Central Bank and Financial Services Authority of Ireland Bill 2003: Report Stage (Resumed).

Debate resumed on amendment No. 1:
In page 5, lines 8 to 10, to delete "PROVIDING FOR THE ESTABLISHMENT AND FUNCTIONS OF THE REGULATORY AUTHORITY SANCTIONS PANEL,".
—(Minister for Finance).

Amendment No. 11, in the name of the Minister for Finance, has a serious deficiency in that it leaves too much discretion with the regulatory authority as to how to proceed in the event of irregularities or contraventions in financial services being discovered. The regulatory authority has the option to either instigate an inquiry or enter into a negotiable process on the admission of the respective contravention by the financial service. The legislation should be more instructive and specific, leaving no room for subsequent doubt.

The constitutionality behind the introduction of new penalty provisions was questioned and Part IIIC had to be replaced to address this issue. The new Part inserts a confirmation procedure by the courts. It is modelled on the recommendations of the McDowell report, but in substance, other than the procedural changes, it retains all the features of the original provision which is to sanction financial institutions and their managers.

Some Deputies sought to amend the membership of the sanctions panel. However this is overtaken by the Government amendment which will do away with the panel requirement. It is clear that the presence of credit union representatives will be required on the IFSRA advisory panel and I will ensure that is the case. Deputy Ó Caoláin commented on IFSRA's discretion in the matter of holding an inquiry. Such discretion is required as correct action depends on the scale of the issue. Deputy Boyle raised the question of non-deposit-taking institutions. I dealt with this matter on Committee Stage by submitting an amendment to the Consumer Credit Act 1995. A question was raised regarding the proportionality of sanctions. I am satisfied that IFSRA has discretion in this area and I have the power to make regulations about monetary fines. Deputy Burton raised the issue of internal audit. I am satisfied that apart from the requirements of the Companies Acts, IFSRA can impose conditions and requirements on financial service providers.

A number of Deputies referred to credit unions. The 2003 Act specifically requires IFSRA to regulate credit unions having regard to their special characteristics. Deputies will recall that an amendment to that effect was inserted. As I have emphasised many times before, it is essential that there be proper regulation of credit unions. As I pointed out in my two main contributions, the assets under the control of credit unions were worth about €10 billion as of last year. Deputy Richard Bruton mentioned the one-size-fits-all concept. IFSRA will be able to tailor its penalties to the circumstances. The question was raised of whether the word "may" was suitable in this context. That is the purpose of using such a phrase.

Will it be obliged to refer to the earlier legislation which specified proportionality?

Yes. It will have reference to all the Acts rather than just one.

I dealt with the question of credit unions as best I could. In this context, Deputy Burton asked about bankruptcy. I do not think any Deputy would suggest that the credit union should be forced into bankruptcy as a result of action by IFSRA. It would not be in anybody's interest to ensure that a financial institution would go under as a result of such an action. The use of the word "may" is essential because a judge will need to decide whether a matter merits an inquiry. A once-off error at the counter may not require an inquiry but a pattern of bad behaviour could require one. That is reasonable.

Deputy Ned O'Keeffe raised many interesting points, asking for balance in the debate. It is popular to knock the banks as nobody likes them. They are like politicians — nobody likes them either. However, if we did not have financial institutions we would never have had the Celtic tiger. It is required that institutions lend money to viable projects and take chances in lending money despite advice not to go in that direction. That is the free market. It is that attitude that has allowed Ireland to develop. Deputy Ned O'Keeffe raised the issue of the adequacy of the banks' profits. Banks in Ireland are profitable, but in the matter of their capital base — the money they are lending — things are not so great.

Deputy O'Keeffe also mentioned the interesting issue of the ownership of Irish banks, which has been dealt with in another context. Deputies will recall that we had a debate about this some years ago. If anyone wants to take over an Irish bank there are a number of hurdles to jump. One can legitimately make the case that the Irish banks are only nominally Irish and are not owned by Irish people. Pension funds all over the world own most of the major banks on the Irish market. Yet they have an Irish ethos. The Deputy referred to what happened in New Zealand. One morning people woke up to find that none of the country's banks was a New Zealand bank. One can make the case that the Irish banks are owned by non-Irish people, so they are technically not Irish. There would be a big difference, however, if they were owned by a German bank. At the moment, if a certain business sector is going through a bad time — the farming industry, for example — the banks are in touch with the situation as their executives and chairman are living in Ireland and decisions are made here. The Minister for Finance could speak to the chairman of a body and explain that the sector is going through a bad patch. The chairman need not do anything about it, but the possibility exists. It would be different if the bank was German-owned. It would have no base here. That is what happened in New Zealand.

