Q&A

I am a member of the Irish Nationwide. I notice now that to open an account which grants membership takes a rather large investment. I have an account with about 1,500 in it but have had this account for over 10 years.

Irish Nationwide

Do you think this amount is sufficient to allow me to qualify should Irish Nationwide demutualise? I assume that the large amounts needed to open qualifying accounts only applies to new members?

Mr E.H., email

I wouldn't worry if I were you. Your 1,500 should make you more than eligible for free shares when the building society does eventually succeed in managing director Mr Michael Fingleton's long-sought-after demutualisation.

The most important thing from your point of view is not to reduce your balance below the threshold for eligibility that would have applied when you opened the account. Ten years ago, this would have been £100.

As you suspect, the higher recent thresholds for opening an account that would qualify for free shares are there to deter carpet-baggers - people who joined the society only in the expectation of making a quick windfall profit from the sale of their shares following a demutualisation.

As a member of the Irish Nationwide Building Society (i.e £15,000 in a qualifying share account) that was opened in June 2002, can you advise me if I qualify for the mini-windfall on demutualisation, as in when it finally is signed into being or when it is voted on to accept?

Mr M.L., Dublin

The big issue for you is time and, depending on whom you believe, your position is touch and go. As you state, you hold a qualifying account, the threshold for which has been rising rapidly in recent years as the society sought to deter investors in search of a quick buck.

I assume that you have ensured that the balance in your account has remained consistently above the level required to ensure eligibility to a windfall on the date the account was opened.

That being so, the only risk for you is the two-year rule. The effect of this is that only those people who have been qualifying members for two years at the date when a decision to demutualise is announced will be eligible to benefit in any subsequent windfall.

For you, the key date is whatever date in June 2004 marks the second anniversary of your opening the qualifying account. There is a growing view that the building society will move quickly to announce its intention to demutualise once new legislation governing building societies is passed into law.

This is currently ready for publication and the proponents of demutualisation hope that it will pass speedily through the Oireachtas. If it does, it should be ready to be signed into law early in the summer.

On that basis, as I say, it could be touch and go as to whether your account will qualify. On the plus side, these things tend to take longer than expected and our politicians are currently distracted by issues like the EU Presidency, forthcoming local and European elections and electronic voting. As the pressure for this Bill comes largely from one institution, it is possible that the timetable for its passage through the Oireachtas might slip.

If I were to bet, I would say that you will probably be all right but you will need to keep an eye on the progress of the legislation.

Tax on cards

Last week, my 13-year-old daughter received a bank statement. She had previously had a paltry balance of 32 but noticed that 10 had been taken by our marvellous Government as an ATM stamp duty, leaving her with an even more paltry balance of 22.

Isn't it a sad sign of our country when the Minister for Finance can now tax our youth for having an ATM card? I thought that our Government wanted to encourage our youth in the use of all items electronic.

What if my daughter had an empty account? Would they simply take the money the minute she lodged a tenner or would she incur another bank charge for being overdrawn?

My daughter is completely disillusioned and will now have to cancel her ATM card (to avoid paying this charge) and go back to the marvellous queues that are now modern banking in Ireland.

Mr P.D., Clare

It's a blow when something like a parent's efforts to encourage a child in the use of money is undermined by something like this. Mind you, the timing surprises me. Most banks deduct Government stamp duty on cards in early April in respect of the previous year, which runs to March 31st. It would be unusual for deductions to be taken at other times and your daughter might query this with her bank.

As you say, the Government has clearly signalled that it is intent on encouraging the use of electronic payment systems both for their efficiency and their security. Of course, such a policy also suits the banks, which have been cutting costs by closing branches and turning increasingly to automated banking.

Still, Government policy hasn't stopped the Minister for Finance executing an entirely contradictory position in relation to taxation of bank and credit cards in order to bolster what were relatively parlous Exchequer figures last year.

Mr McCreevy likes to pull rabbits out of hats when it comes to Budget day and would no doubt have seen the banking sector, which at time struggles with its own public image, as a soft target.

For his part, he would presumably argue that any duty on bank cards would have to be universal to be equitable and that means that minors with bank cards are as vulnerable as the rest of us, despite the generally small sums in their accounts.

All of this is no good to your daughter. She must get rid of the card before the end of March or she will face a further charge in respect of the April 1st, 2004-March 31st, 2005 year. Then, as you say, she can look forward to increasingly poor service at a diminishing number of bank branches.

By the way, as you suspect, if she had less than the 10 in her account, the bank would have put her into overdraft and subsequently penalised her with charges as a result. They would argue, rightly to be fair to them, that it is the responsibility of the customer to be aware of the fact that stamp duty was due on the account.

Mind you, that brings us back to the timing of the whole thing. Strange.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.