The Building Society Act transferred regulatory powers and the register of Building societies to the Central Banks. These powers were then transferred to the financial regulator and then back to the Central Bank under the 2010 act. The Central Bank is obliged to administer societies with a view to the protection of the funds of shareholders and depositors and the maintenance of financial stability and well-being of societies generally.
The Central Bank may revoke a Building Society’s authorisation. This may apply where requested or where the Building Society had seized business where it is unable to meet its obligations. The Bank maye direct a Building Society to suspend operation.
The Central Bank has investigatory powers. Authorised persons may investigate the affairs and must be furnished with all the information required. Inspectors have powers to search premises and require production of documentation. Failure to cooperate is an offence.
Building societies are subject to the same deposit guarantee scheme as other financial institutions. They are obliged generally to comply with the same requirements applicable to credit institutions.
Members of a Building Society may call on the Central Bank to appoint inspectors to investigate the affairs of the Society and report to the general meeting. The requisition must be made by at least one-tenth of the members or 200 whichever is less. The bank itself may also undertake investigations where it considers the same should be undertaken. Inspectors are obliged to report to the Central Bank which report is forwarded to the Minister for Finance.
There is a procedure for winding up building societies directly equivalent to that provided for a company under the Companies Act. Notice of resolutions for windup must be given to the Central Bank in the same way as in respect of a bank. Upon winding up, persons to whom loans have been advanced are not to be treated like ordinary debtors. They may only be required to pay the loans in accordance with the terms of their mortgage contract.
Disputes and complaints
Disputes between the Building Society and a member of the Society in his capacity as such or as representative may be resolved by an adjudicator appointed under a scheme pursuant to regulations made by the Minister. If there is no such scheme, it may be resolved by a non-statutory adjudicator. The relevant functions have ultimately been passed to the Financial Services and Pensions Ombudsman.
The Circuit Court hear and determine disputes when the rule so provide, and its decision shall be binding save for an appeal on a point of law to the High Court.
Rules may provide that disputes may be resolved by arbitration. There are provisions governing arbitration provisions in the rules of a Society.
The statutory or non-statutory scheme for complaints provide for informal investigation and adjudication of disputes and complaints against the Society by its members. Disputes which may be adjudicated under the rules may instead be adjudicated under the scheme where, they are within the scope of the scheme.
Building Societies are obliged to keep deposits at the Central Bank of a proportion of their total liabilities in respect of shares and deposits. It is determined by the granting of the authorisation and may be varied. No charge may be created over the deposit with the Central Bank. It is not subject to any kind of execution in satisfaction of any claim, judgment or decree.
The Minister may make a savings protection scheme to protect savings as deposited. The scheme wis later subsumed under the General Deposit Protection Schemes. See other chapters in that regard.
Officers of a society are subject to penalty if they fail to keep proper accounting records. Officers may be personally liable where proper records have not been kept.
There are similar provisions in respect of indemnifying and insuring directors as apply in respect of a company. A court may grant relief against liability of officers and auditors in respect of negligence, default or breach of duty where they acted honestly and reasonably and where having regard to all the circumstances, they are fairly to be excused. They may be relieved of liability on such terms as may be determined.
There are a range of offences under the legislation including, obtaining authorisation by false statements, breach of condition of an authorisation, and failure to comply with requirement. They may be subject to summary conviction or conviction on indictment depending on the seriousness of the breach.
Where a judgment is obtained against a Building Society, the registrar of the court shall notify the Central Bank if the judgment is not satisfied or security is not given, he shall be deemed unable to pay its debts and the provisions as to winding up shall apply.