Dáil Éireann - Volume 498 - 16 December, 1998
Private Members' Business. - Building Societies (Amendment) Bill, 1998: Second Stage.
Question again proposed: “That the Bill be now read a Second Time.”
Mr. Fleming Mr. Fleming
Mr. Fleming: I wish to share my time with Deputies Kirk and Dennehy. 
An Ceann Comhairle Séamus Pattison
An Ceann Comhairle: Is that agreed? Agreed.
Mr. Fleming Mr. Fleming
Mr. Fleming: I welcome the opportunity to speak on this Bill. I praise Deputy Browne for the time and effort he has put into bringing this Bill forward. The principle of the Bill is a good one and one which has aroused public interest in recent years.
I have a personal interest as I was an account holder with Irish Permanent and when it converted to a plc I received 300 free shares. In the intervening years I received two allocations of 15 shares so I now have approximately 330 Irish Permanent plc shares. This illustrates the point. I received the shares — my wife did not get half of them. I received the full amount, lock, stock and barrel.
Mr. Browne (Carlow-Kilkenny) Mr. Browne (Carlow-Kilkenny)
Mr. Browne (Carlow-Kilkenny): Deputy Fleming is sharing them, that is the difference.
Mr. Fleming Mr. Fleming
Mr. Fleming: In the intervening years, all other items of correspondence from Irish Permanent plc have been addressed to both of us. In the past week I received a letter addressed to Mr. Seán G. Fleming and Mary B. Fleming, “Silveracre”, Castletown, Portlaoise, County Laois. This letter was about insurance. When there is a change in the interest rate, a year end statement or if someone is in the unfortunate position of being in arrears, notices will be sent out in both persons' names. However, we were surprised I received the shares. The same applied to First National Building Society, which is now called First Active.
I remember this issue came to light some years ago when a lady called Muriel Scorer tried to get on the board of Irish Permanent through election by the members at the AGM. She had done all the groundwork she thought was necessary. She contacted a number of people, including ladies she understood to be account holders. She duly got nomination papers and many of her friends and colleagues completed them and returned them in good faith, to find that when it came to the AGM they were adjudicated to be out of order because most of them had been signed by women who were second names on the account. They were deemed ineligible as valid nominations. She discussed the matter at length on “The Gay Byrne Show”. Like all good stories, there is a happy ending. In recent years she became a member of the board of Irish Permanent plc.
While I agree with the sentiments behind the Bill, I have a number of difficulties with its narrow focus. Under current legislation account holders decide who should be the first name on the account and thereby agree to whom the shares should be issued, if that is the case. The Bill is good but simplistic in its approach. It does not take due cognisance of other difficulties which may arise. I do not favour piecemeal legislation to deal with issues such as this when there are broader issues affecting building societies and financial institutions which could be dealt with.
 I would like to get some more information before we discuss this legislation further. The onus should be put on financial institutions and building societies to see if they can take measures at administrative level within their organisations to deal with this problem, instead of having to do it through legislation. Only if they fail to do this should legislation be necessary.
What has the Ombudsman for financial and credit institutions said on this issue? Have there been insurmountable problems with which the industry has been unwilling to deal? If there have not, the first port of call should be the building societies who should deal with them in the first instance. As regards the administrative aspect, I do not know why two accounts cannot be opened and then linked in the computer system for other financial purposes. I ask building societies to take this administrative approach.
I would like to be given more facts on this issue. How many joint account holders are there in remaining building societies on whom this could have an impact? This information should be available to us before we introduce legislation, on the basis of what appears to be a valid objective, without knowing the exact number of people it affects. I would like to get that information before we go further with this legislation.
I listened to Deputy Howlin speak on this yesterday. He spent most of his time talking about other difficulties as regards building societies. This undermined the good work done by Deputy Browne. The clear implication of Deputy Howlin's contribution was that there are many other issues to be dealt with as regards building societies and this Bill was a minor detail in his contribution.
I wish to refer to some of those glaring difficulties — first, high interest rates and arrears. When a person falls into arrears they immediately incur draconian penalties. It has recently been brought to my attention and it has been published in the national media that when a person who has a mortgage misses a couple of months' payments and is £1,000 in arrears they are charged a penal interest rate in relation to the original total capital sum borrowed, which might be £50,000. They are not only charged a penal rate in respect of the arrears but also in respect of the total loan, the vast majority of which is not in arrears. This is an issue I would like to see dealt with in any legislation regarding building societies and financial institutions.
Deputy Howlin also referred to the excessive interest rate charged by the Housing Finance Agency. One has to be refused by commercial institutions before one can qualify for a Housing Finance Agency loan. The rates charged are exorbitant when one looks at the rates currently available elsewhere. I would also like to examine the impact of the euro on these matters. We should look at this before we go ahead with any detailed legislation.
This brings us back to the big issue — the number of people requiring public housing and  affordable housing for young people. In the past week Laois County Council has had to pay £940,000 for 12 acres of land in Portlaoise so it can provide public and private housing in the next couple of years. This might be seen as good value for money by Dublin standards. However, in terms of a county like Laois, it is an exorbitant figure. However, it is a clear indication of the pressure on the housing market. These are the issues we should be looking at when discussing building societies and financial institutions. We should be providing loans for people trying to get houses.
This debate has highlighted the need for a financial services regulator. The Select Committee on Finance and the Public Service has discussed this matter at length. I am pleased that the Minister for Finance, Deputy McCreevy, and the Tánaiste, Deputy Harney, are bringing forward joint proposals for a financial services regulator. This is a classic issue for referral to that office when it is established, hopefully in 1999. I would only support legislation if that cannot be resolved satisfactorily. The intention is good but the legislation is premature. It may be possible to solve the problems referred to by Deputy Browne through administrative approaches by building societies rather than bringing forward legislation.
