Financial Regulation: Discussion with Friends of Banking Ireland.

Wednesday, 16 September 2009

Joint Committee on Economic Regulatory Affairs Debate

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Chairman: Information on Michael Moynihan Zoom on Michael Moynihan I welcome Mr. Jerry Beades, chairman of Friends of Banking Ireland, Mr. Eddie Fitzpatrick and Mr. Liam Gaskin. I draw attention to the fact that members of the joint committee have absolute privilege but the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable. I propose that we hear a short presentation by Mr. Beades which will be followed by a discussion with the committee.

Mr. Jerry Beades: I thank the committee for providing Friends of Banking Ireland with an opportunity to return today. Since I was last before it, in May 2008, there have been dramatic changes in both banking and economic conditions in Ireland. As chairman of Friends of Banking Ireland, I previously outlined our key concerns from the consumer’s point of view on the shortcomings of regulation within the banking sector and the need to make bank officials more accountable and transactions more transparent. At the time there was a genuine feeling of surprise among the committee on some of the issues we raised and also a belief that some of them needed to be addressed. Eighteen months on, this is even more apparent; there is a need to act on each of these issues.

To review the issues raised in May 2008, the first concern was with regard to the consumer, as defined by the Financial Regulator and Financial Services Ombudsman, and the restrictions on the size of a business within the scope of the regulation. We have seen obvious changes in personnel within the Office of the Financial Regulator in the past year, with the resignation of Mr Patrick Neary which caused public anger over the circumstances of his departure and his severance package. We now have a new Governor of the Central Bank in Professor Patrick Honohan who is taking the position in a financial landscape that is completely different from that of his predecessor. Despite the changing personnel and escalation of problems within the sector, no changes in the powers or scope of the regulation have been made to protect the customer or consumer.

As chairman of Friends of Banking Ireland, three years ago I was the first person to call on the Financial Regulator to resign, following my own difficulties with the banks. When I undertook a detailed examination of the Financial Regulator and the failure of the Central Bank to regulate and deal with issues faced by customers of banks, Friends of Banking Ireland came to the conclusion that the Financial Regulator was not doing the job he was supposed to be doing and that his office was burning up in excess of €100 million a year and only regulating 25% of banking transactions. The committee suggested it would recall the Financial Regulator and the Central Bank to answer some important questions raised by Friends of Banking Ireland on that occasion. It is clear that major restructuring is required within the Financial Regulator’s scope. We again request redefinition of the word “consumer” to incorporate the majority of everyday banking customers, or to at least make provision for the regulation of the transactions currently not under scrutiny.

Our second concern was the establishment of a regulatory body to cover all financial services in Ireland, to report and investigate from a business and consumer point of view. We see the need for a wide range of regulations. One of our proposals concerns the need for an external body, not a consumer panel as was established under the last regulatory system. This body was governed by secrecy and failed because it became part of the establishment and was confined under the Central Bank Act to secrecy and non-disclosure. The people appointed could not be outspoken and many of those on the panel did not complete their full term as they found it frustrating.

The model I propose as chairman of Friends of Banking Ireland is an independent organisation such as Friends of Banking Ireland be taken and placed on a statutory footing. This model is something similar to the way An Taisce is structured. An Taisce is an independent body, a watchdog on planning and, regardless of whether one likes it, receives Government funding to go about its daily duties. We know many people might not like what An Taisce is about, but it allows it a certain amount of independence to go about its daily tasks as it sees fit.

In recent weeks, we have heard Colm McCarthy from an bord snip nua, call for an Oireachtas committee to investigate the banking sector. I would second that proposal and add further to it that people in the key sectors, including myself, who have a lot of information on difficulties which consumers are having with banks should be consulted when analysing what went wrong. I would like to point out that as a result of speaking to customers who have had difficulties with banks, the information I have amassed is of a completely different nature to that which the Financial Regulator would find.

A member of this committee asked what type of people came to me with banking issues. Having reviewed how I have come in contact with people, it is interesting that six of the Friends of Banking Ireland cases that have been referred to me were referred by Members of the Oireachtas, each of whom was frustrated in trying to deal with cases concerning constituents who had come to them with banking problems and they actually had nowhere else to refer the cases. This indicates the gap that exists within the regulatory authorities.