In 1999 I commissioned and published a report which dealt with this issue. We did not come down heavily on one side or the other. If the authors of the report said they were choosing one side over another we told them not to worry about it. I take a different view. The Deputy's point was a valid one. He also raised the interesting point of whether there should be any control of bank charges. Why not let the market decide? Other people mentioned this also. The Deputy referred to the experience of the prices commission. The unintended effect of the prices commission was that cartels and lobbies grew up and prices were kept at a higher level. Competition forces prices down. The matter of bank charges is being examined in the report to be published shortly by the Competition Authority. It will be interesting to see its opinion on this matter. The issue has been raised before and there are differing opinions about it.

I do not want to go into the matter of the AIB investigation but it is the background to much of the current debate. We must await the report. Deputy Ned O'Keeffe may be correct in his assumption that at one point AIB was charging a lower rate than its competitors and that if it had applied for the 1% sanction it would have received it. The offence, if that is the correct phraseology, is that the bank was approved to charge a particular rate, yet it charged a different one. As Deputy O'Keeffe said, AIB was the most competitive player in the market at the rate it was charging.

That is all the more reason heads should roll, if this is an institution that looks after people's money. It was a stupid mistake. It is hard to imagine the bank being in possession of all that money and making a mistake such as that.

I do not know whether it is true — we must wait for the final report — but I have heard the same thing.

The balance between prudential regulation and the consumer has been at the heart of this debate for the past seven years. Last year's Act, the Central Bank and Financial Services Authority of Ireland Act 2003, proves the worth of the legislation we put before the House. Some people were critical of that legislation, which was some time in development. It was hard to obtain agreement on which way to proceed. However, the way in which we have dealt with the AIB matter shows the benefit of the legislation.

Sometimes we get carried away trying to find somebody to blame when mistakes such as this are revealed. There is no point in blaming anyone in the regulatory regime. The area was under the control of the Director of Consumer Affairs for eight years and for the past year it has been under the control of IFSRA. We should not single out any body for blame. No regulatory regime in the world can turn up every mistake. It just will not happen. One hopes the institutions being regulated have sufficient control mechanisms in place so that mistakes will show up. I must refer to the AIB matter as it has been so much in the news, but let us await the report and keep a sense of proportion. I welcome the contribution of Deputy Ned O'Keeffe because it brought a sense of balance to the debate which has been lacking in recent weeks.

Is the amendment agreed?

Is there no opportunity for a further comment on the Minister's response?

No. According to procedure, that was the final response.

It is a pity there was not more balance. Why was he so enthusiastic about Deputy O'Keeffe's contribution?

I missed my two-minute slot.

I was not here when the Minister started so I cannot take the blame.

Amendment put and declared carried.
Amendments Nos. 2 and 3 not moved.

Amendments Nos. 4, 37, 38, 67, 68 and 81 are related and will be discussed together.

I move amendment No. 4:

In page 5, between lines 27 and 28, to insert the following:

1.—The Board of the Central Bank and Financial Services Authority of Ireland and all subcommittees or panels under its jurisdiction shall be so constituted as to consist of not less than 40 per cent men and 40 per cent women.".

The Minister made a statement as to his assessment of what happened in Allied Irish Banks. I do not wish to prejudice any investigation, but I assume he has good sources of information.

The same as Deputy O'Keeffe.

Even though Deputy O'Keeffe is a long-standing admirer of Allied Irish Banks, more than one person in the bank is guilty of at least extraordinary stupidity and incompetence. Everyone can be stupid on occasions.

They are not stupid in this House.

It is extraordinary that this stupidity went on for eight years, which brings me back to the central point. Partly as a result of the AIB debacle and revelations, the Minister has wisely had a major rethink of the IFSRA regulatory structure. His attempts to ensure it is in line with the Constitution are welcome. However, we heard him say that stupidity and incompetence are the reasons AIB customers were potentially overcharged to the tune of €25 million, a sum of money which the bank has now lodged with the Central Bank.

The amendment seeks to ensure that there will be an appropriate gender balance on the boards, panels and authorities of the new body when a significant number of appointments will be made. It is reasonable to propose that these appointments should constitute at least 40% men and 40% women, and the balance as the Minister sees fit. In the context of what the Minister said, it is crucially important that the boards, panels and advisory bodies associated with the IFSRA structure should comprise independent people who are qualified in the oversight required.

In the case of Allied Irish Banks — we do not know whether this applies to other banks — serious overcharging of customers appears to have persisted for eight years. This is despite an expensive regulatory structure. As I said earlier, the most important regulatory structure in most banks and financial institutions is the internal audit function and the internal audit committee, aided by the external auditors. This Bill, and the recent companies legislation, is silent in regard to the role of internal auditors, who are absolutely crucial. As a former employee of a bank, I am sure Deputy Ó Caoláin will agree that they are the front line on a day-to-day basis in regard to reporting malpractice or departure from guidelines. I recall that the DIRT malpractice was first drawn to the banks' attention by reports of the internal audit function.