Mr. Kirk Mr. Kirk
Mr. Kirk: I declare an interest as I am a shareholder in First Active. When it became a plc I, like many other borrowers, benefited from a certain allocation of free shares. Deputy Browne should be commended for bringing the Bill before the House as it affords us all an opportunity to focus on mutual and plc building societies. Supply and demand in the housing market is going through a period of significant change. As with all such legislation, one must consider its implications not only for building societies which become plcs, but in terms of the precedents it will set and its knock-on effect for other financial institutions. For this reason it might be prudent to give more time for consideration of some of the proposals contained in the Bill before they are formally put through the Oireachtas. In his response last night, the Minister indicated he is prepared to consider some of the underlying objectives set out in the Bill. Clearly, this will involve consultation with the Attorney General, other Departments and the Central Bank. I am sure we will have further legislative opportunities to incorporate the changes set out in the Bill.
We must remember that only two building societies have become plcs, Irish Permanent and First National. It is not certain that any of the other building societies will consider going down that road. Naturally they will allow some time to pass in order to evaluate and assess the impact of demutualisation on the two societies to which I referred.
Inevitably there are pitfalls in legislation such as this. Today the Minister for the Marine and Natural Resources, Dr. Woods, introduced  changes to foreshore legislation. The Fisheries and Foreshore Act was introduced only in 1997, not 30 or 40 years ago. When it was given effect, defects came to the fore and it was necessary, because of the importance and relevance of it to the aquaculture industry, to make adjustments to rectify the problems identified.
Under current procedures in building societies there is one vote per member. Clearly, a change to allow joint account holders an entitlement to shareholding would result in two votes. It appears that those with one name on an account would be at an immediate disadvantage and this could lead to all kinds of difficulties in terms of decision making in plcs. Also, the procedures which would apply would have implications for some of the Company Acts. This would in turn have implications for various companies and credit unions. Another issue would be the constitutional implication for account holders, as some account holders would have more favourable voting rights than single account holders. Similarly, there would be a knock on effect in terms of property rights. I do not know if the Deputy who moved the Bill has had an opportunity to seek constitutional advice, but it would be important to consider this matter and to tease out the knock-on implications, if any, well in advance of the provisions being given legislative effect.
The cost of house building has escalated, particularly but not exclusively in Dublin, primarily because of the market forces of supply and demand. The demographic changes which have taken place are quite unprecedented. Six or seven years ago nobody could predict that we would have the level of economic growth we now enjoy and that the knock on demographic changes would cause a very significant increase in the demand for housing units. Recent statistics indicate there may be 40,000 house completions in the current year. Only those who are buying a home for themselves can say whether this is adequate to meet the demand in the market place.
On foot of the recent Bacon report the Government has taken a number of steps which I hope will take the over-heating out of the housing market. I am concerned by the cost of some houses in different parts of the country. The immediate question which springs to mind is the employment position of couples buying houses. There would certainly need to be no economic downturn for a long number of years as couples who buy houses undertake a huge financial burden by any standards.
Not so long ago there was a crisis in the housing market in Britain when many people found themselves dropping below the negative equity threshold. I am not anticipating that this will happen here, but I am concerned that many people on low and middle incomes might find themselves effectively excluded from the housing market. Many of the arrangements under social housing are very worthwhile, but all these things are constantly evolving. I am sure the Department of the  Environment and Local Government, particularly the Minister and the Minister of State, are keeping it under constant review. It is important this is done. It would be very serious if we reached a point where local authority housing lists became so long year after year without us making a real impact on reducing them.
The cost of building land is a major problem. It is only when the current supply and demand situation arises that we can afford to speculate on what would be if we decided in the past, when building land was more available and much cheaper to buy, to give local authorities the financial empowerment to acquire larger blocks of land. What would this have meant for many people today? It is not realistic to speculate on local authorities being given the necessary financial empowerment to buy building land at present. It is off putting for local authorities to see some of the prices being demanded for building land in my constituency. Like everything else, I am sure these matters are cyclical and change will come. I hope the lessons we have learned going through this phase of housing provision will be put to good effect.
Mr. Dennehy Mr. Dennehy
Mr. Dennehy: I join previous speakers who complimented Deputy Browne on taking the initiative to introduce this Bill. The preparation of any legislation is difficult and time consuming. It is opportune that we have time to debate not only this specific point, but to broaden the issue. I have been told that because of serious deficiencies in the Bill and the fact it could have wide ranging adverse application, the Government will oppose it for reasons spelled out by the Minister of State last night and other speakers since then.
However, I commend Deputy Browne on introducing the Bill and hope his objective can be achieved. As Deputy Fleming said, it is a small aspect of building society regimes with which we must deal and include in legislation in the future.
People target and identify with politicians and come to them with their grievances. The issue about which people are most aggrieved is the instant millionaires who emerge following the amalgamation of building societies and when they become plcs. It appeared there was a cosy relationship among individuals who were able to make companies public and give themselves a minimum of £1 million along the way. The public find it very difficult to understand how that can happen.
Explanations about good business and practice were given but I have a fairly fundamental approach to the issue in that money must come from some source. If a person gets £1 million through shares or any other arrangement, someone else must pay. At the end of the day, it is the customer who pays. These companies do not make money any other way other than through charges imposed on their customers. That has been the greatest negative reaction I have heard to the amalgamation of building societies and their rationalisation. I have been worried by it  and thank Deputy Browne for giving me this opportunity to raise this matter in the Chamber. People, including business people, are astonished that can happen.
The Minister of State gave a number of instances where these items can be addressed and I hope this matter will be looked at also. There is no such thing as instant money and somebody must be creaming it off. I do not mind anybody getting a fair reward for a good commercial achievement but the golden handshakes are way over the top and certainly result in a negative reaction.
There has also been a negative reaction to the recent spate of court cases and actions emerging from the repossession of property or homes. This has been an indictment of some of the institutions. Just as I intensely dislike people generalising about politicians and lumping them together, I do not believe I should place all building societies in the one basket. A pattern is emerging among the financial institutions whereby the public is totally unprotected, whether they are customers of large or small banks, building societies or a lending agency.
I am a member of the Committee of Public Accounts and the Joint Oireachtas Committee on Finance and the Public Service. Both committees tried to ascertain the protection for individuals with the lending agencies, but there is none. We even went as far as the Governor of the Central Bank to try to ascertain who polices the banks or who minds the minder as it were. It is a totally open market for these people.
