. I hope this Bill will seal that off.

I am glad there is a possibility of investigating officers, acting on behalf of the regulator, to go into organisations. It is a certain invasion of legal protections in terms of privilege between professional persons and clients but, in these circumstances, it is necessary.

One thing which is not really addressed in the Bill is the bonuses paid to directors and senior personnel. These must be made legally performance related. It is completely absurd to reward people for failure, which happens. On the front page of The Irish Times today there is an article about investors wanting a say on the pay of Irish firms' top executives. In Britain, resolutions on executive pay are quite normal but in this country, they seem not to be.

I find it astonishing that a Bank of Ireland spokesman can say it is covered by the general report. There is only one vote on it so one must vote against the entire series of accounts or leave any question of inappropriate remuneration out of the game. That should be addressed.

This is an important Bill which is too late, although it may prevent things from happening in the future. It is quite wrong for people to milk their own companies. This is especially scandalous when they are building societies because they started off as mutual societies for the benefit of people but turned into kind of casinos operated in the interests of some of the principals involved. That is quite wrong. Again, I thank Senator Coghlan for facilitating me.

12:00 pm

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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I welcome the Minister of State and wish him well with his new responsibilities. I have no doubt he will deal with all matters comprehensively and competently. I welcome the contents of this Bill but will comment on what it should also have contained. Like Senators Norris, Ryan and Cannon, everyone on this side of the House welcome this measure in light of recent developments.

There have been so many furtive transfers and dealings which were deliberately kept under the radar that the matter had to be addressed. There is no place in Irish company life for the dubious activities we have witnessed recently. It does not reflect any credit on Irish society that some directors of companies - in some instances, very large companies - ran them as if they were personal fiefdoms without any regard for the law or the fact a company is a separate body in law. For that reason, as well as the manner in which share registers were maintained in some instances, I very much welcome the Bill. I hope the Director of Corporate Enforcement will be able to be strict in regard to the manner in which the new register of directors' loans is kept to ensure it is kept in a satisfactory manner.

I agree very much with the remarks of Senator O'Toole who spoke about light touch regulation which we realise does not work. He chaired the audit review group and spoke about directors' compliance statements. I agree with what he said about that issue. All material matters must be included. He also spoke about the company law review group about which I will speak in a minute.

I tabled a Private Members' Bill, the Credit Institutions (Financial Support) (Amendment) Bill 2009. Under current law, the ability of the Director of Corporate Enforcement is being impeded. How does he deal with an entity which is not a company? That is why we tabled this Private Members' Bill which, I accept, was done in a rush. It may not be adequate but it would be very acceptable to us if it was taken and improved. If not, we believe we must table an amendment to this Bill on Committee Stage to cover that point.

The Tánaiste indicated her intention to bring forward this legislation amending the Companies Acts to increase the powers of the Director of Corporate Enforcement which we very much welcome in regard to transparency, loans to directors and powers to enforce compliance. However, I do not believe these promised measures go far enough in that they prevent the director from investigating building societies or credit unions. While there has been an indication of an intention to close this loophole, we believe strongly this cannot wait for another day because very often legislation is not brought into the House quickly. I look forward to the Minister of State's comments on this. Once this Bill is passed and if this issue is not dealt with, perhaps it will be allowed to rest.

We are all aware of the very disturbing allegations about Anglo Irish Bank, Irish Life & Permanent and Irish Nationwide, which is a building society. The Director of Corporate Enforcement is currently actively engaged in Anglo Irish Bank but is prevented from doing cross-checking because he cannot go near Irish Nationwide in regard to those loan transfers which were deliberately kept under the radar. There is no excuse for such a large section of the financial sector to be excluded from investigation when such a prima facie case exists, as at present. For that reason we are most anxious that this anomalous position be dealt with quickly.

In passing, I compliment the Oireachtas Library & Research Service on its wonderful work on the Bills Digest on this item of intended law, published yesterday, which Members have probably seen. Page two of the document refers to the working group on Company Law Compliance and Enforcement under the chairmanship of Michael McDowell, Senior Counsel, a former Minister. The working group found that compliance with company regulation was generally low, which is another reason we need this measure. I found this document informative. I hope to digest it further before Committee Stage. I found the requirement of corporate compliance outlined in the document interesting. I wish to refer specifically to another part of the document, which I thought I had marked but I must not have done so.