With regard to point five, the recording of disciplinary measures taken against banking employees, Friends of Banking Ireland has seen many instances where bank employees have acted recklessly for their own and the bank’s gain. I have formed the opinion that the property bubble was created by some very greedy bankers in a commission and bonus-driven environment. We have seen several examples of this. For instance, we note the case in ACC-Rabobank where a manager approved a loan of €2 million for an individual without consulting with head office. He loaned €500,000 in four lots to a man, his wife, his brother-in-law and sister-in-law. They received the €2 million loan that is now distressed and being recalled. This man’s wife never worked, nor did his sister-in-law. How could a bank lend money to individuals with no income and now be recalling it? Another individual owes €4.6 million to ACC-Rabobank. The bank has secured judgment against this individual for that amount. I have a bank statement from the previous customer who owed the same bank €1.5 million and was put under pressure to sell in 2002. The bank was repaid €1.5 million on the same day it lent €4.6 million at an inflationary price on the property. The bank was effectively giving people money to bid on properties, of which they knew the true value, and yet they provided excessive sums to allow people to go and buy property.

In another instance with Anglo Irish Bank, in a property transaction on which I now understand there is €300 million owed and which property I estimate would not make €50 million if put back on the market, the bank lent in excess of €300 million and was repaid €175 million on the same day by its existing customer. Therefore, if one looks at these transactions in the banks, clearly there was reckless lending and there is no question about it.

The third example is of a customer who paid an arrangement fee to ACC-Rabobank of around €7,000 and the fee disappeared. From internal inquiries in the bank, it was established that the manager concerned had used the money to buy a holiday with a female staff member. This was all recorded on the bank’s file and I have seen this information. The bank spent nine years fighting the customer, almost denying ever having had dealings with him. The customer, as a result of the mismanagement of his whole affairs, lost a business and a considerable sum of money. This case was recently settled and the bank paid out somewhere up to €500,000, including costs. The bank’s own costs in this case, are estimated at more than €1 million. The customer is now sworn to secrecy. The facts surrounding the case will never be known. However, the alarming part is that the manager who took the arrangement fee has gone on to work for another financial institution which was involved in a very large financial disaster on a housing project. This individual is still working for that financial institution despite the fact that he stole a customer’s money.

On the issue of accountability, we reiterate there is a need to regulate and record individuals working in banks. The people working in banks who made reckless decisions are able to resurface in other financial institutions. No individuals have been held accountable for the above actions and without discipline and traceability they continue to move freely within banking circles. This needs to stop.

Eighteen months ago when I was before this committee, I called for the setting up of a commission of investigation. I asked this committee to propose it so that the Minister could establish it without delay. We also wrote to the Minister for Finance, Deputy Brian Lenihan, asking him to establish a commission of investigation into the issues we raised. We also contacted every Deputy and Senator and as a result of a raft of correspondence, the Minister for Finance finally wrote back saying that he would not commission an investigation into the issues. We found this astonishing. The issues of overcharging of customers at ACC-Rabobank are very great and the officials advising the Minister and the civil servants in the Department of Finance are the people who presided over introduction of a new regulatory system in 2003 and ultimately have not been held to account either.

As a result of the complete failure of anyone to take action on the issues raised since my last appearance before the committee, Friends of Banking Ireland has now lodged a complaint with the European Parliament’s Committee on Petitions. Our complaint has passed the initial screening process:

The Committee has decided that the issues which you raise are admissible in accordance with the Rule of Procedure of the European Parliament ... and decided to ask the European Commission to conduct a preliminary investigation of the various aspects of the problem.

Moreover, the Committee felt that the issues raised in your petition should be submitted to the Committee in the European Parliament with whose terms of reference it falls and decided as a result to refer it to the Committee on Economic and Monetary Affairs for information.

It seems our European counterparts believe there are grounds for further investigation, based on the same information supplied to this committee. It leads me to ask when action will be taken at a local level.

On points three, four and six, we also called for the placement of a framework to record and track consumer complaints within banking, the establishment of a framework for dispute resolution and the annual publication of statistics for all financial institutions regarding customer disputes. To the best of our knowledge, there have been no further steps taken to address these issues.

New issues raised by us included overcharging and the need for transparency and accountability. Overcharging by banks is rampant in Ireland, with new cases emerging regularly. Overcharging, in essence, is effectively the stealing of customers’ money. The whole banking culture in Ireland is that the stealing of customers’ money is acceptable. Why is the stealing of customers’ money by banks regarded as acceptable practice? If an individual goes to court for having stolen money to benefit financially, he is expected to make some restitution or repay the money as a means of lessening his sentence. There is no such similar practice in banking.