As Deputy Fleming mentioned, we made a recommendation and have looked at situations in other countries. A pattern is developing throughout the European Union as regards the creation of regulatory bodies for financial institutions. They are all emerging for the same reason — malpractice or unsavory practices. We are seeing the same pattern emerge here. There is a need for further legislation, whether through the regulatory body or elsewhere, and I am sure it will be brought forward.
I am primarily concerned about the consumer. During the past week I looked for a package for the house purchaser, the main client of the building societies. It is a jungle out there particularly for the first time buyer who is inexperienced and who is usually dealing with the legal profession, which has its codes and fine high standard of practice, for the first time. They will also deal with engineers, money lenders and various other issues such as insurance. I looked for a package to simplify the situation for the buyer in areas such as searches and insurance protection. If we had a code of practice, we could include building societies.
I am all for a voluntary code where it can be applied, whether by the CIF or the building societies. I got an assurance from the Cork branch of the CIF that it has no intention of allowing the gazumping which happened in County Kildare and parts of Dublin to happen in  Cork. It is a voluntary code of practice and the Cork branch are a fine and decent bunch of people. They have assured that there will not be a need to go beyond that voluntary code.
We need to debate such issues and to do so, we need people like Deputy Browne to introduce Bills and table motions. I compliment him on the Bill. However, we will vote against it and I am sure he will understand and accept the reasons for that, as he would any good judgment in this House. I hope he will accept the goodwill and support of the Minister of State and the good intentions behind his rejection of the Bill. He promised the matter will be looked at positively.
Members have used this opportunity to broaden the debate on building and the Bacon report. “Density” seems to be a popular word at present. I fear that we will go back to the bad dark days of the 1960s which gave us the high rise monstrosities and the problems on which we are spending tens of millions of pounds rectifying. I hope we will not return to that era and that people will have a little common sense. I am sure the Minister of State will oversee this matter along with his colleague, the Minister of State, Deputy Molloy. I use this opportunity to appeal to people not to throw out the baby with the bath water.
The critical issue is the zoning of a sufficient amount of land. Some people have adopted the high moral ground on this issue. It is amazing that this is not a great difficulty in County Cork, which is the largest county, and where people can deal with questions like zoning and no accusations are made against individuals. It seems to be endemic in Dublin city and county. Once sufficient land is zoned, there is a suggestion of malpractice. I appeal to public representatives to ensure land is zoned for young people. That is what will prevent the occurrence here of the negative equity trap which occurred in the UK. It is an issue which public representatives must confront, especially in the Dublin and Kildare regions. Without land, prices will soar.
I compliment Deputy Browne on the legislation. I like to see people take the initiative on issues and I wish him well in having it implemented in the next session.
Mr. Perry Mr. Perry
Mr. Perry: I wish to share my time with Deputies Ring, Jim O'Keeffe and Crawford.
Acting Chairman (Mr. McGinley) Acting Chairman (Mr. McGinley)
Acting Chairman (Mr. McGinley): Is that agreed? Agreed.
Mr. Perry Mr. Perry
Mr. Perry: I compliment Deputy Browne on introducing this innovative Bill. The 1989 Act needed updating because it is hugely discriminatory. Since building societies went public, they have become cash driven and devoid of sentiment. It is a huge anomaly that, when they issued shares on becoming public, both signatories to a mortgage were not entitled to them.
 The Director of Consumer Affairs has written to all banks and building societies seeking written assurance about their charges and fees. He has ordered his staff to begin spot checks of bank branches to ensure they are not overcharging customers. The 1989 Act needs updating in the area of bank charges, especially as regards building societies, because so much has happened in the interim. By law, financial institutions can now only impose charges already notified to the Director of Consumer Affairs.
It is disheartening to hear how much complaints about overcharging by credit institutions add to the work of the Ombudsman. Revelations of overcharging by financial institutions prompted a huge increase of 28 per cent in complaints against banks, building societies and other credit institutions. Complaints to the Ombudsman, who is an independent arbitrator on disputes between financial institutions and their customers, have increased from 1,033 to 1,321. Of these, 29 per cent related to the operation of accounts by banks and building societies, including errors in statements, fees charged and interest rates. Complaints about the operation of mortgage accounts were also prominent, accounting for 27 per cent of the total number of cases brought to the Ombudsman, with a further 20 per cent related to other lending activities. I am very concerned about that.
I compliment Deputy Browne on bringing forward the Bill because it is critically important for people who take out a mortgage, especially with the level of house prices. More than one in ten people fall behind in their mortgage repayments and an average of three houses a week are being repossessed by building societies according to figures compiled by the voluntary housing agency, Threshold. Its report, As Safe As Houses, warns that more people could fall into arrears and have their homes repossessed as a result of the property boom. Huge increases in property prices now mean an average new house costs £35,000 more than a person on an average wage can normally borrow. The 178 repossessions by building societies last year represent a lower rate than in 1995, but are almost twice that of 1990. The figures speak for themselves. The Act became law in 1989 and, since 1990, the figure for repossessions has doubled.
I appeal to the Government to accept Deputy Browne's Bill. It is important that, when banks are driven by profit, the people entitled to shares receive them. It is an injustice that both holders of a mortgage from a building society are not entitled to shares when it goes public. Irish Life, the third largest life insurance company in the country, is amalgamating with Irish Permanent. With the churning of policies and the allegations of corruption surrounding bank charges, the time has come for the 1989 legislation to be updated. I appeal to the Government to examine this attempt in a positive manner. Some shares are now £10 each which means a single beneficiary is worth £3,000 in some cases. Divorce legislation  has been introduced since 1989 and I am amazed the Act was not amended then. It should have been amended in parallel to ensure both signatories to a mortgage receive an entitlement.
Being in business, I know the pressure couples are under to pay mortgages. Shares are one of the few benefits one receives from financial institutions because building societies and banks charge for everything. For example, there is a charge for an additional copy of a statement. A customer in my supermarket had his cheque for £35 returned and the bank made £15 on it by charging the customer and retailer £7.50 each. If building societies had any gumption, they would collectively correct the anomaly highlighted by the Bill to ensure everyone benefited. People gain very little from them so, when they pretend to play Santa Claus by allocating shares, it is a huge injustice that only one signatory to a mortgage benefits.
