AMENDMENT OF REGULATIONS.

Your Sub-Committee have given careful consideration to a report of the General Manager containing suggestions for the removal of restrictions which hamper the development of the Bank and for strengthening existing powers possessed by the Bank. Your Sub-Committee have arrived at the conclusion that the Regulations should be amended as indicated below:

(1) Limitation of Deposits.

Under Regulation 36 (with certain exceptions) the amount which may be received from any person by way of deposit in any Bank year is limited to Five hundred pounds. Having regard to the strong position of the Bank and its remarkable development, and to the fact that no difficulty has been experienced in meeting withdrawals in times of exceptional industrial depression, it is unreasonable to impose this limitation on the Bank. The argument advanced by the Treasury some years ago that without such a limitation the Bank might find it difficult to meet demands from Trade Unions in the case of a prolonged strike does not apply, because these bodies are prevented by their Rules from depositing their main funds with any bank other than the Co-operative Wholesale Society. Small local funds may be deposited with this Bank but they would not reach such a figure as to embarrass the Bank in the event of immediate withdrawal.

It is, therefore, recommended that Regulation No 35 be amended so as to meet the position, and that Regulations Nos 36 and 37 be rescinded.

(2) Regulation No 39. Interest on Deposits.

This Regulation fixes the rate of interest at 3½% per annum on every complete pound deposited. Your Sub-Committee feel it desirable to amend this Regulation so as to admit of the present rate being allowed on money withdrawable on demand or on one week's notice, and a higher rate to be allowed on money deposited for a fixed period. Trustee Savings Banks are able to make such distinctions, and at present allow 2½% on sums withdrawable on demand or on one week's notice and 4% on sums which are subject to a longer period of notice. Railway Savings Banks allow 4% and Building Societies have been accepting deposits at 5% (Tax free) for some time.

It is, therefore, recommended that Regulation No 39 be amended so as to admit of the rate of interest being maintained at 3½% in respect of deposits withdrawable on demand or on one week's noticed, and a rate of 4% being allowed on special deposits of £50 or multiples of £50 subject to three months' notice of withdrawal.

(3) Regulation No 41. Withdrawal of Deposits.

It is felt that the time has arrived when the Bank should give equal facilities for withdrawals on demand at Branches, as is given at Head Office. The limit of £5 which may be withdrawn on demand at branches was a wise precaution when the Bank was first established, as practically all the Branches were conducted in temporary premises with inadequate accommodation for storage of cash. The position has altered considerably, and as all the permanent Branches have modern strong-room accommodation, there is no reason for any distinction between Head Office and Branches in the matter of withdrawals on demand. As regards the few Branches still conducted in temporary premises any risk there may be in having a uniform practice in this matter can be met by arrangements between such Branches and the nearest permanent Branch.

It is, therefore, recommended that Regulation No 41 be amended so as to permit of sums up to £30 being withdrawn on demand by depositor at all offices of the Bank.

(4) Regulation No 67. Estate, Succession and Legacy Duties.

Much annoyance is experienced in giving effect to this Regulation, which requires the production of a certificate of payment of estate duty, and a stamped receipt for succession and legacy duty, or a certificate that the latter duty is not payable, before payment can be made to the survivor in a joint account.

The position which arises as a result of this Regulation is unsatisfactory. If the survivor fails to notify the Bank of the death of the other party to the account an application to withdraw money would be met without any question being asked, and withdrawals could take place even to the extent of closing the account. On the other hand, if the survivor volunteers the information that the other party to the account has passed away, then the provisions of Regulation No 67 begin to operate. When opening a joint account a special form is filled up authorising either party or the survivor to make withdrawals. It is difficult to appreciate the reason that during the lifetime of the parties to the account, withdrawals can be made by either party even to the extent of closing the account, but immediately a death occurs the survivor is put to the trouble referred to. Proof as to whom the balance in the account belongs always rests upon the survivor, and his contention that the balance represents his share or his own money is difficult to disprove. The general reason for opening a joint account in a savings bank is that of convenience; it is a common practice for a man and wife to open a joint account so that either can deposit or withdraw, and encouragement should be given to joint saving of this nature.

Your Sub-Committee accordingly recommend that Regulation No 67 should be amended so as to free the Bank from the necessity of requiring production of certificates and receipts.

(5) Regulation No 87. Ground Rents and other Payments.

This Regulation imposes upon the Bank the duty of calling for production of receipts for ground rents within 30 days of the payment falling due. As a result, it becomes necessary for the Bank to issue letters to Mortgagors asking for these receipts, and the mortgagors are put to the trouble and inconvenience of producing same.

In the case of Municipal houses the difficulty has been surmounted by making it a condition of the mortgages that ground rents shall be paid by the Bank in the first instance and debited to the account of the Mortgagor. The Estates Department are thereby saved labour and expense in making out and issuing separate accounts and receipts.

In the case of private houses, however, such a scheme can only be carried out with the written consent of the Mortgagors. While several are willing to give this consent, there are many who decline to do so.

It is proposed to make the payment of ground rents subject to the same procedure as Fire Insurance premiums; that is to say, that the amount shall be paid by the Bank when due and debited to the account of the mortgagor.

It is, therefore, recommend that Regulation No 87 be amended to provide accordingly.

(6) Regulation No 90. Depositor in Arrear.