I was a victim of overcharging within banking. I queried amounts of interest being charged on loan accounts and ended up, at my own cost, having my loans recalculated independently because the bank strenuously denied having overcharged, despite information I obtained through discovery that staff members noted incorrect amounts had been charged. From calculations made independently, it was established that I was overcharged up to €1.2 million over a four-year period on a loan of €3 million. Following my claims, the bank in question then engaged its external assessors to recalculate the loans. PricewaterhouseCoopers produced reports to say the account had not been overcharged in any way. However, on the first day of my case in the High Court, Ms Justice Finlay Geoghegan reduced the sum they were pursuing by €1.2 million. While they never admit this was a deduction for overcharging, there was no other explanation given. This was a serious issue which I had raised with the bank. With Bank Check, I had invested a lot of time and money in proving that there had been overcharging but no one in the bank admitted it, no one was held accountable and I was not compensated for the stress related to this issue. Mine is just one case and I wonder how many similar cases there are.

Friends of Banking Ireland calls for the need to reform the legal system to curb extensive financial gain by the legal professionals who settle banking cases. The courts system does not provide justice when it comes to banking problems. Disputes involving customers and the banks are not properly dealt with by the current legal system. Customers do not receive justice, they receive law.

In my case, the bank lost the title documents to two properties and the result in direct losses of that action were somewhere between €12 million and €15 million. These were the actual losses sustained by me. I was left with 50 employees and with no way of paying their wages. ACC-Rabobank was unsympathetic and did not care in 2004. The manager at the time was filling out credit reports, which I have seen as a result of court documentation. He admitted in the witness box that he did not know that I had planning permission to build apartments on the site and yet he was a senior lending manager. The documentation, my case and others have afforded me a great insight and I am probably the only person in the country who has access to information on the scandalous behaviour of this bank.

With regard to the appointment of receivers, some of the facts I have at my disposal are interesting and alarming. I will list a few. Particularly as ACC-Rabobank is in the courts seeking to have receivers appointed, it must be asked how it selects them? The process is very simple. From a document I have obtained from ACC-Rabobank, it is evident that the bank appointed a receiver to a company. When qualifying why it was appointing him internally, it gave the reason that he had brought in a lot of business to the bank and had been good to it and, therefore, would probably be very diligent as a receiver and look after the bank’s interests. In my case, PricewaterhouseCoopers was engaged by the bank to check out overcharging and recalculate loans. Its finding, as relayed by ACC-Rabobank, was as if there had been no overcharging, yet on detailed examination of the documents released on discovery, we were able to extrapolate that there were several difficulties in the recalculation of my loans and that there had been clear overcharging. In spite of this, as a finding of fact, PricewaterhouseCoopers prepared documents stating there had been no overcharging, yet one must question why it spent six months on the case and had a team of up to ten people involved. With regard to the appointment of receivers, it is important to ask how the courts ensure the bank customer in difficulty receives fair treatment if the receivers are appointed because they have done favours for the banks, as we have seen indocumentation we have in our possession.

Let me outline other practices that we have observed; they are stark. Legal professionals are making a fortune out of bank disputes, on which banks will spend millions. In my instance, it was estimated that the bank had spent in excess of €4 million in legal costs fighting me. The solicitor acting for the bank, Bríd Munnelly of Matheson Ormsby Prentice Solicitors, MOPS, stated on her website she was representing the bank in fighting a high profile individual making serious allegations of overcharging against it. The website also stated she represented National Irish Bank in its overcharging case. It is interesting that when I won my case, this section of her website was removed quickly.

The issue regarding the legal profession is alarming for people taking cases against banks. It is a well known fact that the banks spend huge sums of money in the courts defending cases and that most individuals do not have the money to fight them. The legal teams that represent individuals in the courts find themselves in very strange circumstances. They know the banks will spend unlimited sums fighting them; therefore, a practice has arisen whereby the legal teams of plaintiffs in the courts are sometimes bought off by the opposing banks. The practice is such that most such cases do not proceed to court.

