Session: Session currently unavailable
Date: 24 November 2015
Report on the Credit Unions and Co-operative and Community Benefit Societies Bill
Together with the Minutes of Proceedings of the Committee, the Minutes of Evidence, Written Submissions and Correspondence and other papers relating to the Report
Mandate 2011/16 Number of Report - NIA 280/11-16
1. This Report details the Committee for Enterprise, Trade and Investment’s consideration of the Credit Unions and Co-operative and Community Benefit Societies Bill.
2. The Bill is intended to update the key Northern Ireland legislation governing credit unions and industrial and provident societies (IPSs) – the Credit Unions (Northern Ireland) Order 1985 and Industrial and Provident Societies Act (Northern Ireland) 1969 respectively.
Principles of the Bill
3. The main principles of the Bill are:
- In the interests of promoting the continued growth and ongoing sustainability of the sectors, to give Northern Ireland Credit Unions and IPSs greater operational flexibility while seeking to ensure that this flexibility does not put at risk the prudential running of such organisations; and
- To address a lacuna in the legislation relating to the disqualification of directors, so that directors of credit unions can be disqualified in the same way as directors of companies. It will also ensure that the Company Directors Disqualification (Northern Ireland) Order 2002 applies both to credit unions registered under the 1985 Order and to registered societies under the 1969 Act.
4. This legislation had arisen as a result of an Inquiry into the role and potential of credit unions which was undertaken by the Committee during the previous mandate. The Committee undertook considerable pre-legislative scrutiny of the Bill and, as a result, the Committee suggested a number of changes to the proposed policy which have been largely accepted by the Department and, where appropriate, included in the Bill.
5. During the Committee Stage of the Bill, the Committee engaged in a call for evidence from interested organisations and individuals, as well as from the Department of Enterprise, Trade and Investment as part of its deliberations on the Bill. Evidence from stakeholders indicated there was broad support for the Bill, however a number of key issues arose in relation to some provisions.
Committee consideration of Key Issues
6.The Committee’s pre-legislative scrutiny focused on: corporate members of credit unions; interest-bearing shares; attachment of shares; supply by credit union of copies of its rules; application of surplus funds towards social, cultural or charitable purposes; and removal of limit on holding of non-withdrawable shares.
7. In the Committee’s consideration of the Bill, as introduced, the key issues related to:
- Corporate members of credit unions;
- Interest-bearing shares;
- Registration of societies as co-operatives or community benefit societies etc.
- Minor and consequential amendments
8. The Committee welcomed the provision in Clause 1 of the Bill to allow a credit union to admit corporate members as recommended by the Committee in its Inquiry report into the role and potential of credit unions, from the previous mandate.
9.Following Committee consideration of trade body concerns regarding provisions for corporate members as they relate to unincorporated bodies, the Department agreed to bring an amendment to the Bill at Consideration Stage to insert a new Clause 13A to make provisions for a review of Clause 1, as it relates to unincorporated bodies becoming members of credit unions in the name of the entity. The Committee was content with Clause 1 subject to the inclusion of the new Clause 13A.
10. During pre-legislative scrutiny the Committee recommended to the Department that provision should be made in subordinate legislation to allow the amount that a credit union can charge for a copy of its rules to be increased in line with inflation. The Committee therefore welcomed provisions in Clause 5 for the Department to change the fee by regulations.
11. The Committee welcomed the provision in Clause 6 of the Bill for application of surplus funds towards social, cultural or charitable purposes. This was a key recommendation from the Committee in its Inquiry report in the previous mandate.
12. The Committee considered evidence relating to Clause 8 on possible adverse regulatory consequences resulting from registration of societies as co-operatives or community benefit societies etc. The Committee welcomed the agreement of the Minister to advise the Assembly, when speaking on the Bill in plenary, that the Department will continue to review more generally the legislative framework underpinning credit unions and IPSs after conclusion of work on the Bill, and whether further legislation change is appropriate.
13. The original policy proposal, considered by the Committee during pre-legislative scrutiny, was to remove the £20,000 limit on holding of non-withdrawable IPS shares altogether. The Department informed the Committee that Clause 10 of the Bill will amend the restriction, removing it entirely for non-withdrawable shares but maintaining it for withdrawable shares with the limit on withdrawable shares increased from £20,000 to £100,000. The Committee was content with the change to the original proposal.
14. Clause 15(4), as introduced, makes all regulations under Clause 15(2) subject to negative resolution. The Examiner of Statutory Rules recommended that Clause 15 be amended to make regulations under Clause15(2) subject to affirmative procedure where they amend primary legislation and subject to negative resolution in other cases. The Committee accepted the ESR’s recommendation. The Department provided the wording of the amendment as suggested by the ESR. The ESR indicated that the Department may wish to consider a small amendment to Clause 15(4) to reflect the new subsection (3A). The Department informed the Committee that a minor amendment to this effect will be brought at Consideration Stage. The Committee was content with Clause 15 subject to the proposed amendment and was content with the wording of the proposed amendment. The Committee’s agreement is subject to the minor technical amendment to be brought by the Department at Consideration Stage.