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Ireland: Leading Finance Groups Criticise Delay On Single Regulatory Authority

Mandy Robinson, Tax-news.com, London

21 November 2000


Almost two years ago the Irish government announced plans to set up a Single Regulatory Authority (SRA) but has yet to come up with the goods, which has led to the rapidly thinning patience of three of Ireland's most powerful financial groups.

The Irish Association of Investment Managers (IAIM), the Irish Insurance Federation (IIF) and the Irish Brokers Association (IBA) have written to Tanaiste Mary Harney expressing their concern at such a lengthy delay and the likely damage done to the finance industry and its consumers.

The government's so far empty promise was followed by the McDowell Report published 18 months ago, which highlighted the Central Bank's attempts to retain its function as Ireland's main financial regulatory authority and recommended that the SRA should be independent of the Central Bank. The delays have given rise to rumours that Ms Harney and Finance Charlie McCreevy are unable to agree upon the nature of the role the Central Bank should perfom under the new system.

A letter to Ms Harney, dated October 2000, from IAIM chairman Martin Nolan, IIF president John Hanlon and IBA chief executive Paul Carty, condemns the political disagreements that have contributed to the delay: 'It is now 18 months since the McDowell Report was published. It is well known that there are differences at political level on how the SRA should be structured. These differences seem to relate to whether or not the SRA should operate within the ambit of the Central Bank (and if so, on what basis) or whether it should be a greenfield operation. The absence of decision-making in this area is, at this stage, damaging both to industry and consumer interests.'

The letter also highlighted the urgent need for the implementation of the SRA: 'The increasing complexity of the financial services industry, the neeed for effective consumer protection, the existence of dysfunctions and anomalies caused by the current, split regulatory systems combine to create a powerful impetus for an SRA.'

Furthermore, the letter called for the SRA, when instated, to be efficiently financed and resourced 'with a complement of senior and highly qualified staff who are capable of achieving a major enhancement of the regulatory system in Ireland in the interests of both the consumer and the financial services industry.'

A spokesman for the Central Bank refused to elaborate on the problem but indicated that the bank would welcome a speedy conclusion to the issue. The bank has stated that it would prefer to establish a separate division dealing with consumer protection rather than come under a new greenfield authority. But a spokesman for the Consumers Association of Ireland said a greenfield regulator entirely separate from the bank would be the only course of action the CAI would find acceptable.

It is unlikely an agreement will be reached in the very near future

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