Shadow Finance Minister Grant Gibbons has criticised a recent piece of legislation excluding credit unions from falling under the new Banks and Deposit Companies Act.

The amendment was one of three Orders considered by the Senate this week and other changes included the redefining of "deposit taking companies'' in the original bill to only include companies into which deposits are made on a "day-to-day basis''.

An order proposing consequential amendments to other legislation due to the Act was also considered.

When tabled in the House of Assembly last July, the Banks and Deposit Companies Act was heralded by The Royal Gazette as bringing on a "new era for banking'' by placing banks under the control of the Bermuda Monetary Authority.

Another purpose of the bill, which was passed last August and becomes law on January 1, 2000, was to bring banks into line with international standards and also make it easier for them to gain secondary listings on overseas stock markets.

Named at the time by Independent Sen. Walwyn Hughes as a "milestone that will be welcomed by the industry'', the bill also gives Government power to waive the 60/40 ownership rules.

Finance Minister Eugene Cox said of the recent amendments: "Their main purpose was to clarify exactly what the original Act meant.

"Some of the terms in it, including the meaning of `deposit' and `deposit taking companies', were so wide that we felt the need to tighten them up somewhat,'' he explained.

"If they weren't redefined, then certain companies would have been caught up in the Act that hadn't originally been intended.'' Considered by Dr. Gibbons to be the most "controversial'' of the changes was the Banks and Deposit Companies (Exemption) Order, which excludes credit unions from being licensed under the terms of the new Act.

Bermuda Monetary Authority deputy general manager Colin Furr said the amendment was made because "the credit union is already governed by its own legislation''.

"At this stage of the game,'' he added, "it wasn't intended to review the Credit Unions Act of 1982.

"However, we are considering revamping all of Bermuda's financial legislation so that it will be more in line with international factors in the future.'' But, when the Order was considered in the House of Assembly last Friday, Dr.

Gibbons said: "I don't understand why credit unions are being exempted.

Members of the credit union deserve just as much protection from the Act as clients of other organisations do.'' Mr. Cox responded by pointing out that credit unions were "distinct'' from banks in that they deal more with "domestic'' concerns.

Yesterday, Dr. Gibbons said: "I see no good reason why credit unions should be exempted by this legislation.

"This new bill is much more thorough than the old Credit Unions Act of 1982, which is simply not strong enough.

"I feel that credit union members deserve exactly the same protection that other deposit companies will get and I can only say that it looks like they may have been exempted from the law for a political reason.''