Genuinely independent people must be appointed to the panels and structures of the IFSRA. The amendments deal with the issue of gender balance. Later amendments deal with the issue of persons with technical knowledge in regard to advocacy of consumer affairs and advocacy of credit unions. The Minister is putting far too much trust in the banking structure. We all accept there is a need for banks and financial institutions. In the United States, to which the Minister likes to refer, and in the UK, there are genuinely powerful independent regulatory watchdogs which make many sections of the banking and financial services institutions tremble. In the United States, these bodies go back to the Wall Street crash, because the banking system failed significantly. Many years later in the United States there was the series of problems in regard to savings and loan institutions which are probably the closest to our credit union institutions.

The Deputy must speak to the amendment.

I am speaking to the amendment. It is absolutely crucial that those involved in oversight are genuinely independent. I have a serious worry that the Minister is proposing to appoint and stuff the boards and panels of the new structure with the usual suspects, namely, members, including senior members, of the banking and financial services professions and institutions and the usual suspects from the Government parties. The people who will take the flak for the mistakes, or stupidity as the Minister implied, which Allied Irish Banks has been guilty of do not appear to be those at the top level but those in the middle ranks, or perhaps those who work in the front offices. These are the people who will have to take abuse from customers, not for their failures but for the failures of senior management.

The amendments, which are narrow in scope, relate to gender balance.

As many of the front line people who provide bank services are women, why would the Minister refuse to accept a Labour Party amendment which would give women and men a 40% participation level in the new structures? If he passes up this opportunity, we will have an extraordinarily expensive regulatory structure which may simply serve the interests of the financial institutions.

The Director of Consumer Affairs, one of the few women appointed to a top job in the new structure, has produced a number of consumer-friendly reports, which I welcome. In the appointments the Minister will have the power to make, there is no indication of a commitment to gender balance. After seven years as Minister for Finance — I congratulated him on it this morning — during a time when many things have changed, he finally got around to appointing one woman to the board of directors of the Central Bank. The Minister said he is making a breakthrough after 60 years, which I welcome. Today the Dáil has an opportunity not just to make a breakthrough, but to ensure that women are appointed to the new structures.

I spoke previously about the amount of credit based advertising and financial product advertising which is a pervasive feature of Irish life. In its recent report, the Central Bank referred to the high credit levels in the Irish economy.

Many of those who control household budgets are women and it is they who have to pick up the pieces when households get into trouble. This can happen due to over borrowing at Christmas time or for Holy Communion when they take the financial service providers at their word. Instead of appointing the usual suspects from the top levels of the banks, the commercial bodies and from Fianna Fáil and the Progressive Democrats, the Minister should opt for people of genuine independence, including women. If the Acting Chairman considers that an unusual request, I do not. We are in the 21st century and the Minister should be big enough to acknowledge that it is desirable and necessary that women should have a central role in the new structure. That is the purpose of the Labour Party amendment.

I will table a similar amendment later on the Ombudsman's council and the consumer consultative panel. However, I want to make a general comment about such panels. This elaborate structure, with an Ombudsman's council, a consumer consultative panel, an industry panel, as well as a hybrid board, is a consequence of not having got the objective correct in the first place. We should have produced tough pro-consumer legislation with competition within the banks. I agree with Deputy Ned O'Keeffe on this issue. At the end of the battle, the Central Bank became the main area within which consumer protection was to develop, albeit with a cavil to make it more pro-consumer. All these panels and councils were strung along behind to compensate for the lousy pro-consumer body which had been created. What is the sense in having these extras when we could have gone for a simple regulatory regime? The Government hung back from the issue of a vigorous competition policy. This is the second report from the Competition Authority and nothing has been done. Nothing has been done to deal with the ability to move freely from account to account and nothing has been done to open up competition in areas that are not really contestable.

Where these panels exist there ought to be a balanced gender representation. We have succeeded in creating a monstrosity. If we had gone about this in the right way, there would have been a very strong pro-consumer board charged with the task of consumer protection. It would have had many women with practical experience in consumer protection. Not only will the Minister not have a proper gender balance on these councils, but they will be talking shops with no real authority to influence the direction of policy. When push comes to shove, it will be the heavy brigade within the Central Bank structure who will call the shots. These groups will be frustrated in their work. I have not been persuaded by this legislation that we have got the simple things right. We are struggling to correct a situation that we created. Notwithstanding that, the Minister should push to make sure that there is proper gender balance. I know he will not accept these amendments as we have been through this on Committee Stage.

The Minister thinks he has been pioneering in reform for women in other areas within his remit. I do not agree with some of the actions which he claimed are pro-women, such as his refusal to support child care. However, this is an area in which he ought to make a special effort. The Fianna Fáil list of candidates for the European elections does not contain a single women. There is a problem here and I never said that my own party was virtuous but we are trying hard to get more women to run. The Minister has to make the extra effort to bring more women into the authority and not round up the usual suspects, who will almost invariably be well known men in these sectors. I support Deputy Burton's amendment and my own amendments grouped with it.