The report of the Ombudsman, the revelation that three homes a week are being repossessed and the fact that it seems all the banks are involved suggest the time has come for major regulation in this area. It is overdue and it surprises me that the 1989 Act was not updated to bring forward changes. A great deal more could be done with building societies to create more transparency in their dealings with customers. People are mortgaged to the hilt. In the current housing boom, banks and building society can justify 100 per cent loans and sometimes even more, such is the competition which exists.
I appeal to the Minister to examine this important amendment to the 1989 Act. It is a matter of consumer rights, especially as the Ombudsman's office must spend so much time dealing with complaints about financial institutions. In 26 per cent of cases or 348 disputes, the procedures failed to provide a solution and the cases were subsequently referred again to the Ombudsman. There is a huge level of error, yet people are so heavily mortgaged they are afraid to do anything. It should also be noted that these are only the complaints referred to the Ombudsman. How many did not go that far? There is a huge number of people in arrears with their mortgages who cannot question charges. I believe building societies are indulging in hidden charges and are getting away with charging rates considerably in excess of those used to appeal to new customers.
I compliment Deputy Browne on introducing this innovative, necessary and timely legislation and I plead with the Government to accept this important amendment to the 1989 Act.
Mr. J. O'Keeffe Mr. J. O'Keeffe
Mr. J. O'Keeffe: I compliment Deputy Browne on performing his duty as a legislator and on the quality of the legislation he has produced. However, I have some doubts about the compliments coming from Members on the Government side. They ring hollow when they initially compliment him and then tell him they will not accept the Bill. The best compliment they could pay him  is to ensure his Bill becomes law. Deputy Browne will not say the Bill is perfect. He has raised a serious issue and has proposed a solution. We are all aware that Committee Stage is the procedure for dealing with deficiencies in a Bill. That is the procedure I have used since I came to this House 20 years ago. Why will the Government not use it in connection with this Bill? If there are difficulties or deficiencies let us discuss them on Committee Stage. The fundamental question is whether the Minister accepts the principle of the Bill. As of now it appears the Government does not accept it.
We have heard much about the problems and the launch of the building societies. I was amused by the Minister of State, Deputy Dennehy, who raised the serious issue of instant millionaires emerging from some of the flotations. The procedure for dealing with instant millionaires, people who get money for jam, is tax. That was the procedure until yesterday. We now have the zero tax regime.
I invite the Government to use the Committee Stage procedure for dealing with Deputy Browne's Bill and the normal tax procedure. Let us get away from the zero tax approach, which appears to be the hallmark of this Government, to the normal tax procedure where people pay their tax in the normal way. I am not concerned about the position of instant millionaires. Deputy Browne may deal with that point on another day, particularly if the zero tax approach continues. He is concerned about the people who got nothing on the flotations. There is an attempt to suggest that has happened only to a few people. The Minister admitted that upwards of 50 per cent of all accounts are joint. I am aware from my experience as a lawyer and a politician that in those 50 per cent of cases, virtually every single account has the woman in second place. Almost invariably the male dominance emerges when it comes to opening accounts. I will lay a bet since we do not have to pay tax on bets any more——
Mr. Ring Mr. Ring
Mr. Ring: The Government does not like taxes.
Mr. J. O'Keeffe Mr. J. O'Keeffe
Mr. J. O'Keeffe: ——that in nearly all cases the women will suffer because of this anomaly. Does the Minister realise the position? Does he realise he is effectively supporting discrimination against women by shooting down this Bill? If I may coin a phrase, instead of the Minister being known as “Wallace for women”, he will be known as “Danny the discriminator”. That is a fate I do not wish on him but that will be the outcome of his approach because this is clear discrimination against women. Given that the Minister of State is an old friend of mine I would hate to see him labelled in that fashion. In his own interest I suggest he review his decision forthwith and ensure the Bill goes through.
Much lip service is paid to the question of equality of women. This is an opportunity for the Minister to show whether he is for or against it. The situation that now exists clearly discriminates  against women. In virtually all cases of joint accounts, the women got nothing from previous flotations because the second name was that of the wife. What will the Government do about it? Deputy Browne has highlighted the anomaly and produced a Bill. The Government's response is a hollow compliment to him. It will look into the matter and in the meantime shoot down the Bill. That is the wrong approach. The correct approach would be to approve the Bill in principle on Second Stage and to refer it to a committee where I have no doubt Deputy Browne would be most accommodating in regard to any amendments the Government considered necessary to tighten up its provisions.
The Minister talked about effecting the decision-making process. Anybody who knows anything about building societies and plc AGMs knows that is not the issue. He referred to the Constitution but I have not the time to quote the Constitution. I could make a case that it is unconstitutional to continue this discrimination against women. I could make the case that because of the equality of all citizens before the law and under the Constitution, this discrimination is unconstitutional and the Minister's position is unconstitutional. Time does not permit me to dwell on it in any more detail. The Minister has thrown the Constitution and the kitchen sink into his arguments to stop this Bill. It is unworthy of the Minister to adopt that approach.
I appeal to the Minister not in the interest of my friend and colleague Deputy Browne who has done this House and the nation a service in producing the Bill but in the interest of the Minister of State, Deputy Wallace, to ensure the Bill goes through. Otherwise there is a fate in store for him: the chance to be known as “Wallace for women” will be gone and he will be known as “Danny the discriminator” henceforth.
Mr. Ring Mr. Ring
Mr. Ring: I wish to share my time with Deputy Crawford.
Acting Chairman Acting Chairman
Acting Chairman: Is that agreed? Agreed.
Mr. Ring Mr. Ring
Mr. Ring: I compliment Deputy John Browne who introduced this Bill. He has been in the House for many years and is a man of culture and class. He quotes regularly from Shakespeare and so on. I like to listen to and learn from him. This is a matter which I thought about because a number of constituents came to me in recent months arising from the flotation of the building society. I did not realise there was a problem until a widow came to me from the Newport area. She made a strong point about this. She wrote to every TD in County Mayo, the Minister and the Taoiseach because she was outraged to find that, although she held a joint account with her husband, when he died the shares were not passed on to her.
