IFSRA cites Irish Nationwide for proxy violation

Irish Nationwide Building Society has been found by the financial regulator to have broken the law in relation to its 2003 annual general meeting.

Nationwide is only the second financial institution to be named this year by the Irish Financial Services Regulatory Authority (IFSRA) as part of its enforcement activities. The other institution named was AIB.

A spokesman for Nationwide could not be contacted yesterday. In a statement, the regulator said the society issued separate proxy forms to some members prior to the 2003 meeting.

The proxies were not appended to the notice of the a.g.m. and were issued in the absence of written requests for the proxies. This was in contravention of the law.

"The breach did not invalidate the exercise of the proxies in any way," the regulator said. "No such issue arose in relation to the 2004 annual general meeting."

Mr Shane Nolan, an activist member of the society, said he and a colleague, Mr Brendan Burgess, complained to the regulator about the proxies which, he said, were issued to customers in Irish Nationwide branches.

The proxies sent out in the post came attached to the notice of the a.g.m. and contained statements from Mr Nolan and Mr Burgess in support of particular positions to be taken by members on some motions.

Mr Nolan and Mr Burgess have been campaigning for the demutualisation of Irish Nationwide and the reform of its lending policies. A motion of confidence in the society's chief executive, Mr Michael Fingleton, at the 2003 a.g.m., was prompted by a submission for a vote of no confidence in Mr Fingleton from Mr Nolan and Mr Burgess.

The men subsequently called for the confidence vote in Mr Fingleton to be postponed, alleging that staff in the society had been enticed to canvass for votes for Mr Fingleton.

In the event, the vote was passed comfortably in Mr Fingleton's favour.

The chief executive of IFSRA, Mr Liam O'Reilly, said strict compliance with the law is required if mutual societies are to retain the confidence of their members.

"Regardless of the technical nature of this issue, it is clear that the actions of Irish Nationwide in this case were in contravention of the legislation governing building societies. It is a cause of some concern that this breach was permitted to occur.

"It is important to stress that the new sanctions powers of the Financial Services Regulator will be available where contraventions of requirements occur in the future. We will continue to monitor compliance with the requirements of the legislation."

Since August, the regulator has new powers to impose sanctions. The Building Societies Act 1989 allows for societies to be fined up to €1,270 if found guilty in court. However the regulator opted not to take Nationwide to court and to instead issue a statement on the violation.