I have three amendments in this grouping. Amendment No. 38 argues that at least two of those to be appointed to the Ombudsman council should be women. The proposed configuration of the council is not less than five and not more than ten. My colleagues' amendments would ensure a greater level of female representation. I would be happy if the Minister accepted that argument because we are trying to achieve a pro-active approach to gender balance in all of these areas. The same applies to the consultative consumer panel where not fewer than five and not more than 20 members are to be appointed. Amendment No. 68 seeks that at least one third of the members must be women. Other colleagues have suggested it should be 40% and I fully support that. The same configuration applies to the consultative industry panel, and amendment No. 81 also seeks that not less than one third should be women.

The Minister heard these arguments time and again on Committee Stage, not just in respect of this legislation, but on the Oireachtas Committee on Finance and the Public Service. There is a need to take affirmative action to guarantee a greater participation of women in all of these areas. In the run up to the local and European elections, the National Women's Council made the argument repeatedly that women should be accommodated in all levels of elected public life. This is no less important and I hope the efforts of all parties to ensure a greater gender balance will be better reflected in the Minister's efforts to ensure female participation in all of these bodies.

This proposal cannot be taken in isolation from the need to reform the process of appointment. I would like to see the process of appointment become a process of selection. It should be open. Heretofore these appointments were made from a very restrictive pool known to a circle of people who will ultimately make the decisions. It is very important that in ensuring gender equality, we ensure equality of access to these bodies. There should be a public advertisement or notice. All citizens should have the right to offer their services. Those with the suitable qualifications, expertise and interest should be taken from a pool of both applicants and people who are nominated. The argument time and again is whether one would expect A, B or C to apply. The important thing is to try to persuade them to offer their service. It can be a marriage of both nominees and applicants. It can be by nomination or application and, ultimately, from that pool of names, a suitable body of people can be appointed to these and all other bodies within the range of responsibility of the various Departments.

I urge the Minister to take on board the arguments I and others have presented, recognising that there is currently a major imbalance and that now is the time to address it.

I support many of these amendments. I am aware the Minister comes from the school of thought that if the best man for the job is a woman, he will appoint a woman but we have to address many of the imbalances in the financial services sector and the banking industry. The banking industry is the most grey of all the grey professions and moving up along the echelons in terms of who makes decisions within the banking industry, there are progressively fewer women. The regulatory structure we put in place to police that banking system must properly reflect the fact that in its own gender make-up, the banking industry's decision making processes, and who makes up those processes, is flawed. It might even be argued that many of the difficulties the banking industry gets itself into are due to the fact that it lacks an appropriate gender make-up. On the other hand, many of the victims of either poor banking practices or banking practices that can be shown to be illegal in their effect subsequently are women. The consumer protection focus of IFSRA, and whatever legislation we put in place to strengthen the role and resources of IFSRA, should properly reflect that.

Apart from the difficulties of AIB and foreign exchange rates, the other reportage about encouraging people, largely elderly women, to move from deposit accounts to different types of investment products that carry a high degree of risk should be an area covered by this Bill and upon which IFSRA should have a strong effect. Much of the reaction to that reportage was along the lines that it was very much a case of caveat emptor in that if people moved from secure deposit accounts into high risk investment products, it was their look-out.

In consumer protection terms, however, a series of questions need to be asked. The Consumer Association of Ireland has asked questions on the way databases are obtained by many financial institutions and how people are subsequently preyed upon in terms of seeking to move their money from secure situations into less secure situations. We have heard stories about the school banking system, where the children supply names of fathers and mothers who are subsequently approached by either a bank directly or an arm of the bank. I have no doubt such information is also made available by banks to investment and insurance arms of other banking companies who directly approach some of their customers.

In the case of the investment fund issues, I understand a decision was made to approach a sector of the population who happened to be largely elderly women. As a result, there is a price to be paid by people who were lured into situations which would not otherwise have occurred if proper consumer legislation and regulation existed. The balance in our regulatory structures should help reflect that. I do not believe it is political correctness gone mad or a form of gender engineering to insist that, in terms of the representational role of women in these types of decision making processes, they should have a proportionate role. No one is saying it should be exactly 50%. Figures are mentioned in the Bill but it is a benchmark towards which we should aim and go beyond, if possible. I hope by putting such an example in place we are sending out a clear signal to the banking and financial services industry that it should get its act in order and properly represent the consumers to whom it is offering services, and society, because it is not doing that. Until we get that balance right in the banking industry, the fear is that the type of stories we have been hearing in recent weeks will become more rather than less prevalent regardless of the existence of IFSRA and whatever powers and resources it has to counteract that.