In Ireland we always believed in the family. We always preached and talked about the family. In  every household throughout the country, whether it was the family land, the family car or the family account it was in the father's name. That is how we were taught and that is how it was until recently.
I am disappointed the Government does not see fit to accept this Bill. The same applied with the pro rata pensions. When something is wrong it should be fixed and legislation should be brought before the House. Deputy Browne has introduced legislation to rectify a genuine problem. It should be corrected. The Government is rejecting that Bill. That is wrong. In my opinion building societies will be challenged in the future and legislation will have to be put in place to deal with existing problems.
I wish to make a number of comments about banks, building societies and supermarkets. To quote an old saying, “the banks give you the umbrella when the sun is shining and they take it away when it starts to rain”. The banks have always been noted for that and the building societies are no different. I recall a case where the managing director of a building society could have allowed a family to remain in their home. The individual in question is a strong supporter of a political party, but I will not name him. I contacted his office and discovered that the family also owed money to the banks and a number of other people and they sold property to pay their debts. Of the five people owed money, four were willing to play ball but the managing director of the building society was not prepared to do so.
The upshot was that the family were evicted from their house. For as long as I live or as long as I am involved in politics, I will never forget the moment when the father contacted me by phone on the morning in question and I heard his children crying in the background. I immediately came into the Dáil and attempted to raise the matter, but to no avail. I tried to contact the managing director of the building society, but he would not talk to me. He behaved like an animal. All he wanted was his pound of flesh, he was interested in nothing more than pounds, shillings and pence. The four other parties involved played ball but this individual would not do so.
A number of speakers referred to financial charges. If a woman entered a supermarket tomorrow and stole two pounds of sugar and one pound of butter because she needed them, the local Garda sergeant would arrest and detain her to appear in court. If a contrary judge heard the case and the woman refused to pay for what she had stolen, she might be sentenced to a week in Mountjoy Prison.
Over the years we have been robbed by the supermarkets, the banks and the building societies in respect of charges. I will provide an example to prove my point. Last week an individual who is well known to me bought one pound of rashers in her local supermarket. For the sake of argument, let us say the rashers cost £3. However, when she went home the woman  checked her receipt and discovered she had been charged £22 for the rashers. She returned to the supermarket the next day and, to be fair, the manager accepted there was a problem. He took the rashers, scanned them at the checkout and was given three different prices for them. The woman was fortunate because the management rectified the situation. However, what happens in cases where people do not check their receipts?
There is a need to introduce legislation to deal with problems involving scanners, bar codes, supermarkets, banks and other institutions. If the institutions to which I refer make mistakes — I accept everyone makes mistakes — they must pay the penalty. What is the difference between a woman who steals some rashers and a supermarket checkout attendant who — perhaps because he or she is hungover from the night before or because he or she is not good at mathematics -rings up a sale as £22.20 instead of £2.20? The only difference is that the woman who stole the rashers will be prosecuted while the supermarket employee will be protected. That is wrong. It is time legislation was introduced to deal with these serious problems. If people caught stealing are prosecuted, supermarkets which make mistakes or overcharge must also be prosecuted.
I grew up in a working class housing estate. I have said on many occasions that there is one law for the rich and another for the poor. A poor man once said to me “Mr. Ring, it does not matter whether you support Fianna Fáil, Fine Gael or Labour because if a rich man's son gets into trouble he will be looked after by his own kind.” We saw an example of that today. I appeal to members of the Judiciary to be as lenient with poor people who commit petty theft as they have been with certain other individuals.
To return to the Bill, there is an injustice in existence at present. We have always preached about the family and, as stated earlier, despite the fact that husbands traditionally owned the family land, car or bank account, these were always understood to be owned jointly by other members of the family. What is happening at present is wrong and I appeal to the Minister to accept the Bill. If amendments are required, they can be introduced on Committee Stage. I compliment Deputy Browne on bringing the Bill before the Dáil.
Mr. Crawford Mr. Crawford
Mr. Crawford: I thank my colleagues for sharing time and I congratulate Deputy Browne on bringing the Bill before the House. I am disappointed this straightforward Bill which deals with only one issue has been deemed unsuitable by the Government. However, the Government has until 8.30 p.m. to face reality and accept that people must be given equal rights.
It is unbelievable that if a man signs on the dotted line first, he immediately makes his wife a second class citizen. If, as Deputy Browne stated, he is well bred and allows his wife to sign first, he signs away his rights. What happens when the building societies encounter problems and the  spouse who signed first is away from home? That happened in the case highlighted by Deputy Browne. The person who signed for the mortgage did not pay the bills but the building society was happy to accept their money. If the spouse had not paid, the building society would have expected the first person it found living in the house to do so. The building society was able to uncover the long lost husband when it wanted to issue shares to him.
The Bill is so straightforward that the Minister of State and his party, which has preached about equality for a long period, should accept it. If, as Deputy Jim O'Keeffe stated, there are flaws they can be rectified on Committee Stage. However, there is no need to throw out the baby with the bath water. The Minister of State is merely being asked to recognise that the two people who sign for a house — they may be married, living together with the intention of getting married or living together as partners — have equal rights.
I understand the Minister of State indicated he was concerned about the costs involved in ensuring that computer files, documents, etc., were corrected. At a meeting a number of years ago a civil servant in the then Department of Agriculture informed me it could not pay out sizable grants to farmers because it did not have time to do so. However, before we left the meeting, the Minister agreed to introduce a £5 fodder or fertiliser scheme. This should be paid by Teagasc. All the information is on computer. The Minister's excuse, therefore, is a lame one. He should support the Bill and ensure the matter is rectified.
Minister of State at the Department of Health and Children (Dr. Moffatt) Minister of State at the Department of Health and Children (Dr. Moffatt)
Minister of State at the Department of Health and Children (Dr. Moffatt): I concur with the sentiments expressed by the Minister of State, Deputy Dan Wallace, when he expressed sympathy with the broad objective of equality underlying the Bill.