Practices have developed whereby legal teams of customers involved in cases against banks recommend settling out of court for smaller sums than would potentially be achieved if the cases proceeded to trial. Friends of Banking Ireland has become aware that, in some cases, clients’ legal teams strongly recommended that they settle for paltry amounts, thus implying the legal teams themselves benefit more financially than their clients. In such cases, the banks’ legal teams offer extremely generous incentives to the opposing legal teams to settle out of court. This practice must be investigated because it is acting as an inducement for plaintiffs’ legal teams to settle out of court rather than fight large financial institutions which continually buy their way out of responsibility for addressing the mistreatment of customers and continue to cover up the goings on in the banking sector.

We regularly receive complaints about the legal profession. This is an area in which most people have no experience. They do not have the money to defend themselves and there is no free legal aid for them. This is a matter to which some consideration should be given. If this must be considered, the funding therefor should be provided for by the banks by way of a levy.

Legal costs, in the following order, are regularly requested from people: the cost of legal action — brief fees for senior counsel, up to €150,000; brief fees for junior counsel, up to €75,000. This brief fee is the introductory fee and for the privilege of having the legal team take on one’s case. Daily rates are €3,000 for senior counsel and €1,500 for junior counsel. Solicitors’ costs could be in the order of €4,000 or €5,000 a day, with the bills which we have seen presented to people. Very few can afford the cost of legal assistance to defend themselves against banks. Almost every day of the week people are in front of Mr. Justice Peter Kelly in the commercial court. Those present can hear him pleading with people to seel legal representation. He generally uses the words, “If you have a pain in your stomach, you go to see a doctor, and if you are in financial difficulties, you require legal representation.”

I represented myself for six months in the commercial court in the case against ACC-Rabobank because, when it took me to court, I did not have the money to pay brief fees or engage solicitors or barristers. With the assistance of some friends in the legal profession, I managed to keep my head above water until I remortgaged a property and managed to secure some funds.

The biggest problem people have is that there is no clear or definitive way of presenting the legal documentation. The process one must go through is not explained by the Courts Service to the ordinary person. There is nowhere one can go to find out what documentation must be lodged. On many occasions, the courts are not accommodating and frown upon people who represent themselves, although it is every citizen’s right to do and is supported by EU legislation.

Apart from complaints about the cost of legal representation, the bribing of legal teams — or putting a carrot before the donkey, a practice which has operated for many years in the insurance industry — is also evident in cases involving financial distress. It is a well known and almost acceptable practice in the insurance industry. The insurance companies have operated in such a manner for a long time, with the Law Society taking no action.

I will now set out in layman’s terms what happens in the insurance industry. If someone has a claim for €1 million against an insurance company, there is a widely accepted practice whereby, before the case proceeds to court, the company, in the interests of reducing its losses, agrees to offer €100,000 to the claimant and agrees with the legal team to pay all costs. However, as a sweetener to the legal team, the costs offered may be to the tune of €200,000 or €300,000 rather than the €100,000 offered to the claimant. These fees are far in excess of what one would expect on the basis of the work carried out up to that point. The claimant is faced with a dilemma; his or her legal team advises him or her to take what is offered and asks how he or she will pay the legal costs if the case is lost. In many instances, one is not told about the large sums in costs offered to the legal team to get one to settle. The insurance industry has taken a gamble. It knows the sums the solicitors will accept and this has been a widespread practice in the settlement of insurance cases during the years. It is well known in legal circles.

This practice is also rampant in legal cases involving banks and, in many instances, the inducement offered is even on a grander scale. In one case, the circumstances of which I am fully aware, the bank paid legal fees of €250,000 for approximately, but no more than, four days’ work. There was no relationship between the sum offered and the amount of work done but the offer was such that the legal team exerted major pressure on the plaintiff to settle the case. Some of the circumstances surrounding this settlement are highly questionable and should be investigated by the Law Society.

It is also an accepted practice that if one goes to court, one must play by court rules. Individuals going to court are advised that once they are in the court system, they should not take any actions or operate contrary to legal etiquette that operates within the legal profession. In many instances, however, this is not practised in legal firms acting for banks which are supposed to operate according to the same code of ethics. What can only be described as the bullying and intimidation of people involved in disputes with banks is widespread.