Photo of Kieran PhelanKieran Phelan (Fianna Fail)
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The Senator can raise it on Committee Stage.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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That is my intention. Page 18 of the document states:

The Bill addresses a number of discrete issues relating to the effective enforcement of company legislation.

It closes off the ability of banks to avoid reporting loans to directors made during the financial year, but otherwise cleared on reporting day. [That is very much to be welcomed]. The Bill will require all such transactions above a minimal level to be listed in the company's annual accounts, irrespective of whether any balance is outstanding. [That is also to be welcomed]. Loans to persons connected to directors are subject to a different regime. Instead of being individually listed, aggregate information on all such loans must be appended to the annual accounts.

Everything else in this measure is to be welcomed. I look forward to the Minister of State addressing the question I raised.

Photo of Kieran PhelanKieran Phelan (Fianna Fail)
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Before I call the next speaker, I welcome my good friend, councillor O'Loughlin from Newbridge, and her party to the Seanad.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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I join the Acting Chairman in extending that welcome.

Photo of Larry ButlerLarry Butler (Fianna Fail)
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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.

Photo of Mary WhiteMary White (Fianna Fail)
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I welcome the Minister of State, Deputy Kelleher. I also welcome the proposed changes in the Bill. It comes on the back of the shocking revelations that a bank had concealed from public scrutiny huge loans granted to a former chairman for eight years. The Bill closes a legal loophole that allowed bank directors to keep their individual borrowings secret from the Financial Regulator and sets strict limits on the amount that may be borrowed by bank directors.

Company law has in the past treated banks differently from other businesses in recording loans to directors. The Companies Act 1990 limits loans from businesses to their directors to 10% of the company's assets. Until now, banks have been exempt from detailed disclosure but were required to record the aggregate total of loans to directors at the end of the year. This situation could not continue. As has been shown by all the recent scandals, policing the 10% rule has been next to impossible for the authorities.

This Bill specifies that all loans above the threshold to each individual named director will have to be disclosed separately in the annual accounts. I also am pleased to note that the liability of directors has been amended by making every director of every company that contravenes the Bill severally and individually liable for the contravention as the current legislation provides that liability is confined to the directors who approved contravening loans to other directors. Second, the Bill will make it an offence for companies and their directors to fail to comply with the disclosure provisions regarding loans and material interests of directors in company contracts.

The Director of Corporate Enforcement will now have a right to access third party records relating to a company under investigation. The 2008 report of the Office of the Director of Corporate Enforcement showed a 22% rise in alleged breaches of company law which in many cases involved directors' loans where borrowings were used for improper impersonal benefit amounting to €134 million last year, a four-fold increase on 2007. Go raibh míle maith agaibh, a Aire agus a Leas-Chathaoirligh.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Trade and Commerce, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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I welcome the Second Stage contributions from Senators as they have been very helpful and insightful. I was a Member of this House from 1993 to 1997 and I endorse the view that this House allows for broad, reflective debate at times and some very interesting points were raised by Senators on all sides.

I remind Senators that the Bill is very focused and aims to deal with a limited number of issues requiring immediate attention. Some of the company law suggestions made by Senators are not directly related to these urgent issues and therefore I consider that any positive response should await the major company law reform and consolidation Bill which is being drafted and to be published next year. This is a significant undertaking containing approximately 1,200 sections. It will consolidate all company law. There have been broad discussions with the stakeholders and the Government will be bringing the Bill forward as soon as possible but it is a significant undertaking by the Department and by all those who have been consulted.

The Tánaiste is still actively considering a number of the issues upon which there were divided views in the company law review group, for instance, the question of the directors' compliance statement which was raised by Senator O'Toole yesterday. The Tánaiste will bring her resulting legislative proposals to Government before the major Bill is published. It will be ultimately for the House to consider and adopt the final legislative proposals.

