Dáil Éireann - Volume 346 - 30 November, 1983

Trustee (Authorised Investments) (No. 2) Order, 1983: Motion.

Minister of State at the Department of Finance (Mr. J. Bermingham): I move:

That Dáil Éireann approves the following Order in draft:

Trustee (Authorised Investments) (No. 2) Order, 1983,

a copy of which Order in draft was laid before the House on 26th October, 1983.

The investment powers of trustees are set out in the Trustee (Authorised Investments) Act of 1958. They may of course be modified by the terms of the instrument setting up the trust. The chief purpose of the legislation is to protect the interests of the beneficiaries of trusts by providing trustees with a range of suitable investment outlets. The Minister for Finance is empowered under section 2 of the Act to amend the list of authorised investments by order. Before an order may be made, a draft must be laid before both Houses of the Oireachtas and each House must pass a resolution of approval. The present draft order has already been approved by the Seanad. It is the second draft order to be laid before the House this year and, if approved, will mean that, in 1983, six additions will have been made to the list of trustee authorised investment.

In the present Order, I propose to authorise trustees to invest trust funds in interest-bearing deposit accounts in the following licensed banks:

(a) First Southern Bank Limited,

(b) Credit Finance Bank Limited,

(c) Hong Kong and Shanghai Banking Corporation.

These three banks have been recommended for trustee status by the Central [646] Bank, the banking supervisory authority. First Southern Bank and Credit Finance Bank have been in operation for several years, providing a wide range of banking services. The Hong Kong and Shanghai Banking Corporation has been operating in Ireland for the last four years and is a member of one of the largest banking groups in the world.

The 1958 Act requires that the following referees must be consulted about the terms of the draft order before it is laid before the Houses of the Oireachtas:

(a) A Judge of the High Court nominated by the Chief Justice;

(b) The Governor of the Central Bank;

(c) The Public Trustee;

(d) The Chairman of the Irish Banks' Standing Committee;

(e) The President of the Incorporated Law Society of Ireland;

(f) The President of the Stock Exchange — Irish.

All of the statutory requirements have been complied with and the referees are in agreement with this draft order.

I am satisfied that the banks named in the draft order provide suitable investment opportunities for trust funds. I therefore commend the motion for approval by the House.

Mr. Flynn: How many other banking organisations are covered?

Mr. J. Bermingham: The other banks are the Bank of Ireland, Guinness and Mahon, Allied Irish Banks Limited, Ulster Bank Limited, Northern Bank Limited, National City Bank Limited, now the Chase Bank of Ireland Limited, Post Office Savings Bank, Trustee Savings Bank, British Government Securities inscribed or registered in the State. There are some other banks as well.

Mr. R. Burke: What about the building societies?

Mr. J. Bermingham: The Irish Permanent [647] Building Society, the Educational Building Society, the First National Building Society, the Irish Civil Service Building Society, the Irish Nationwide Building Society, the Norwich Irish Building Society; investment in industry on deposit accounts with any of the following licensed banks: Bank of Ireland, Algemene Bank Nederland (Ireland) Limited, Allied Irish Finance Company Limited, Allied Irish Investment Bank Limited, the Bank of America, Bank of Ireland Finance Limited, Bank of Nova Scotia and the Banque Nationale de Paris Ireland Limited, Bowmaker Ireland Limited, Citibank and City of Dublin Bank Limited, First National Bank of Chicago, Forward Trust (Ireland) Limited, Hill Samuel and Company (Ireland) Limited, Investment Bank of Ireland Limited, Lombard and Ulster Banking Ireland Limited, Mercantile Credit Company of Ireland Limited, Northern Bank Finance Corporation, Ulster Investment Bank Limited, United Dominions Trust (Ireland) Limited, Irish Intercontinental Bank Limited, Royal Trust Company (Ireland) Limited, Trinity Bank Limited, Barclays Bank International Limited, Irish Bank of Commerce Limited and the Standard Chartered Bank Ireland Limited. That is the full list.