These practices never come to light as most people are lost in the legal system and feel totally let down by it. I have with me today a letter issued last Thursday by solicitors to a Friends of Banking Ireland member, whose name I wish to keep private, stating a repossession team will be on that person’s premises tomorrow, Thursday. The bank in question is owned by Rabobank. The losses inflicted by the mismanagement of the concerned party’s business by ACC-Rabobank are in excess of €10 million. The company in question was raising finance three or four years ago to buy equipment and the payments to its overseas suppliers were made incorrectly, resulting in equipment not being provided within the relevant timeframe because the bank had messed up the payment procedure. The bank in question took no responsibility for its actions and, as a result, the factory did not operate for two years. In the meantime, the bank demanded repayments, despite the fact that it had been negligent in how it had handled the whole matter. The case is in the court system and I am, therefore, not going to talk too much about it; however, I will talk about the issue of threatening letters by legal teams which know the system which are used regularly to intimidate people. It appears that, in this case, some of the intimidation is structured in such a manner as to force a settlement on the people concerned. I call on the Law Society to investigate the behaviour in this matter immediately as the people in question have no other means of defending themselves owing to the highly unusual circumstances surrounding their difficult financial cases. I felt it was necessary to bring these issues to the attention of the committee today as this is an area where there appears to be no regulation. While there is a huge amount of distressed finance, there will be no NAMA-land for these people and some form of protection has to be provided for them.

It appears that Rabobank has made a decision to exit the Irish market. Its strategy is to do it while minimising cost. By forcing stressed loans into the court system and obtaining judgments as quickly as possible, it reduces its administration costs and problems on the administration of these loans.

The reason for doing this, however, is not always understood. Once a judgment is obtained court interest applies — interest which currently stands at about 8% — and these loans do not have to be administered any further. They move to outside sources and these debts are then sold on and are a tradeable commodity.

This is an area that is totally unregulated and due to the issues which will arise this must be addressed immediately and regulation put in place. Once a judgment has been obtained in the court, debt collection agencies appear, the sheriff’s office becomes involved and people face years of being chased by individual agencies where no rules apply.

Court interest is currently at 8% in a time when Government borrowing is at 1% in the ECB. Court interest has never kept pace with moving interest rates and for years it has been in stark contrast to current interest rates, taking it years to go up and to come down. The Courts Service should have it pegged to ECB rates and it should be set at an acceptable rate so there should be no gain to be made out of the cases which are distressed and in the courts. Financial institutions gain huge amounts of money by applying court interest once cases have completed the court process.

The matters I have raised today are not being addressed by any Government agency. No one is looking out for the interests of the consumer and non-consumer. These individuals do not fall within the realm of any regulation and are at the mercy of the sectors I have expressed concerns about.

Senator Paul Coghlan: Information on Paul Coghlan Zoom on Paul Coghlan Mr. Beades made some serious allegations and his case should be referred urgently to the Law Society and Bar Council in regard to the charges against solicitors and lawyers. Details could be given to both bodies in confidence so that they could examine the need for disciplinary procedures.

We are all aware there have been scandalous practices in the banking industry and while the Minister has urged the banks that those who steered the ships on to the rocks should not be part of the recovery, they are still there except for those directors who have resigned or retired. The Minister for Finance has now reached agreement that the other directors will leave over the next two years. That is not satisfactory but, more urgently, all of the top tier of management who made the decisions on reckless lending should be sidelined immediately. There are plenty of good people working in the major banks who must be appalled at what happened. I agree with the statement that much of this was bonus driven, with reckless lending being made available for personal aggrandisement. These people have been allowed to escape scot free and still occupy senior positions in Irish banking. They, more than the directors, were responsible for the billions of euro in loans that we must now deal with as a State in the legislation that has been introduced today.

Regulation failed and it was a pity that a twin pillar set-up was established; we should have relied more on the Central Bank. I welcome the decision to introduce a new Central Bank Bill which may lead to a return to more prudent banking practices.

I totally disagree, however, with Mr. Beades’s analogy with An Taisce. As a democrat, I firmly believe that An Taisce should not be a prescribed body. No one should have more say than anyone else outside of the relevant agencies in complying with law. I equally feel that people who object to planning applications all over the country when they have no interest in the area are completely wrong.

If there is to be an investigation, it should be done by the Committee of Public Accounts or this committee with a role for the Joint Committee on Finance and the Public Service.

