Building Societies (Amendment) Act, 1986

In short

This law amends and expands the existing Building Societies Acts from 1976 to 1983, primarily focusing on how building societies can make loans, charge interest, and operate. It introduces new regulations regarding loan purposes, interest rates, and the governance of these societies.

What it regulates

The purposes for which building societies can make loans to their members.
The charging of tiered interest rates on loans by building societies.
Additional rules concerning loan-related matters like redemption fees and insurance requirements.
The appointment, remuneration, and removal of a society's board of directors.

Who it concerns

Building societies established under the Building Societies Act, 1976.
Members of building societies who receive loans.

Key points

The Minister, with the consent of the Minister for Finance and after consulting the Registrar, can prescribe new purposes and conditions for loans made by societies, beyond what was previously allowed.
A society cannot charge a tiered interest rate on a loan if the mortgage was created before August 1, 1986, and a tiered rate was not already being charged on that date.
A society cannot charge a tiered interest rate on a loan if the mortgage was created on or after October 23, 1986, with this rule taking effect from the first day of the month following six months after the Act's passing.
The Minister can prescribe rules regarding matters such as prohibiting or restricting redemption fees, making loan security reports available to members, and limiting a society's ability to dictate insurance providers or charge for legal investigation of title.

Legal text

Building Societies (Amendment) Act, 1986 Skip to content Disclaimer Feedback Helpdesk Gaeilge Léim go dtí an t-ábhar Séanadh Aiseolas Deasc chabhrach English Gaeilge English Produced by the Office of the Attorney General Táirgthe ag Oifig an Ard-Aighne Home Legislation Acts of the Oireachtas Statutory Instruments Pre-1922 Legislation Constitution External Resources Bills (Houses of the Oireachtas) Iris Oifigiúil / Official Gazette Revised Acts (LRC) Classified List of Legislation (LRC) Translations (acts.

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s)or rangeBliain nó blianta nó raon TypeCineál All Legislation Acts Statutory Instruments Advanced SearchCuardach Casta HomeBaile ActsAchtanna 1986 Building Societies (Amendment) Act, 1986 Building Societies (Amendment) Act, 1986 Permanent Page URL View by SectionAmharc de réir Ailt View Full ActAmharc ar an Acht Iomlán Bill History Stair Bille Commencement, Amendments, SIs made under the Act Tosach Feidhme, Leasuithe, IRí arna ndéanamh faoin Acht Print Full ActPriontáil an tAcht Iomlán Number 36 of 1986 BUILDING SOCIETIES (AMENDMENT) ACT, 1986 ARRANGEMENT OF SECTIONS Section 1. Definitions. 2. Amendment of section 2 of Principal Act. 3. Power of Minister to prescribe purposes for which loan may be made. 4. Tiered interest rates. 5. Rights of member if charged tiered interest rate. 6. Additional powers of Minister to prescribe rules. 7. Rules relating to appointment, etc. of board of directors. 8. Building Societies Consultative Council. 9. Amendment of section 12 of Principal Act. 10. Amendment of section 22 of Principal Act. 11. Short title, construction and collective citation. Acts Referred to Building Societies Act, 1976 1976, No. 38 Building Societies Acts, 1976 to 1983 Number 36 of 1986 BUILDING SOCIETIES (AMENDMENT) ACT, 1986 AN ACT TO AMEND AND EXTEND THE BUILDING SOCIETIES ACTS, 1976 TO 1983. [22nd December, 1986] BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS: Definitions. 1.—In this Act— “the Acts” means the Building Societies Acts, 1976 to 1983; “the Principal Act” means the Building Societies Act, 1976 . Amendment of section 2 of Principal Act. 2.—Section 2 of the Principal Act is hereby amended by the substitution in subsection

(1)for the definition of “society” of the following definition: “‘society’ means a building society established under this Act for the purpose of raising, in accordance with this Act, funds (by the subscriptions of the members, the acceptance of deposits and loans) for making loans to members— (

a)on security by the mortgage of freehold or leasehold estate or interest; or (
b)with or without security and in accordance with any regulations made by the Minister under section 3 of the Building Societies (Amendment) Act, 1986;”. Power of Minister to prescribe purposes for which loan may be made. 3.—

(1)Notwithstanding any provision of the Acts and of any statutory instrument made thereunder, a society may, in addition to any other loan which it may make under the Acts, make, for such purposes and subject to such conditions (other than conditions in relation to the rate of interest chargeable on a loan) as the Minister, with the consent of the Minister for Finance and after consultation with the Registrar, may prescribe, loans to members, with or without security as may be so prescribed, and different conditions may be prescribed in relation to different classes of loans.