I listened attentively to many of the Opposition speakers and I was taken aback to hear someone suggest we should have another auditing system to watch the other auditor. In other words, the internal auditor should be watched by the external auditor and vice versa. The internal audit is a function of management. It has no statutory function but it exists because the chief executive of the board might want to keep an eye on the board but the external auditing system might——

(Interruptions).

We do not yet have an Enron in Ireland and if that happened in the banking system, I would not like to be on this side of the House because we would be blown out of it by Members on the Deputy's side of the House. There may be room for tightening up that area.

I listened intently to Deputy Burton who made a point about the Wall Street crash in 1929. None of us here were around at that time, although some of us may have vague memories of hearing about it from our families in America who were caught up in it because they worked in the private sector. We do not want to live through those days again.

We have to look at some of the banks who are providing more than 45% or 50% of the mortgages and moneys to the building industry. That is the level of exposure of some of those banks, and I agree with the Minister that we have an obligation to have good legislation in place to protect both the lender, the borrower and the person who deposits money. That is what we are talking about here.

On board appointments, I agree with the Minister's criteria. Appointments are usually made on the basis of the best person for the job. In my time as a Member of this House I have never recommended anyone for appointment to a board. This Government is two years in office and I have never got involved in any way in appointments to boards.

On the question of gender balance, we would like gender balance to be a policy of our organisation. This Government has a gender balance but it is on the basis of the best people for the job. All things being equal, however, I will always take the people on this side of the House because we are the legislators. We are the Government of the day and when a board is put in place it is there to keep an eye out for the Government side also. I do not see any problem with that. If people on this side of the House are right for the job, it should be given to them.

A great deal of nonsense has been spoken about this issue but when Deputy Burton was a Minister of State, she made quite a few appointments and I do not believe they were from my side of the House, although I did not check the record in that regard. She may have got the gender balance right but she did not get the other aspects right.

The Deputy should check the record.

I am simply making the point, and I do not often differ from Deputy Burton. Deputy Bruton agrees with me that it must be simple to do this but every time Deputy Bruton contributes he talks about more legislation and regulation. We cannot have it both ways.

I thought the Deputy wanted competition.

Competition is the way forward. It has always been the way forward in a free enterprise society.

The Government is doing nothing about it. It is piling reward on reward and it is not doing anything about it.

The Deputy talks more about free enterprise than I do. He is very much into that but at the same time he wants to have it every way.

I remind the Deputy that this is Report Stage.

I know that. I do not believe I am rambling too much from the subject.

I want to compliment the Minister because he is charged with the responsibility of regulating the financial institutions and protecting borrowers, lenders, depositors and all who do business. We have mortgage holders, the building industry and pension funds.

The pension funds are very important, and the banks are the largest investors in the pension funds. Those funds are for our blue collar and white collar workers who retire and who want to have a satisfactory pension at the end of their working lives.

The charges are not the only effect on the banking industry. The Indian general election and oil prices had as much an effect on share prices. I fully support the Minister in his endeavours to regulate this sector and keep it simple. It is a protected system. Over the years we had collapses in different sectors of industry and various issues arose. I was in Government at the time and we suffered severely because we felt the wrath of the public, the media, the Opposition and this House. That could happen again. We have an obligation to keep things right and not to go over the top.

I support the Minister. He is doing an excellent job. In the SSIAs he has given the people an opportunity to make investments. I support the way he has appointed people to the boards of various organisations. If one cannot get the gender balance right one must appoint the best person for the job. If we do not appoint the best person we will not have the best regulation or direction at board level.

Listening to the last speaker one would imagine there is no such thing as a woman who is capable of serving on a board. Deputy O'Keeffe says that if one cannot get the gender balance right one must appoint the best man for the job.

I said, "the best person for the job".

It is always the best man for the job. Women have an interest in high finance and in finance at all levels. I cannot understand why men will trust women with their children or with their most valuable possessions, which is usually their dog or their home, and will trust them to manage their money but they do not think them capable of participating on boards such as the one the Minister is proposing to establish. The notion, which we heard articulated again today, that there is not a sufficient number of intelligent women who are willing to be appointed to the boards of financial bodies annoys me.

Women are now more and more involved in finance. I spoke to a young woman during the week who was negotiating the mortgage for her house. When mistakes were made in the mortgage document it was she who spotted them and returned to the bank to have them corrected. When she returned she spoke to a man but it was she who corrected the mistakes. Women have a great interest in finance. It is usually women who organise personal finance and it is they who pick up the pieces and negotiate second loans for holidays, cars, house improvements and so on. To indicate that women do not have an interest in finance or that there are not enough women to allow a gender balance of 40% on any board is wrong. Women are available for these appointments.

I do not claim that women will beat down the doors of financial institutions seeking appointments to their boards. Most women are inclined to believe the argument that men are better at financial business than they are.