Senator Diarmuid Wilson: Information on Diarmuid Wilson Zoom on Diarmuid Wilson I thank Mr. Beades for his presentation. I am almost in total agreement with Senator Coghlan. I sympathise with Mr. Beades when he outlined how when he ran into difficulty he was unable to afford the briefing fees of a senior and junior counsel. I am amazed that a senior counsel’s briefing fee was €150,000, with a junior counsel’s fee set at €75,000. Anyone familiar with the High Court knows one must have a junior and a senior counsel as well as a solicitor, an additional cost. It is appalling those who are in difficulty must resort to defending themselves.

Did Mr. Beades make a complaint to the Law Society or the Bar Council on the difficulties outlined in the presentation? Does he agree the decision by the major financial institutions to take the power from local management to make decisions may have landed us in some of the difficulties we are now in? I commend him and his organisation for the work they are doing to highlight the anomalies that exist in the banking system in Ireland.

Deputy Peter Kelly: Information on Peter Kelly Zoom on Peter Kelly I welcome the witnesses to the committee and I agree with Senator Coghlan, a highly respected Member of the Houses on financial matters. An Taisce should be abolished and the top bankers should all be fired. Hindsight is a great thing but Mr. Beades was the first man to question the position of the regulator. People doubted him at the time but he was 100% correct and I wish him well in his endeavours.

Senator Peter Callanan: Information on Peter Callanan Zoom on Peter Callanan I apologise to the Chairman and to Mr. Beades for my late arrival and have a simple question for Mr. Beades that he may have answered in my absence. Other than to state a case, why is Mr. Beades here? While it is a horror story, what does he expect from this joint committee or from anyone else? I cannot discern any expectation or requests in the conclusion to his presentation. Perhaps they are embodied therein somewhere but I have not seen them.

Chairman: Information on Michael Moynihan Zoom on Michael Moynihan As for this meeting’s aim, when Mr. Beades last appeared before the joint committee in May 2008, few people would have realised the position in which we would find ourselves within three or four months. Many of the comments Mr. Beades then made were scoffed at by senior people to whom they were put. However, as members have noted, the comments he made in May 2008 have become a reality. The system is not listening to people such as Mr. Beades who have had such a desperate experience at the hands of financial institutions and much more heed should be paid to what happened in this regard. I invite Mr. Beades to respond to members’ questions.

Mr. Jerry Beades: I will deal with Senator Callanan’s question first. The Chairman may have explained that when we came before the joint committee 18 months ago, we had a wish list of six or eight items to which I referred in my presentation. Although at the time, Senator Coghlan stated that the regulator should be recalled and so on, effectively nothing has happened. I have attended meetings of the joint committee at which the regulator has appeared and different people have been monitoring what was going on. I understand the joint committee has been busy since then and I do not cast aspersions on it. In essence, we asked the Minister for Finance to commission an investigation into this bank in particular. This is an important issue at present because the bank in question is exiting the Irish market and could bring down some of the Irish banks on foot of the Liam Carroll case. This issue is that serious unless some of the loans involved are taken into NAMA first. A number of major issues arise in respect of this State-owned bank that behaved thus when it was sold into private ownership.

However, the reason we came back before the joint committee is that we have lodged a complaint with the European Parliament under the auspices of its petitions committee, which now is investigating these matters. We consider it to be highly unusual that we are obliged to go to Europe and that there is no vehicle in Ireland to investigate such matters. I mentioned six cases that have been referred to me by Members of the Oireachtas. One case was referred by a Minister who in recent weeks dealt with someone in great distress but had nowhere to which to refer him. I received a telephone call asking whether I could talk to the person to see whether I had anything to offer to him. In itself, this case indicates the complete vacuum that exists in this regard. There was no regulation. There is something of a misconception to the effect that Mr. Neary failed in 2003. In respect of the task with which he was charged, he was given the wrong legal instruments. In addition, however, the Central Bank did not regulate before then either. Consequently, there was no regulation. The situation worsened because of the rising economic boom when there were absolutely no scruples and banks simply lent money indiscriminately.

We are here to state a case because we will be doing so before the European Parliament and I am sure its Members will ask the reason we have not presented further in Dublin. We are doing so to the joint committee to ascertain whether it can move these issues forward. As for An Taisce, I did not use An Taisce as a model because I am a lover of that organisation, but because of the model under which it is set up. It is a statutory body that is provided with funding to conduct its independent work, regardless of whether one likes it. I agree with——

Senator Paul Coghlan: Information on Paul Coghlan Zoom on Paul Coghlan I believe it is a prescribed body, rather than being a statutory body.