The present Regulation limits action being taken against a Mortgagor in default to the time when his arrears equal three monthly instalments of principal, and as a result considerable inconvenience and expense is incurred on account of certain Mortgagors who deliberately evade their obligations until the Bank commences to take action. It frequently happens that as soon as the Town Clerk commences to proceed, the defaulter makes a partial payment bringing him just within the provisions of this Regulation. Another month goes by, the same position arises, the same action is taken, and the same partial payment made by the defaulter.

Many Building Societies reserve to themselves the right to take action promptly when an account is in arrear and it would be desirable for the Bank to have similar property. In certain cases the financial position becomes serious at the end of three months, particularly where the Mortgages are arranged on low deposits, or in cases where there are subsequent charges upon the property.

Cases of hardship or cases where exceptional circumstances exist, will continue to be dealt by suspension or modification of payment.

Your Sub-Committee, therefore, recommend that Regulation No 90 be amended in the manner indicated above.

(7) Regulation No 93. Legal and other Charges.

It is considered desirable to strengthen this Regulation so as to make it clear that any expenses incurred in the recovery of arrears shall be payable by the defaulter. Considerable correspondence and interviews are conducted by the Town Clerk, and it is only equitable that the defaulter should meet expenses so entailed.

Your Sub-Committee, therefore, recommend that Regulation No 93 be amended to cover the position.

INVESTMENT OF FUNDS.

Your Sub-Committee have reviewed the present system of placing money with the Corporation at call, and are of opinion that the arrangement, whereby the rate of interest on such money is agreed upon from time to time by the Bank and Finance Committee, is satisfactory, and therefore your Sub-Committee do not recommend amendment of the Regulations in regard to investment of funds.

COLLECTION OF CORPORATION ACCOUNTS.

It has been proposed on several occasions to insert a new Regulation giving authority for the receipt and payment of monies on behalf of the Corporation.

In view of the existing facilities with regard to the trading accounts and to the fact that a scheme has been prepared for the collection of Rates through the medium of the Bank your Sub-Committee do not recommend any action being taken in the direction of amending the Regulations in this respect.

SANCTIONS.

Your Sub-Committee further recommend that the Town Clerk and General Manager be instructed to obtain the provisional approval of HM Treasury to the amendment of regulations as outlined in this Report, and that the phraseology of such amendments be left to the officers referred to.

SAVINGS BANKS BILL.

In view of the proposals contained in the Savings Banks Bill now before Parliament and the additional powers which it is contemplated shall be conferred upon Trustee Savings Banks, some of which powers are not possessed by the Municipal Bank, your Sub-Committee have directed the Town Clerk and General Manager to give the matter their consideration. It is considered that any proposals in the Bill which may be of equal advantage to this Bank, should be secured by amendment of the Regulations and it is therefore proposed to submit a further Report on the matter to your Committee at an early date, when the Report of the Town Clerk and General Manager thereon has been considered.

The Town Clerk and General Manager were instructed to draft the required amendments and to approach the Treasury with a view to their provisional approval being obtained to the proposals, prior to submission of draft amended regulations to the City Council.

On April 15th 1929, the Town Clerk presented the following report, and then informed the Committee of the negotiations and correspondence which had taken place with the Treasury:

I beg to report the result of an interview which your Chairman, Mr Hilton and myself, had with Mr Phillips of the Treasury concerning the amendments to the Bank Regulations which your Committee desire to obtain.

The amendments as embodied in the attached report of the General Purposes Sub-Committee were discussed seriatim.

As to No 1 - Limitation of Deposits.

Mr Phillips stated that at the present time the £500 limit applied to Trustee Savings Banks, and accordingly he could not agree to making a special exception in favour of the Birmingham Municipal Bank.

He added that an amendment to the Savings Bank Bill, which is now before Parliament, was expected to be moved for the removal of this limitation from the operation of the Trustee Savings Banks. Mr Phillips also stated that if this amendment were carried, then, of course, he would have to reconsider the position so far as the Birmingham Bank was concerned.

The matter was, therefore, left in abeyance until the result of the discussion on the Savings Bank Bill on this point is made known.

As to No 2 - Interest on Deposits.

Mr Phillips stated that from the figures which he had before him showing the financial position of the Bank and the amount of its reserve fund, he could not entertain the application for authority to allow the higher rate of interest on certain deposits, viz: 4%.

It was mentioned that any Trustee Savings Bank that made application to increase its rate of interest had to comply with certain standard conditions laid down by the Treasury in regard to their financial status.

Mr Phillips undertook to communicate these requirements to the Corporation, and it would then be for the Corporation to satisfy themselves as to whether or not they felt themselves able to fulfil these conditions, and in that event, Mr Phillips would be prepared to reconsider the application. A Communication from Mr Phillips on this matter is therefore awaited.

As to No 3 - Withdrawal of Deposits.

Mr Phillips agreed to this amendment.

As to No 4 - Estate, Succession and Legacy Duties.

It was stated that the main objections to this amendment emanated from the Inland Revenue Authorities, as the present law on this point in regard to the Bank and Trustee Savings Banks afforded a protection against evasion of income tax and death duty payments.

After some argument, Mr Phillips expressed himself as being willing to approach the Inland Revenue Authorities with the suggestion that the surviving party to the joint account should be allowed to draw 75%, or as a minimum, 50%, of the amount standing to the credit of the account.

In the view of your Chairman this seemed to be a satisfactory compromise if the Inland Revenue Authorities will agree to it.