The contributions by Senators Cannon, Callely, Norris, Coghlan and Butler touched on financial regulatory matters that properly fall within the remit of the Minister for Finance. I will ensure these comments are brought to his attention for his consideration and that of his officials. Senators will be aware that the Minister for Finance has announced his intention to bring forward proposals for a revised regulatory framework for the financial sector. It is acknowledged that the financial services sector is of critical and strategic importance in the broader economy. Approximately 25,000 people are directly employed in the financial services sector and the Government wants to ensure there are proper and appropriate regulatory frameworks in place. There has been broad discussion about this issue and the Government does not intend to have a knee-jerk reaction to issues that have been raised in other jurisdictions particularly in the United States. We are aiming for a calm, rational analysis of the need for changes in regulation while at the same time being conscious that this country, as a global, open trading economy, is competing in the international markets and that financial services are very mobile. We must still be able to protect our integrity and assure investors and markets that the systems and regulations in place here are appropriate and will stand up to scrutiny. However, this is an issue for another day in the context of regulation of the financial services.

In response to the point raised by Senator Cannon yesterday and Senator Coghlan today, that the Office of the Director of Corporate Enforcement should have a role with regard to the activities of building societies and credit unions, the Tánaiste and I hold the view that the regulation of these financial services sectors rests with and should remain the responsibility of the Financial Regulator.

Senators Callely and Boyle raised issues relating to the disclosure of loans to connected persons. Section 26 of the Companies Act 1990 defines connected persons for the purpose of Part 3 of that Act, the Part which deals with transactions involving directors. This definition includes the directors' parents, brothers, sisters or children. As the Tánaiste explained yesterday, the Financial Regulator is empowered under the Central Bank Acts to require more detailed disclosures in the accounts of loans made to persons connected to directors of licensed banks. It must be remembered that company law covers all companies and only a limited number of companies are licensed banks. We need to be aware that this Bill must encompass all companies and is not just specifically for the areas referred to by some Senators. The provisions of this Bill accommodate the position whereby the Financial Regulator can, if considered appropriate, use a refined definition which will be solely appropriate to companies which are licensed banks.

Senator Boyle raised some fundamental questions about the nature of directors' loans and the purposes for which they are given. These provisions fall to be further examined in the reform and consolidation Bill as previously mentioned.

I refer to the point raised by Senator Ryan in connection with section 40. Is the Senator suggesting it could criminalise officers?

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Trade and Commerce, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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There is a defence system allowed under section 383 of the Companies Act 1963. The purpose of this section 40 is to make that provision more robust, to make people accountable and answerable. Previously, there was a necessity to prove the officer knowingly or wilfully authorised or permitted the default in question but now the onus will be on the officer and there is a defence allowable under section 383 of the Companies Act 1963. I hope this clarifies the issue for the Senator.

In response to queries from Senator Callely about consultation with stakeholders, the urgency of introducing this legislation meant that only limited consultation was possible. I can confirm that with regard to loans to bank directors issues, the Office of the Director of Corporate Enforcement, the Department of Finance and the Financial Regulator were the main offices consulted. With regard to amendments to Part 2 of the 1990 Act and other provisions granting access to registers, the Office of the Director of Corporate Enforcement was also consulted.

The European Commission, the Companies Registration Office, the Department of Finance and the Revenue Commissioners were consulted about provisions regarding the Irish registered non-resident companies. Deputy Coghlan also referred to the McDowell report of 1999. It has to be acknowledged that when that report was published initially only 13% of companies were in compliance with the Companies Registration Office but that percentage has now increased to 90%. On foot of that report the Government set up the Office of the Director of Corporate Enforcement.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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I appreciate that.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Trade and Commerce, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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The report was acted upon.

Amendments are proposed in two areas of the Bill. I am not giving a hostage to fortune but this is the Oireachtas where legislation is decided upon and everybody's opinion is valued here. This is where legislation can be refined and examined in greater detail and the Government will be willing to listen to arguments that stand up to scrutiny and which would improve the legislation. I refer to those proposed amendments with regard to the issue of the Irish registered non-resident companies and the amendment of section 40 in Part 2 of the 1990 Act.

