Other Questions. - Independent Financial Regulator.

Thomas P. Broughan

Question:

7 Mr. Broughan asked the Tánaiste and Minister for Enterprise, Trade and Employment the plans, if any, she has to implement the report on the financial services sector recommending the establishment of a single financial regulator; and if she will make a statement on the matter. [21987/99]

Nora Owen

Question:

88 Mrs. Owen asked the Tánaiste and Minister for Enterprise, Trade and Employment the role, if any, her Department will have in the decision to implement the recommendations of the McDowell report on a single financial regulator; and her views on the recommendations of the report. [22055/99]

I propose to take Questions Nos. 7 and 88 together.

As indicated in the programme for Government, we intend to establish a single regulator for the financial services sector which will be operationally independent. The Government is anxious that Ireland should have a financial regulatory system of the highest quality. I am discussing the precise powers, structure and reporting relationships of the regulator with my colleague, the Minister for Finance. These discussions take into account the many and varied observations and comments made during the debate that has taken place on the report of the implementation advisory group on the establishment of a single regulatory authority for the financial services sector published last June.

The rules for Question Time are daft and make a mockery of parliamentary accountability. No Minister can be held to account under them and that is not the fault of—

It was Deputies who decided upon them and the Chair must implement them.

I accept that, Sir, but looking at the sheet you have sent around, in terms of time, with one minute for supplementary questions—

Perhaps the Deputy should raise the matter elsewhere.

I accept that, Sir. Does the Minister agree with the comments attributed to her in a recent edition of a Sunday newspaper to the effect that she is of the opinion that the evidence produced by the recent Committee of Public Accounts DIRT hearings strengthens the case for an independent regulator?

Yes, it does. The implementation advisory group was established prior to the excellent work done by the Committee of Public Accounts. We have had the benefit of the committee's work in the meantime and we will have its report soon. The group reported in May and its report was subsequently published. The group's membership included people from various Departments, professional bodies, three independent appointees of the Government – one a nominee of mine, one of the Taoiseach and one of the Minister for Finance. They all came to the conclusion that there is a need for an independent regulator. The Committee on Finance and the Public Service is examining this issue. It could make an important contribution to the debate and I look forward to its recommendations. A previous finance committee of the House recommended the establishment of an independent financial regulator. It is essential that is done.

I am not in favour of institution building or turf wars. What is important is that, as much as we need the powers of the new regulator, the culture must be right. One can have all the powers in the world, but if the culture is one of not taking aggressive action, nothing changes. Various efforts were made during the work of the group, which were well publicised – everyone is well informed because there are plenty of people to inform Members and the media of the positions of various parties – to have a single body divided internally, with policy the remit of one wing and regulation the remit of another. However, that did not find favour in certain quarters. We will shortly – probably not until after the budget – bring a memorandum to Government so that we can make a decision.

When the Minister says the regulator ought to be operationally independent, does she mean independent from the Central Bank or that the Central Bank will be the financial regulator, or is it a fudge, somewhere in between? Will we allocate the top three blocks of the Central Bank to supervision and the bottom three to the remaining duties of the bank? I assume the Attorney General is being helpful in the discussions between the two Ministers on this.

As a professional, the Deputy knows the Attorney General does not become involved in policy matters. He simply gives legal advice. He compiled an excellent report in a different capacity. I started out with an open mind about how this should be done. New institutions should never be established just for the sake of it. That is not good. The Central Bank has a huge resource. My concern is whether the culture can change to do the job required. Some of the most successful economies in the world are those with the most aggressive regulation. The Central Bank has important functions relating to prudential supervision and monetary policy supervision and it has a role with the European Central Bank. That will continue. However, it also has a huge body of expertise relating to regulation and so does my Department, the Registrar of Friendly Societies, the Director of Consumer Affairs and others. It is not satisfactory in a small economy that financial regulation is all over the shop. It needs to be brought together. I have an open mind as to how that should be done. The important point is that we must do the job and the report of the advisory group makes compelling reading.

When will the row between the Department of Finance and the Minister's Department about the location of the regulator be resolved? That was not clearly outlined and was left open in the revised programme for Government. When will this be finalised?

I hope the decision will be made reasonably soon after the budget. Obviously it will have to be independent of Ministers, Government and Departments. That is the idea. I took the view after May to let people cool down for a while. As the Deputy knows, there was intensive lobbying and, sometimes in the heat of the moment, we do not always make the best decisions. It is no harm to let some time pass and reflect on what was reported. The Committee of Public Accounts then—

We must now move on to Question No. 8.

I agree with Deputy Rabbitte about questions, but maybe I say too much.