CHARLIE McCreevy's new single financial regulator Bill has been slated just weeks before it is due to be published. The failure to incorporate the lessons learned from the AIB trading scandal into new regulatory legislation is "inexplicable", a leading Irish financial expert said yesterday
CHARLIE McCreevy's new single financial regulator Bill has been slated just weeks before it is due to be published.
The failure to incorporate the lessons learned from the AIB trading scandal into new regulatory legislation is
"inexplicable", a leading Irish financial expert said yesterday.
Professor Ray Kinsella of the UCD Smurfit Graduate Business School said that a Bill which will put in place a single regulatory structure would reduce our capacity to respond to a major economic shock and that it should be shelved.He told the annual Finance Dublin conference that the legislation was being put through with a "lack of informed debate".
The Bill, which has been in preparation for over a year, is expected to be published in the next week or two.
Mr McCreevy told the conference it was designed to maintain the best of the existing system, while moving towards a "one-stop-shop" approach.
He made clear that the Bill would contain the proposed structure chaired by the Governor of the Central Bank but with a separate board, chairman and chief executive for the financial regulator.
Prof Kinsella told the conference: "It is almost as if the Bill is being rolled out at a total remove from the events of the last six months and semi-detached from the lessons that may need to be incorporated in future legislation.""Internal controls are at the heart of the supervisory process. There are enormously important lessons to be learned from the failure of internal controls and risk management procedures in Allfirst/AIB."
John Hurley, the newly-appointed Governor of the Central Bank, said the Bank was reviewing its relationship with other regulators of parent and subsidiaries of Irish authorised institutions to identify any areas which need to be strengthened in light of the Allfirst affair.
But Prof Kinsella said the proposed Bill was "fatally flawed" and should be withdrawn.It envisaged "an alphabet soup", too complicated for efficient and transparent regulation."The net effect of the proposals in the Bill will be a weakening of Ireland's, albeit already limited, capacity to respond to a major systematic shock," he said."At the same time, consumers of financial services and products would be considerably disadvantaged, compared with alternative institutional arrangements," he continued."Namely, an enlarged director of consumer affairs which could ensure timely redress for an ever-widening spectrum of financial services."He also said that the Bill was being brought forward at a time of considerable financial uncertainty, both globally and within the EU."The reality is that prudential supervision and consumer protection have a very different focus."It simply makes no sense whatsoever to lump them together within a single organisation."
Mr McCreevy said the new regulatory authority would have a dedicated consumer protection director to give a new focus on consumer concerns.
"The overall purpose ... is to combine the targets of having both a prudently managed and regulated, internationally competitive and consumer-friendly financial services sector."
- Samantha McCaughren
And this was April 10 2002!