Mr. R. Burke: Would the Minister of State clarify the position with reference to the continued monitoring of the institutions involved? I need not go into detail about the experience of investors in one building society because the matter is well known. What is the monitoring procedure carried out to ensure that these companies continue to deserve trustee status? I am particularly concerned because of past experience where institutions have accepted funds from small investors and these investments were subsequently dishonoured. The nest eggs investors were putting together were frittered away. Could I ask the Minister to emphasise the importance of proper control by the Registrar of Friendly Societies, Building Societies and the Central [648] Bank with regard to institutions deserving of trustee status, institutions which accept funds from the general public?

An Ceann Comhairle: Is the Minister concluding?

Mr. Flynn: At what stage may I ask a further question?

An Ceann Comhairle: I take it the Deputy has already spoken. He can ask a question now or when the Minister concludes.

Mr. Flynn When the Minister concludes.

Minister of State at the Department of Finance (Mr. J. Bermingham): I can assure Deputy Burke that the institutions on the list I read out are continually monitored by the Central Bank in the case of banks and by the Department of Finance in the case of building societies. No institution with trustee status has been in any trouble. Any organisation named in this order is continually monitored by the Department of Finance or the Central Bank. Banks are continually monitored and have to be passed as sound by the Central Bank before they are put on this list, and their names have to come before both Houses of the Oireachtas before they are put on the list. There has been a case where private individuals invested their funds and the organisation got into trouble, but in such cases there will always be risks.

Mr. R. Burke: The Central Bank monitor the banking institutions and the registrar registers the building societies, whether or not on the trustee list?

Mr. J. Bermingham: Yes.

Mr. R. Burke: If they monitor, do they have a statutory responsibility to meet defaulting situations? If not, does the Minister think they should?

Mr. J. Bermingham: This is something which should be considered. In naming these institutions the Government do not accept responsibility as such because [649] these people are considered to be trustworthy.

Mr. R. Burke: I am not doubting that.

Mr. Flynn: There is an informal list of referees.

Mr. J. Bermingham: Under this order the Government do not give any guarantee——

Mr. R. Burke: Does the Minister think they should?

Mr. J. Bermingham: I am not prepared to offer an opinion on that, although it might be considered.

Mr. R. Burke: When a member of the general public invests funds in a company which he understands is being monitored either by the Central Bank or by the Registrar of Building Societies, the Government should be responsible for a defaulting situation.

Mr. J. Bermingham: We should not confuse the issue. These people on our list have fulfilled the criteria laid down in this order and are trustworthy. Whether we should guarantee every company, irrespective of whether they are on the trustee list——

An Ceann Comhairle: We cannot extend this debate beyond the trustee list.

Mr. Flynn: We appreciate that the list of trustees are highly reputable people conversant with banking and other arrangements, but the thrust of the question is that we are not aware of the criteria applied, whether it is a question of their good standing over a period of years in this jurisdiction or if their international resources and assets are taken into consideration. But once the referee has authorised that this order should be made, does his responsibility cease or has he a continuing responsibility to see that the criteria are being lived up to? Has there ever been a case where the referee has recommended the removal of one of [650] the banking organisations from the list of trustees?

Mr. J. Bermingham: As the Deputy said, the referees are reputable people. The organisations on this list are constantly monitored either by the Central Bank or by the Department of Finance, and I do not think there is any danger in these cases. I am not prepared at this stage to discuss investment institutions in general. I am talking about the specific organisations on this list and people need have no worries about them.

Mr. Flynn: The Minister can rest assured that the question hinted at by Deputy Burke will be raised here because it concerns the control of deposits made by innocent depositors in certain building societies who subsequently find their money is lost and they have no redress. We will be seeking redress in this House in the near future.

Mr. J. Bermingham: That is a different matter entirely.

An Ceann Comhairle: We cannot have a debate——

Mr. Flynn: I appreciate that but——

Mr. J. Bermingham: I am not prepared to discuss it under this order.

Mr. R. Burke: The Minister is a very wise man.

An Ceann Comhairle: I will not allow a Committee Stage debate on matters which are in order, and I will certainly not allow a far-flung debate on matters which are not in order. Is the motion agreed?

Mr. Flynn: I want to make one point.

An Ceann Comhairle: I allowed the Deputy to ask a question. Is the motion agreed?

Mr. Flynn: Yes, but——

Question put and agreed to.