The country is in very challenging times with regard to the economy. There are difficulties to deal with such as rising unemployment and a drop in exports and we are under severe pressure. However, we must address the issue of banking. The banks are under huge pressure and this is not because of any internal context but rather as a result of the broader international global credit crisis which has afflicted all modernised economies. It is critical to have structurally sound banks which can access credit on the wholesale money markets and provide it to first-time buyers and small and medium-sized businesses.

It is important we do not put out these bland statements on the purpose of the Government's support of the banks through the bank guarantee, which was of critical importance to the State and the functioning of the economy on 29 September 2008. If we had not brought that forward at that time, we could have been in a very precarious position because a collapse of any one of the major financial institutions that are of systemic importance would have had a knock-on effect on the broader economy. That was of great importance. Some people and parties have views on that but it was genuinely brought forward with one aim, to support and avoid a systemic collapse of the banking system in this country. At the time it was acknowledged internationally by everybody that it was a brave and courageous decision and, more important, it was the right decision.

We then went further in having broader due diligence of the banks. There was the nationalisation of Anglo Irish Bank for the reasons pointed out at the time by the Minister for Finance because of issues that arose in the context of undermining confidence due to certain activities. That is why that bank was nationalised. We then had the whole area of the capitalisation of the banks.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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It is not complete yet. Only one bank has been recapitalised.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Trade and Commerce, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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Yes, but we are in the process and it is important that we temper our language in these debates to point out that the Government is not capitalising banks for the sake of giving them money to support the developers. It is to ensure we have a working financial system in this country. I use any forum to point out that the Government is fundamental about ensuring we have working banks in place. Every country is grappling with this major difficulty of impaired assets. It is not unique to Ireland but has happened across all modern economies. It started first with the collapse of Lehman Brothers and the sub-prime market in the USA and it has spread across the world. The simplistic argument that has been put forward that we are just giving a few bob to the banks so they can look after developers is fundamentally unfair to what the Government is trying to do. More important, when Senators and Deputies raise the issue of lack of credit to mortgage holders and small and medium sized businesses to go about their daily business, it does not stack up.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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The banks are not helping small businesses.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Trade and Commerce, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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We must support the policy of ensuring we have a financially viable and credible banking system. The banks have a fundamental role to play in this. I said this publicly on numerous occasions in my previous role. There is a new relationship between the Irish banks and people through the bank guarantee and support through the capitalisation. We must encourage the banks to open up and allow commercial lending to small and medium-sized businesses. The idea of retracting and retrenching overdraft and short-term loan facilities to businesses is not acceptable. I urge, as should every Senator, the banks to accept that.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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Hear, hear.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Trade and Commerce, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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If Senators have queries raised by small and medium sized businesses or mortgage holders, or information on applicants who were refused a mortgage on unacceptable grounds, they should raise them in every forum.

Photo of Paul CoghlanPaul Coghlan (Fine Gael)
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I had one only last week.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Trade and Commerce, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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There is a new and detailed relationship between the State, the people and the Irish banking system. I urge banks to reflect on that. We all know that banks are challenged because of the internal and international difficulties but they have a fundamental role and we are supporting them so they can provide credit. We must have a mature debate on why we are dealing with the banks. We must have that functioning system in place and there must be credibility. That is why it is important that, in the context of the broader issues as discussed by the Minister for Finance in his review of the regulation of the financial services sector, we have regulation that is appropriate and acceptable and that stands up to international scrutiny. It is critical to the financial services sector and the economy that we do not move these services offshore. They are mobile and can move quite quickly if they are overburdened so appropriate regulation is required.

I thank the Senators and look forward to the discussions on Committee Stage. While we all spoke about the broader issues, this legislation is specific. It was brought forward to address some of the issues raised by Senators. I am confident that when it comes out the other side it will allow for more scrutiny and enforcement to ensure there is integrity in the areas to which the Bill refers.

Question put and agreed to.

Photo of Paddy BurkePaddy Burke (Fine Gael)
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When is it proposed to sit again?

Photo of Diarmuid WilsonDiarmuid Wilson (Fianna Fail)
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At 2.30 p.m. on Wednesday, 13 May 2009.