(2)The Minister may make regulations providing for any modification, adaptation, amendment, repeal, revocation or termination of any provisions of the Acts as may reasonably be necessary or proper for the purposes of subsection

(1)of this section or to give full effect to any provisions of subsection

(1)of this section or any regulations made thereunder.

(3)Where regulations are proposed to be made under subsection

(2)of this section, a draft of the proposed regulations shall be laid before each House of the Oireachtas and the regulations shall not be made until a resolution approving of the draft has been passed by each such House.

(4)The Registrar may, whenever he considers that— (

a)it is expedient in the interest of the orderly and proper regulation of building society business, or (
b)a society has carried on business in a manner prejudicial to such regulation, issue to any society or, as the case may be, to that society, a direction prohibiting or restricting, as he considers proper, the making of loans pursuant to subsection

(1)of this section to members, and any such direction shall have effect in accordance with its terms.

(5)The Registrar may, at any time as circumstances may demand, revoke a direction under subsection

(4)of this section. Tiered interest rates. 4.—

(1)A society shall not charge a tiered interest rate on a loan made to a member where— (

a)the mortgage in respect of the loan was created before the 1st day of August, 1986, and (
b)a tiered interest rate was not being charged in respect of the loan on that day.

(2)(

a)A society shall not charge a tiered interest rate on a loan made to a member where the mortgage in respect of the loan was created on or after the 23rd day of October, 1986. (
b)This subsection shall have effect from the first day of the month following the expiration of a period of six months commencing on the date of passing of this Act.

(3)In this section and in section 5 of this Act— “loan” means a loan made by a society to a member on the security of a mortgage of a freehold or leasehold estate or interest in a dwelling; “tiered interest rate” means the rate of interest on a loan where such rate— (

a)is determined by reference to the amount of the loan made, or to the amount outstanding at any time on foot of the loan, or to the income of the member to whom the loan is made, as the case may be, and (
b)is greater than the lowest rate of interest applicable at the time to loans made by the society to members generally. Rights of member if charged tiered interest rate. 5.—If a member of a society to whom a loan has been made is charged by the society a tiered interest rate in contravention of section 4 of this Act, the following provisions shall apply, namely— (
a)the member shall not be in breach of the terms of his mortgage if he does not pay to the society the amount by which any payment due on foot of the tiered interest rate exceeds any amount due on foot of the lowest rate of interest applicable at that time to loans made by the society to members generally and the society shall not, by reason only of such failure to pay, be entitled to exercise any remedy against the mortgagor which is otherwise conferred on it by law, and (
b)the member shall be entitled to recover from the society any such excess paid by him as a simple contract debt in any court of competent jurisdiction. Additional powers of Minister to prescribe rules. 6.—

(1)The Minister may, after consultation with the Registrar, prescribe rules in respect of any one or more of the following matters, either generally or by reference to a specified class or classes of rules or societies, denoted by reference to such matters as the Minister may consider appropriate: (a) the prohibiting or restricting of the charging of redemption fees; (b) the making available to a member to whom a loan is to be made of the report made under section 79

(1)(

b)of the Principal Act relating to the value of any security for the loan; (
c)removing or restricting the right of a society to require a member to effect insurance on any security for a loan with an insurer directed by the society or through the agency of the society or of any intermediary directed by the society; (
d)precluding or restricting a society from requiring a member to pay its costs of legal investigation of title to any such security; and (
e)the arranging by a society through an insurer or an intermediary nominated by it for the provision of mortgage protection insurance.