Mr. Jerry Beades: It is statutory and receives funding on a yearly basis. That was the basis on which I was proposing An Taisce, rather than because of its work in the planning area. I was referring to its model and the manner in which it is set up.

Mr. Liam Gaskin: Senator Callanan also asked what we hope to achieve. It would be an achievement were a recommendation to go forward in respect of the non-consumer. In law in Ireland, a non-consumer is someone who has a business with a turnover of €3 million or more. If one’s turnover exceeds that figure, although one’s profit may be €50,000 or €1 million, one has no recourse to any State agency for support when one is in a dispute with a bank. Much of what has been seen at this meeting arose from bullying and intimidation by the banks down in the Four Courts. If someone cannot afford to take a case to the Four Courts, he or she must roll over. We have considered this issue in recent months and there is a belief that the small business sector in Ireland needs funding from the banks and potentially constitutes the backbone of our recovery, just as it has been in the past by creating employment and so forth. Such businesses now are in the position whereby they have no recourse to a defence unless they go to the courts. The banks will tighten the screws on them and are increasing interest rates over and above what may be legitimate and such businesses are unable to argue. Were it to come about that the sum of €3 million was increased to €10 million, one probably would bring another 20,000 or 30,000 companies under someone’s protection so that they no longer would be obliged to spend money they did not possess or go bankrupt trying to defend themselves.

Senator Peter Callanan: Information on Peter Callanan Zoom on Peter Callanan I am not unfamiliar with some of the ACC’s activities when it was a State-owned bank and it would not have my sympathy either.

Chairman: Information on Michael Moynihan Zoom on Michael Moynihan Neither would many in the farming community. Perhaps Mr. Beades should address some of the points made by members as there may be a vote in the Dáil.

Mr. Jerry Beades: We have not lodged a complaint with the Law Society. One reason is we are a voluntary body that gathers in information and complaints but which does not have the resources. We try to monitor and stereotype the activity that is going on. As for the Law Society and what has been going on in the courts, I have become highly concerned in recent months. My own experiences educated me as to what goes on down there. I was left with a senior counsel who sought a brief fee of €150,000. Two weeks before my case was due, he pulled out of the case and left me. The junior counsel also did so because I understand that is the etiquette. I also was informed that the solicitor can also leave sometimes. This is how cases collapse in the courts.

We then were obliged to rummage around and secured very good senior and junior counsel at a lesser figure. However, I had been left in the lurch. One reason I recovered one third of what I had lost in the courts because of this bank was that we ended up being ill-prepared. The bank had set down the case to run for 20 days but effectively its case collapsed on the first day, which left us with no time to prepare the second part of the case. The case effectively was in two parts, the first of which was to prove that the bank overcharged and the second being to prove my losses. The part pertaining to the bank’s overcharging collapsed on the first day when the judge took €1.2 million. After lunch on the first day, she asked the bank how it could expect to recover that money, given that it had overcharged me. The court system has been educational for me and some of the other cases I mentioned have only been brought to my attention in recent weeks.

Chairman: Information on Michael Moynihan Zoom on Michael Moynihan Unfortunately, a vote has been called in the Chamber and it will be followed by a number of others.

Senator Paul Coghlan: Information on Paul Coghlan Zoom on Paul Coghlan Members have been notified today that the Government intends to introduce a financial services regulation Bill and a reform of financial regulatory structures Bill. I have no doubt that they will meet some of Mr. Beade’s points. I suggest the Chairman should communicate again with the Minister for Finance.

Chairman: Information on Michael Moynihan Zoom on Michael Moynihan We will take the points and will follow up on the issue regarding the consumer panel and so on. I will be in contact with the witnesses again. They should keep the joint committee informed on progress regarding their complaint to the European Parliament.

Senator Diarmuid Wilson: Information on Diarmuid Wilson Zoom on Diarmuid Wilson While I understand the meeting must conclude, to be of assistance to Mr. Beades and his organisation, it would be helpful to have a complaint issued to the Bar Council and to the Law Society before going before the European Parliament. They are highly effective and ruthless bodies. This would be of assistance.

Senator Paul Coghlan: Information on Paul Coghlan Zoom on Paul Coghlan I completely concur with that proposal.

Chairman: Information on Michael Moynihan Zoom on Michael Moynihan I thank the witnesses for their attendance and apologise for the rush and the delay.

The joint committee adjourned at 3.20 p.m. sine die.

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