I recall the picture of Mary Robinson signing her first document as President. All the other people in the picture were men in morning suits. She stood out as a result of that. We should aim for the day when women are so commonplace in certain areas that we do not even notice their presence.

I was interested to hear Deputy Boyle's opinion that banking is the least progressive area in respect of participation by women. I suggest the next least progressive area in that respect is politics. It is not that we cannot find women to stand but that we do not encourage them enough and give them the supports necessary to ensure they make a contribution. Women will eventually realise they are being overlooked and bypassed with regard to boards such as this.

It is usually women who pick up the pieces when a family gets into financial difficulties. It is always women who arrange the finances to meet expenses for events such as first holy communions, confirmations, weddings, new babies, house extensions and so on. It is always women who must ensure the family's income is sufficient to meet its outgoings.

Women are 50:50 partners in all financial transactions. They should be present at the level where finances are being regulated. I do not understand why this is not accepted. We talk about being colour blind in respect of race. I am praying for the day when we are gender blind also and the best person for the job will always be appointed. Unfortunately, in the eyes of the Government, the best person for the job is always a man. I do not believe that is right.

As I already explained on Committee Stage and as Deputies are aware, it is Government policy to seek to have a minimum of 40% of state boards made up of members of each gender. Unfortunately, it is not always possible to achieve this, given the pool of people available to serve on particular boards. I will continue to try to ensure adequate representation of both genders on boards for which I am the appointing Minister. However, I cannot accept the prescriptive approach suggested by these amendments, given the many matters which must be considered when making the appointments.

I must point out to Deputy Bruton that in my county there are 20 Fianna Fáil candidates for county council seats, of whom seven are women.

That has not filtered up to European Parliament candidate level. The Deputy is the leading light there.

If some members of the hierarchy of Deputy Bruton's party had their way they might reconsider the advantage of selecting women candidates, in Leinster in any event. I will leave the matter at that.

Various panels and consultative bodies will be appointed when this legislation is enacted. During the debate on Committee Stage I gave a commitment that I would look widely and not round up the usual suspects when appointing these bodies. I agree with much of what Deputies said regarding gender balance on state boards but I do not wish to take a prescriptive approach in this matter. I will go far and wide to see that the make-up of these boards represents a cross-section of the population and includes people of every hue. Politics will not come into it.

The general trend of the past ten or 12 years has been to have representational balance on boards. I have been involved in the establishment of bodies where different groups were given nominating rights to the board. I am not convinced this is always the best way to go. It has been my experience that when a board member represents a particular group he or she may feel the interests of the nominating group must be protected. These prescriptive appointments to State boards often result in board members who, while they may speak freely, are constantly concerned that if word leaks out that they did not stand up for their nominating body they will have difficulties with their organisation and may not be renominated or may feel they have let the side down. This has been my experience in the past 15 years or so.

Deputy Ó Caoláin made the point regarding nominating rights. I see certain advantages to such a system. Like the Irish electoral system it has pluses and minuses. I accept there are advantages to such a system but in recent years I have seen board members who felt obliged to stand up for the rights of their nominating body. A small board of approximately seven people appointed without fear or favour generally makes decisions in the interest of the whole organisation. I make that point in passing as it may not have been alluded to before. What the Deputy suggests is against the general trend of what all parties have been doing in recent years. That point should be borne in mind. Deputy Ned O'Keeffe brought balance to an earlier part of the discussion and I wish to bring balance to this part. I am unable to accept the amendments because I do not wish to take such a prescriptive approach. I will endeavour to ensure that the make-up of all the panels will include as wide a cross-section of opinion as possible. I will bear in mind that there are a number of women available for such appointments. Members will have to take me at my word in that regard.

I am disappointed the Minister is not accepting the Labour Party amendment. However, I welcome his indication that he will agree to the participation of a significant number of women in the extraordinary number of appointments which will be made to this new structure. There will be approximately 60 appointments to different panels and boards, the largest number of appointments made by any one Minister for a long time.

The Minister made reference to groups being represented on boards. It can be problematic if somebody identifies themselves with a specific interest group. I am concerned that, in terms of appointments to the many panels and authorities involved, the appointees should be experienced and independently minded. Some of them must also be champions and advocates for consumer rights, including individual as well as business consumers. Many businesses, especially small and medium-sized ones, get a rough deal from some banks. Many banks, financial institutions and building societies apply stringent penalties for a default on loan regulations. People often find themselves out of their depth once these penalties kick in.

It is important that the appointees are independently minded. The board should not be of the type which gathers at 12 noon in the hallowed portals of the Central Bank or new IFSRA building to have a dry sherry and ginger biscuit, receive a three page report and that is it for the day. What we want and need in this oversight structure is strong men and women.