(2)Where rules have been prescribed by regulations in relation to any of the matters referred to in subsection

(1)of this section, such rules shall, with effect from one month after the commencement of the regulations, be part of the rules of any society to which they are declared to be applicable by the regulations by which such rules have been prescribed, notwithstanding any provision of the Acts or the rules of the society.

(3)In this section “redemption fee” means, in relation to a loan, any sum in addition to principal and any interest due on such principal (without regard to the fact of the redemption of the loan) at the time of redemption of the whole or part of the loan. Rules relating to appointment, etc. of board of directors. 7.—

(1)Notwithstanding the provisions of the Acts or the rules of a society, whenever the Minister prescribes rules, pursuant to section 10

(3)of the Principal Act, such rules, in so far as they relate to the appointment, remuneration and removal of the board of directors of societies, shall, if the regulations by which such rules are prescribed so specify, be rules to which this section applies.

(2)Where rules to which this section applies have been prescribed, and the rules of a society to which they are declared to be applicable by the regulations by which such rules have been prescribed are not in the opinion of the Registrar substantially in accordance with the rules as so prescribed, the Registrar shall notify the society of his opinion within one month after the commencement of the regulations, and in such a case the prescribed rules shall, with effect from three months after the commencement of the regulations, be part of the rules of the society and shall have effect notwithstanding any existing provision of the rules of the society.

(3)(a) A society may, before the expiration of the period of three months specified in subsection

(2)of this section, appeal to the Court against the opinion of the Registrar. (

b)Where an appeal under this subsection is upheld, the rules of the society may remain in operation. (
c)Where an appeal under this subsection fails, the rules prescribed shall, with effect from one month after the date of the Court's decision on the appeal, be part of the rules of the society and shall have effect notwithstanding any existing provision of the rules of the society. Building Societies Consultative Council. 8.—

(1)The Minister may appoint a body which shall be known as the Building Societies Consultative Council and is in this section referred to as “the Council”.

(2)The Council— (

a)may advise the Minister on any matter affecting the operation of building society business, and (
b)shall advise the Minister on any matter relating to building societies referred to it by the Minister.

(3)The Council shall consist of so many persons appointed by the Minister, and any person so appointed shall hold office for such period as the Minister may specify.

(4)The Minister shall, from time to time, nominate one member of the Council to act as chairman thereof.

(5)The Minister may, at any time, remove any member (including the Chairman) from office.

(6)The reference in section 76 of the Principal Act to the Building Societies Advisory Committee shall be construed as a reference to the Council.

(7)Section 96 of the Principal Act is hereby repealed. Amendment of section 12 of Principal Act. 9.—Section 12 of the Principal Act is hereby amended by the substitution for subsection

(3)of the following subsection: “

(3)Where copies are forwarded to the Registrar in accordance with subsection

(2)and he is satisfied that— (a) the alteration is in accordance with this Act and substantially in accordance with any rules prescribed under section 10

(3), and (b) registration would not be prejudicial to the orderly and proper regulation of building society business, he shall return one of the copies to the secretary together with a certificate of registration in the prescribed form, and shall retain and register the other copy.”. Amendment of section 22 of Principal Act. 10.—Section 22 of the Principal Act is hereby amended by the substitution for subsection

(3)of the following subsection: “

(3)A society may borrow money (including, where the Registrar with the consent of the Minister for Finance so authorises, money in a currency other than the currency of the State) and, for this purpose, may accept deposits or loans at interest, to be applied for the purpose of the society.”. Short title, construction and collective citation. 11.—

(1)This Act may be cited as the Building Societies (Amendment) Act, 1986.

(2)The Building Societies Acts, 1976 to 1983, and this Act may be cited together as the Building Societies Acts, 1976 to 1986, and shall be construed together as one Act. Privacy Statement Accessibility European Legislation Identifier (PDF) Open Data License Ráiteas Príobháideachais Inrochtaineacht Aitheantóir Eorpach Reachtaíochta (ELI) Ceadúnas Sonraí Oscailte Liosta Fianán © Government of Ireland. Oireachtas Copyright Material is reproduced with the permission of the Houses of the Oireachtas © Rialtas na hÉireann. Atáirgtear ábhar faoi Chóipcheart le cead ó Thithe an Oireachtais

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