Mr. Crawford Mr. Crawford
Mr. Crawford: Sympathy is not enough.
Dr. Moffatt Dr. Moffatt
Dr. Moffatt: The Minister of State was generous in his compliments to Deputy Browne for raising the issue. He gave a firm assurance that the Government will consider how the objective of equitable subdivision of share entitlements for joint accounts might be secured and indicated that if this can best be achieved through a legislative response, the possibility of including appropriate provisions in legislation will be looked at.
It is important to consider the wider context in which the changes proposed would have implications. Some of the comments made by Opposition speakers indicate a lack of appreciation that, while issues with wide-ranging implications have been raised, the Bill would apply only to three financial institutions. The Irish Permanent was mentioned. The Irish Permanent is now a bank rather than a building society. If legislation were to be introduced to address the issues which have been raised, this would have to be considered in the  wider context of banking law and the Companies Acts.
The Government has been criticised for not addressing the issue. Five parties have participated in Government since the enactment of the Building Societies Act, 1989. Few Members are in a position, therefore, to take the high moral ground on this matter. The reason that none of the Opposition parties addressed the matter in Government is that it is not as straightforward as some would have us believe.
It is important to distinguish between the broad objective of equality and the principles of the Bill. Some suggested that any defects in the Bill might be capable of being rectified by amendment and that the Government should be prepared to agree to its passage through Second Stage on this basis. They appear to have missed the important point that, although there may be a desirable policy objective, the approach proposed to achieve it is flawed. It has been acknowledged that the broad objective of securing equality between the parties to a joint account is a laudable one. The approach on which the Bill is based is flawed. Accepting the Bill on Second Stage and rectifying its defects in committee is not an option.
There are technical defects which may be rectified in committee but that is not the basis on which the Government is opposing its Second Reading. The crux of the matter is that, while purporting to seek greater equality between joint account holders in building societies, the Bill would create new inequalities between these and other members of a society and adversely affect their rights and entitlements. Such a scenario has significant constitutional implications. It was surprising that some Members adopted a rather cavalier attitude to this issue almost implying that this was a ploy on the part of the Government rather than a fundamental criterion of the acceptability in principle of a legislative proposal.
There is a question to be answered as to whether legislation is likely to be the most effective approach to address the issue. It was disappointing that a number of Opposition speakers were prepared to turn a deaf ear to the significant practical difficulties the approach proposed in the Bill would create. That legal and practical issues would arise not only in relation to building societies but also companies, credit unions and other shareholding organisations which operate under statutory procedures compounds the seriousness of the implications which the Bill would provoke.
I will give a simple illustration of how the Bill could result in serious inequalities and encroachment on the rights of many building society shareholders. In the case of a person who has £1,000 invested in a share account with a building society and four people who have each invested £250 in a joint account each account carries one vote under existing legislation. The effect of the Bill would be that the vote of single account holders would be reduced to one fourth, that of the joint account. This would result in a significant diminution  of the rights attaching to single account holders and represent a glaring inequity which would be compounded throughout the membership of the society.
A further example of the serious flaws in the Bill's approach is that it does not address the specific objective of achieving an equal subdivision of the share entitlement due to a joint account in the event of conversion to plc status.
Mr. Browne (Carlow-Kilkenny) Mr. Browne (Carlow-Kilkenny)
Mr. Browne (Carlow-Kilkenny): Where is the complication? Where is it stated in the Bill that shares would not be divided equally?
Dr. Moffatt Dr. Moffatt
Dr. Moffatt: Each shareholder has a vote.
Mr. Browne (Carlow-Kilkenny) Mr. Browne (Carlow-Kilkenny)
Mr. Browne (Carlow-Kilkenny): The Bill states that shares would be divided equally. That is not a complicated system. The Minister of State's script is a disgrace, although I accept he did not write it.
Dr. Moffatt Dr. Moffatt
Dr. Moffatt: The Bill would likely cause a fundamental alteration of the basis on which the share entitlement attaching to each account would be determined resulting in a multiplication of the share issues to joint accounts with corresponding dilution of the entitlements of single account holders. It would also lead to a situation in which there would be an open invitation and a strong incentive for those with manipulative intentions towards building societies, as happened in the United Kingdom. This would not be in the interests of the mutual building society movement or the continuation of a diverse and competitive mortgage market. The ultimate loser would be the house buying borrower.
A common theme running through many of the contributions of Opposition speakers was the attempt to gloss over the flaws in the Bill with populist rhetoric about equality and, in some instances, disingenuous insinuations about gender imbalance in the Building Societies Act. Not only does this ignore that the arrangements which have been called into question, for example in relation to voting rights, are a fundamental principle in shareholding under the Companies Acts and other codes, it also fails to recognise that the opening of a joint account is a voluntary decision. The Building Societies Act provides a specific right for the parties to a joint account to determine the order of names and to change it at any time. It is not the case that where one party signs first the other is permanently excluded.
It may be desirable to examine whether there is a need to make persons opening joint accounts more aware of the procedures relating to these accounts, including the position on conversions. This could most effectively be pursued with the societies without introducing fundamental changes in legislation which could have far-reaching and potentially damaging implications. There was also an attempt to paint a very alarmist scenario about the danger of second named account holders being kept in the dark about their  accounts and a suggestion that if the first named failed to meet his or her obligations a serious arrears situation might be allowed to build up without the other person's knowledge. This is based on a very narrow and selective portrayal of the legislative provisions and ignores the reality of what happens in practice. The fact is that building societies, as a general practice, make considerable efforts to ensure that second parties to a joint account are provided with important information relating to their accounts including regular statements. For example, it is the normal practice to address correspondence relating to mortgage accounts to both joint holders. More-over, where difficulties such as arrears arise, societies make special efforts to contact the second party and it is the practice to interview both parties before any proceedings are instituted. An important point to note here is that problems of arrears are not, in practice, always attributable to default on the part of the first named account holder. Quite often the other party is the one responsible for paying bills and it can happen that this person fails to make repayments without the knowledge of the other. In such circumstances, the practical measures which societies take to ensure that both parties are contacted are far more effective than any legislative measures. It is also worth pointing out that the rate of repossessions in this country is extremely low — much lower, for example, than in the UK.
