S.I. No. 339/1987:

BUILDING SOCIETIES REGULATIONS, (AMENDMENT) REGULATIONS, 1987

BUILDING SOCIETIES REGULATIONS, (AMENDMENT) REGULATIONS, 1987

The Minister for the Environment in exercise of the powers conferred on him by sections 5 and 10 of the Building Societies Act, 1976 (No. 38 of 1976) and by sections 3 and 6 of the Building Societies (Amendment) Act, 1986 (No. 36 of 1986) and, as respects articles 3, 4, 5 and 6, after consultation with the Registrar of Building Societies and, as respects article 3, with the consent of the Minister for Finance, hereby makes the following Regulations:--

1. These Regulations may be cited as the Building Societies Regulations, (Amendment) Regulations, 1987.

2. In these Regulations "the Regulations of 1987" means the Building Societies Regulations, 1987 ( S.I. No. 27 of 1987 ).

3. The Regulations of 1987 are hereby amended by the substitution for article 5 of the following article:

"5. ( a ) The total amount of loans advanced by a society in a financial year pursuant to article 4 shall be such that at any time in that year the amount outstanding on such loans shall not exceed 7½% of the total amount of all loans secured by mortgage advanced by the society in the immediately preceding financial year; and

( b ) the total amount of loans advanced by a society pursuant to article 4 and outstanding at any time shall not exceed 4% of the total assets held by the society at the end of the last financial year in respect of which its annual accounts have been laid before an annual general meeting of the society.".

4. Rule V of the First Schedule to the Regulations of 1987 is hereby revoked.

5. Notwithstanding the provisions of article 6 of these Regulations, the rules prescribed in the First Schedule to the Regulations of 1987, other than Rule V, shall continue to have effect for one month after the commencement of these Regulations.

6. The following Schedule is hereby substituted for the First Schedule to the Regulations of 1987:

"FIRST SCHEDULE

Article 8

I Redemption of Loans

( a ) A member may at any time before the time agreed repay to the Society the whole or any part of a loan and shall not be liable to pay any redemption fee in relation to the loan or any part of the loan.

( b ) In this rule "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.

II Valuation Reports

( a ) Where the Society gives approval to the making of a loan (other than a loan pursuant to article 4 of the Building Societies Regulations, 1987), the member shall, at the same time as he is notified of the Society's approval, be furnished with a copy of the report made under section 79(1) (b) of the Building Societies Act, 1976 , relating to the value of any security for the loan.

( b ) There shall be attached to or included in every valuation report furnished to a member in accordance with this rule a note stating clearly the nature and purpose of the report.

III Insurance of Mortgaged Property

( a ) Any insurance which the Society may require a member to effect and keep effected on property mortgaged to the Society may be effected by the member with any insurer and through any agency or any intermediary.

( b ) When the Society requires the member to effect such insurance for the first time as respects a mortgaged property it shall at the same time notify him in writing that the insurance may be so effected and of the nature and extent of the required insurance.

( c ) The Society shall not impose a requirement in regard to the nature and extent of insurance on mortgaged property which differentiates as between insurance effected through the agency of the Society and insurance otherwise effected by members.

( d ) The Society shall not impose a condition on members in relation to insurance on mortgaged property which would require members to pay a fee to the Society or to incur a cost which in either case would not be paid or incurred by members effecting insurance through the agency of the Society.

( e ) Notwithstanding any other provision of the rules of the Society, any dispute between a member and the Society arising out of the operation of this rule shall be determined by the Registrar and section 49 of the Building Societies Act, 1976 , shall apply to such dispute.

IV Costs of Legal Investigation of Title

Any costs incurred by the Society in respect of, arising from or in connection with the legal investigation of title to any property offered as security by a member shall be paid by the Society and shall not be recoverable from the member either as a fee specifically stated to be in respect of such costs or as part of any fee charged in respect of the loan.

V Mortgage protection Insurance

( a ) Subject to the provisions of this rule the Society shall arrange, through an insurer or an intermediary nominated by it, a life assurance policy providing, in the event of the death of a member before a loan made by the Society after the 29th day of February, 1988, has been repaid by the member, for payment of a sum equal to the amount of the principal estimated by the Society to be outstanding in the year in which the death occurs on the basis that repayments of the principal have been made by the member in accordance with the mortgage, such sum to be employed in repayment of the principal.

( b ) This rule shall apply as respects all loans made on the security of a freehold or leasehold estate or interest except:

(i) where the dwelling in respect of which the loan is made is, in the society's opinion, not intended for use as the principal residence of the member or of his dependants,

(ii) loans in excess of £60,000,

(iii) loans for a purpose other than the provision of a dwelling or the purchase of such estate or interest,

(iv) loans to members who belong to a class of members which by reason of health would not be acceptable to an insurer,

(v) loans to members who are over fifty years of age at the time the loan is approved,

(vi) loans to members who, at the time the loan is made, have otherwise arranged life assurance, providing for payment of a sum, in the event of death, not less than the sum referred to in paragraph (a).

( c ) A member who does not belong to a class referred to in sub-paragraph (iv) of paragraph (b) shall not be required to undergo a medical examination as a condition of a policy but nothing in this rule shall prevent a member belonging to such a class from being required to undergo a medical examination.

( d ) The premium on a policy under this rule shall be payable in monthly instalments by the member to whom the policy applies unless otherwise agreed in writing between the member and the Society.

( e ) A policy under this rule may provide for such other benefits as the Society may determine, such benefits to be employed towards meeting the payments from time to time due under the mortgage or to redeem the loan in whole or in part.

( f ) A policy under this rule may, in the case of a loan made jointly to two or more members, apply to such of the member as may be designated by the Society due regard being had to the wishes of such members.

( g ) Where the proceeds of a policy under this rule exceed the amount due to the Society on the loan any such excess shall be payable to the surviving member or to the estate of the decreased member as the case may be.".

GIVEN under the Official Seal of the Minister for the Environment this 21st day of December, 1987.

PADRAIG FLYNN,

Minister for the Environment.

The Minister for Finance hereby consents to article 3 of the foregoing Regulations.

GIVEN under the Official Seal of the Minister for Finance this 21st day of December, 1987.

RAY MAC SHARRY,

Minister for Finance.

EXPLANATORY NOTE

These Regulations make a number of amendments to the Building Societies Regulations, 1987.

Article 3 changes the basis on which the restrictions on unsecured loans are calculated.

Article 6 substitutes a new Schedule for the First Schedule to the Regulations of 1987 which amends the rules prescribed for societies in respect of redemption fees, insurance of mortgaged property and mortgage protection insurance. The rules in relation to valuation reports and costs of the legal investigation of title remain unchanged.