I wish to respond to the latter point raised by the Minister and to emphasise that I was not mooting nomination only but a combination of nomination and open opportunity to the wider public, which is a healthy and good way to do business. I believe it would give rise to interesting possibilities in terms of appointees not traditionally identifiable in the narrow and restrictive circles from which such appointments are traditionally drawn. I strongly recommend my proposal to the Minister. We will revisit the issue again when we come to deal with grouped amendments Nos. 40, 41, 69, 70 and 82. This is not the last opportunity Members will have to speak on the issue.

I accept the Minister's stated position that he is positively disposed to the gender equality project. I await with interest the appointments which he will make to test his sincerity.

I am disappointed the Minister is not willing to give a legal commitment on the matter although I accept his good faith in that regard. We are creating an extraordinary panoply of councils and organisations when we should take a much more aggressive approach towards consumer protection by establishing a much simpler structure to pursue it. If the Minister is to proceed with this structure, I hope he will fulfil his promise to ensure it is properly balanced.

I acknowledge the Minister's remarks in terms of examining the possibility of direct nominations or nominating bodies for such appointments in future. That would be a positive step. However, I wonder how much further down that road he is prepared to go. There are arguments to the effect that appointments should be taken away from ministerial patronage in terms of local government and Civil Service appointments. Perhaps the new Public Appointments Commission could have a role in terms of receiving, vetting and approving nominations for appointments by Ministers to various bodies.

On Question Time recently, I raised with the Taoiseach the appointment of chairmen to the highest position on such bodies. I argue that there is a role for the appropriate Oireachtas committee to openly debate, discuss and approve appointments to such positions so the people concerned could be sanctioned by the Oireachtas before taking up their positions. Perhaps appointees to the position of chairman of IFSRA or any of the bodies under the Minister's current remit could be, by way of initiation to their appointment, exposed to the Oireachtas Joint Committee on Finance and the Public Service, as is the case in other legislatures throughout the world. Such scrutiny would add legitimacy to whatever appointment is subsequently made and would test the person in terms of how he or she is likely to perform in the position.

We will be watching the Minister in terms of the balance of appointments. I am sure many of the political parties will write to him with suggestions as to how these appointments might be made to ensure a width of balance, broadness and qualification.

Amendment put and declared lost.

I move amendment No. 5:

In page 5, between lines 27 and 28, to insert the following:

"1.—The members of the Board of the Central Bank and Financial Services Authority of Ireland and all subcommittees or panels under its jurisdiction shall be required to comply with ethical requirements including requirements as to declaration of interests which shall be prescribed by the Minister for Finance.".

The purpose of this amendment, which is related to the previous one, is to require that people appointed to the various boards, panels, bodies, authorities and so on, about which we spoke earlier, will be required to comply with ethical requirements, including a requirement as to declaration of interests to be prescribed by the Minister for Finance.

The boards of the various bodies will be the ultimate regulators because they will supervise the regulators. It is important that we know who these people are and that they make a declaration of interests. In the past, it has been the practice that senior people in the financial services industry have constituted a significant number of appointees. It is important such people make a declaration of interests so that we can establish whether or not they represent vested interests.

The Minister spoke earlier of the difficulties of people wearing a particular hat when taking up a position on a board and how at times they can be restricted by the terms of the body they represent. That is equally true of people who have financial, employment or directorial interests in relation to particular bodies or in certain financial services institutions. A common complaint is that people are less willing to serve on boards and public bodies because of the declaration of interests requirement. Ireland is often compared with the United States. The Minister is an admirer of the United States. However, that country has relatively limited problems getting people who are willing to serve in the public interest, whether in Government or in areas associated with Government or public regulation. A person who serves in a public capacity in the United States must make declarations. Many appointments at federal and state level must be approved following a public hearing. The purpose of those hearings can be political in some cases but in other cases it is to ensure the person has an understanding of the job to which they are being appointed and the person is willing to serve the public interest, as that is perceived at the time.

No such culture has been developed in this country. We have inherited a class and caste-ridden system from the British which has not been changed. These appointments go to a certain type of person who is usually a man, has attended a certain type of school, has served in the public service or has recently retired as a director of a prominent financial institution.

I do not have a problem with some of these people constituting some of the membership of boards. The other great qualification for public service in this country is membership of a political party. If the person is qualified and if the association with a political party is fully disclosed, I do not have a problem provided he or she is in a position to serve properly.

The purpose of the Labour Party amendment is to support a climate of public service in which opportunities such as membership of boards and panels are available to a cross-section of the community and to both genders. It is reasonable that the interests of people who serve on boards and panels should be disclosed.

The Government has serious difficulties with the concept of openness and transparency. It has virtually dismantled the Freedom of Information Act. I refer the Minister to the republican ethos of the American or French models which is based on the notion of participation by all and the right of every citizen to participate. That is the model which could be used in this country. It is based on the knowledge of who these representatives are. We will want to know whether they have other interests and assess if those other interests or experiences will impact on how they carry out their functions.