Deputy Howlin raised the issue of borrowers with relatively high fixed interest rate loans from local authorities. Generally speaking, fixed rate local authority house purchase or improvement loans have not issued since 1 December 1987. While these interest rates may look high compared to today's rates, when they first issued and indeed for many years subsequently, they were below the market rates. As Deputy Howlin pointed out, borrowers with fixed rate local authority mortgages are free to redeem them at any time without any interest rate penalty and if they wish, refinance them at the lower rate now available in the private sector. This is an important concession which would not be available with private sector fixed rate loans. The Department of the Environment and Local Government will, as suggested by Deputy Howlin, write to local authorities requesting them to notify borrowers of this option.
Some speakers sought to trivialise the cost implications of the Bill. The suggestion appears to be that building societies can well afford it and a comment was even made to the effect that they could easily recoup the cost by increasing their rates. The reality is that additional costs which, as the Minister of State, Deputy Wallace pointed out, could arise well beyond the building society sector if the principle in the Bill was accepted, would ultimately bear on members of building societies and other institutions and on consumers. Some of the sentiments that have been voiced pay scant regard to the interests of affordability for people trying to purchase their homes, or commitment  to business competitiveness which will be increasingly vital in the context of monetary union.
The problems that have emerged in relation to this Bill can be summarised in terms of a gulf between the broad objective that it purports to achieve and the reality of what it would result in. This Bill simply would not achieve the objective of securing equality between the parties to a particular joint account. Instead, it would have a range of undesirable consequences both in relation to building societies and much further afield. It would, in the process, create significant constitutional difficulties arising from the basic approach on which it is founded which makes it impossible for the Government to accept it as a valid legislative approach even in principle.
The Minister, however, has undertaken to examine how the valid objectives underlying the Bill can best be secured without creating the sort of significant legal and practical difficulties which the Bill involves. If this means legislation then the House has an assurance that the necessary proposals will be considered in consultation with the other relevant interests and having regard to the implications of other codes such as the companies Acts which have much wider application than the Building Societies Act. This is a reasonable approach and in the circumstances the only sensible option to ensure a workable solution.
Mr. Shatter Mr. Shatter
Mr. Shatter: I will share my time with Deputy John Browne. I congratulate Deputy Browne on bringing before the House an important an symbolic Bill. I am pleased to discuss it with your illustrious presence in the Chair. Now that the Leas-Cheann Comhairle is assuming the Chair even more lustre is added to the occasion.
This measure is one which any sensible Government would have welcomed, accepted and allowed to pass Second Stage without the parties dividing. Any technical changes which the Government parties sought could have been included on Committee Stage. It is appropriate that we address this measure this evening when there are so many women in the public gallery of the House, many of whom I recognise from my constituency of Dublin South. They will be amazed to learn what the substance of this legislation is and that the Government is opposing it.
This Bill does a very simple thing. It seeks to ensure that where a family home is held in the joint names of husband and wife and where there is a building society mortgage, if the building society floats and goes public any shares made available to the members of the society are shared equally between husband and wife. Apparently the view of the Fianna Fáil party is that shares should not be shared equally between husband and wife and that primarily they should go to husbands.
Dr. Moffatt Dr. Moffatt
Dr. Moffatt: We did not say that. 
Mr. Shatter Mr. Shatter
Mr. Shatter: I would have thought such an approach had been abandoned by the Members of this House years ago. That is the effective position taken by Fianna Fáil and the Progressive Democrats in voting against this Bill. Two building societies, Irish Permanent and First Active, have floated. By and large when mortgages are taken out on properties which are in joint names the building society writes the husband's name down first and the wife's second. That has been my experience as a Member of this House and as a legal practitioner and family lawyer. If Mr. and Mrs. Bloggs take out a mortgage with a building society the first named borrower will usually be Mr. Bloggs and the second named Mrs. Bloggs. When the Irish Permanent and First National which became First Active floated, the shares which were issued in the context of joint mortgages all issued to the first named person on the mortgage. It would be correct to estimate that where the mortgages were in joint names, in 90 per cent of instances, the shares issued to the husband alone. Where a marriage is happy and there are no difficulties between husband and wife and they operate under true financial partnership, no difficulty was created. Trouble arose where there were family difficulties. Deserted wives living in family homes held in joint names found that the deserting husband got the shares and the wife, left in the home looking after the children not only did not get the shares but was furthermore told by the building society that she had no entitlement to them. This meant she did not have the opportunity to realise the windfall benefit of the shares and sell them. It meant that if the shares were retained she had no entitlement to the annual dividend paid to shareholders. The current law in this area is an ass and has failed to keep up to date with the partnership view which we now have of marriage and the view that women deserve to be treated equally with men which we have articulated in many other areas in this House. Neither deserves to be regarded as superior to the other, each should be treated equally. Many mortgage holders tend not to involve themselves in this to any great degree.
The other practical consequence of this in which many mortgage holders tend not to become involved to any great degree is that when it comes to voting on whether a building society should go public the only persons to whom voting cards are issued are those who are named first on the mortgage, and in 90 per cent of instances that is the husband. That is completely wrong. When a family home is held in joint names and there is a joint mortgage, there is no practical reason, when there is a public flotation, that a husband and wife should not have a joint share or a joint beneficial ownership in the shares that are issued. There is no reason a husband and wife should not have an equal 50 per cent entitlement to dividends paid under those shares. There is also no reason wives should be generally excluded from voting at annual general meetings of building societies or from voting on whether their society should  maintain its mutuality status or become a publicly quoted company.
I read, with some astonishment and amazement, the speech of the Minister of State, Deputy Wallace, in this House last night. Normally I would not reveal confidential discussions that take place between colleagues, but yesterday evening Deputy Browne and I discussed what the Government would say about this Bill. Having brought 15 Private Members' Bills before the House, I am familiar with the mantra that is usually wheeled out by Government Departments, when they consider Deputies are impudently attempting to act as legislators as opposed to simply lobby fodder and they want to deflect legislation and prevent it being enacted. I was subjected to that mantra in respect of 11 of the Private Members' Bills I introduced, but within 12 to 18 months Bills practically identical to mine were subsequently published by the Government of the day which addressed issues it had previously said could not be properly addressed.
The first mantra is that this Bill could possibly be unconstitutional, but that is balderdash. In so far as the current provisions in the Building Societies Act discriminate against some mortgage holders, they could be found to be unconstitutional. It is only because such a challenge has not been brought that the issue has not been addressed comprehensively by our courts. In no circumstance could legislation which seeks to provide equality between a husband and a wife be regarded as unconstitutional. It is unfortunate that important constitutional issues are used as asinine political weapons to try to do down practical propositions for legislation that comes from the Opposition benches.
It is suggested that if one allowed joint mortgage holders to share in a share issue that, in some way, sole mortgage holders would lose out. That is arrant nonsense. If I take out a mortgage in my sole name on my home and a building society, when it floats its shares, issues 500 shares to the person who has borrowed funds from it, I would get 500 shares. Based on that provision, if the mortgage were held by my wife and myself jointly, we would get 250 shares each. I fail to understand how that would act contrary to the interests of sole mortgage holders. There is a suggestion that the roof would fall in if husbands and wives were given voting rights and that, in some way, the sole mortgage holder would be done down.
Mortgages can be for different sums of money. Take a married couple with a mortgage of £60,000 who are each allowed to vote, based on the Minister's analysis that would do great damage to the sole mortgage holder who might have a mortgage of only £30,000 and who has a single vote. There is not a single credible argument offered by the Government for voting down this legislation. If the legislation requires technical change, amendments can be tabled on Committee Stage. A Bill has not been brought before the House by the Government that has been so perfect  that the Minister has not had to amend it on Committee Stage. This Bill works. It would right a wrong. It would give women true equality. If it were enacted, it would ensure that any women in the Public Gallery, whose company we have the pleasure of this evening, who have shares in Irish Nationwide or who are parties to a mortgage with that building society, would share in the benefits of that building society going public by getting equal ownership of any shares issued.
We are trying to modernise an archaic area of our law and to brush off the cobwebs of legislative inertia. The Fianna Fáil Party and Progressive Democrats will vote to maintain women as second class citizens in the area of mortgages. They will vote to deny thousands of married women throughout the length and breadth of this country the entitlement to joint ownership rights in any shares issued by any building society that goes public in the future.
Mr. Browne (Carlow-Kilkenny) Mr. Browne (Carlow-Kilkenny)
Mr. Browne (Carlow-Kilkenny): I thank all the Members who took part in this debate, particularly my party colleagues who made a case that justifies the enactment of this Bill. I have seldom listened to arguments from the Government side that stand up. I do not blame the Ministers for that. A script writer somewhere is the son of Sam, the son of the man who brought in the 1989 Act. I checked the Official Report of the Seanad debate on that Bill. That Bill was introduced when a Government had fallen in 1989 and the Seanad was still in session. All Stages of the Central Bank Bill and the Building Societies Bill were put through the Seanad on the same day. That proposal led to the Fine Gael Senators and Independent Senators walking out of the Seanad. Senator Robinson, who arrived a few minutes late, asked about the legality of enacting that legislation. The then Minister, Pádraig Flynn was acting on behalf of the Minister responsible for this area and Committee and Remaining Stages of the Building Societies Bill were passed with no amendment or discussion.
I wish to support the case that was ably put by Deputy Shatter. One cannot be selective about the Constitution. Women's rights are guarded under it and one cannot pretend otherwise. The same is the case in regard to the division of shares and votes. Some Members opposite are convoluted in their thinking and seem to have got only one side of the story.
Mr. D. Wallace Mr. D. Wallace
Mr. D. Wallace: That is not true.
Mr. Browne (Carlow-Kilkenny) Mr. Browne (Carlow-Kilkenny)
Mr. Browne (Carlow-Kilkenny): That is true.  The thinking opposite is such that there appears to be nothing wrong with depriving a woman, who has £30,000 worth of shares, of a vote. She will suffer, but she has always suffered and the attitude appears to be that she should continue to suffer. If three account holders have £10,000 worth of shares, they will get three shares. That is a marvellous argument to put forward.
The Minister of State, Deputy Wallace, stated last night that there are significant constitutional doubts. He said, in particular, the Bill could add substantially to the cost of building societies. The Government said the same in 1989, but it has not learned anything in this regard since then. The contribution of the then Minister, Pádraig Flynn focused on the building societies and did not deal with individuals. I checked the record to see what he said about section 16, but he never mentioned it.
The Minister, Deputy Wallace, also said that more systems changes would be needed to collect, verify and record details. Whoever wrote this rubbish should be taken out? He also said that this Bill, if enacted, would require fundamental restructuring of computer information and the IT unit, as if computers would go up in flames and building societies offices would be burned out because computers would not be able to deal with the second name of a joint account holder.
Mr. Shatter Mr. Shatter
Mr. Shatter: It is rubbish that they could not cope with women having equal rights in advance of the year 2000.
Mr. Browne (Carlow-Kilkenny) Mr. Browne (Carlow-Kilkenny)
Mr. Browne (Carlow-Kilkenny): The Minister of State, Deputy Wallace, said that would be too costly. He also said the Bill would add greatly to difficulties in determining share entitlements in the event of a conversion. One could imagine an official in a building society, with the stub of a pencil, working out that the holders of a joint account are to be given 400 shares and how that could be divided by two or checking if there was a calculator. That just adds insult to injury.
The Minister also said the Bill would greatly add to difficulties in determining share entitlements in the event of a conversion. The building societies can calculate the shares for the one person who is elected, illegally and unconstitutionally but they cannot divide that by two. The Minister should do something about such logic. The Government is voting against a change which will take away an injustice to women about which I am embarrassed. I hope the female Members who vote against this Bill also feel embarrassed.
The Dáil divided: Tá, 66; Níl, 74.
Tellers: Tá, Deputies Barrett and Stagg; Níl, Deputies S. Brennan and Power.
Question declared lost. 
Dáil Éireann 498 Private Members' Business. Building Societies (Amendment) Bill, 1998: Second Stage.