The Minister has significant powers under the Bill to impose regulations. He could give an indication that he will require such regulations. It is a great pity the Minister has not taken an opportunity to re-think the appointments process and make it more worthy of a republic such as Ireland. I have the heard the Minister and his colleagues in Government complain that it is impossible to find people who will serve. The Minister has failed to examine the situation in other countries where people are proud to serve. However, they do so under certain conditions and their appointments are open to challenge and scrutiny.

An old boys' club exists in this country. Retiring Secretaries General of Departments have a choice of appointments, as have former chief executives of major corporations. I see nothing wrong with that practice. However, the wider community should also be allowed to take part in the public service and to do so for a number of years. The successful American model should be examined. It has been argued that because declarations of interest are required from candidates, people are less inclined to accept appointments. This is a feeble excuse. The Government desires secrecy and the closing down of information.

The Celtic tiger did best from 1992 when the light was let in. All open societies have, by and large, done better than closed societies. I recommend the Labour Party's amendment to the Minister as a means of ensuring the widest possible choice of best people to perform in this extraordinary number of bodies which he has chosen to establish. This is an expensive superstructure of regulation. I do not know where it will lead or how effective it will be. The House deserves to know who these people are and what their interests are.

I support Deputy Burton's amendment. She referred in her contribution to the US experience. The Minister will be familiar with the work of the Senate Appointments Commission and the process employed for appointments to various state bodies. The argument is well made that in a country that espouses a republican ethos, there is a requirement for an open and transparent appointments procedure which must also include the ethical requirements of appointment.

In terms of public office it also requires the declaration of interests. Perhaps this House and the other House do not necessarily give the best example in this regard. In my time in local government, I have witnessed a member of a county authority being forced to absent himself from a debate because of a declared business interest.

I have never witnessed anything vaguely reflecting that in terms of the legislative programme which is addressed in this House. I suggest the Commission of the Houses of the Oireachtas produce and provide an updated guide for Members of the Houses of the Oireachtas in respect of the ethical requirements of their position in elected public office.

The example should be given in this House. There is little point in county managers and local authority executives imposing ethical requirements at local authority level if the Parliament of the country does not employ the same rigorous application.

At the outset of this discussion on Report Stage of the Bill, a number of Members redeclared their specific interests and that is to be applauded. However, it is required of all Members to state their respective interests properly which allows the House to make informed judgments as to the stance, source and genesis of their argument and opinion on a given issue. That is an important requirement at this level. I ask the Minister to adopt the amendment.

Every institution we appoint should be guided by ethical principles and any panel or council should adopt such principles. The Government should, therefore, offer councils guidelines for adopting such a policy. In that sense, I support the thrust of the amendment but I am not certain we should require members of panels which are purely advisory in nature to make declarations of interest. These are appropriate where a person's interests may impinge on the decisions he or she is making. While it is possible the panels or sub-committees will make some decisions, by and large they will have an advisory and oversight role.

There is a potential for conflicts of interest to arise in certain cases but the ethical code guiding the panel or council should provide for such circumstances. I would not go as far as to state willy-nilly that persons should be obliged to make a declaration of all their interests regardless of whether they have a bearing on the issues that arise. One can go too far in that regard with the result that people may take a prurient interest in the affairs of persons appointed to various bodies. A balance must be struck as regards the circumstances in which declarations of interest must be made. I agree that all those appointed to panels should be governed by a clear code of ethical conduct, to which the board will expect them to adhere and which should alert it to conflicts of interest.

I support the amendment. Although it was probably not required, as it did not relate directly to the matter being discussed, I declared an interest during this morning's debate. The reason for making declarations of interest is to place them in the public domain to allow people to make of them what they will and ensure that no questions are subsequently asked.

Deputy Richard Bruton is correct that declarations of interest are more directly applicable to people in decision making roles. For example, if a member of the board of the Central Bank or the IFSRA owned shares in AIB, I would want to be made aware of that fact. The requirement to inform the public about how decisions are made also applies to the role of members of advisory panels. While they do not make direct decisions, they can influence decisions on general policy and, more importantly, they also influence the allocation of resources and the setting of priorities in the general organisation regarding what investigations take place and how. It is important that wide-ranging and direct declarations of interest are available in all circumstances.

Making a declaration of interest open to any member of the public should not be difficult for anyone in an open, democratic society. This type of culture should be a matter of course and we should not cloak the matter of interests in secrecy. People should not be affronted by a requirement to declare their interests because it requires them to act in a manner to which they are not accustomed.

As I explained on Committee Stage, while I have no problem in principle with the amendment, existing legal provisions are adequate. Schedules 1 and 3 of the Central Bank Act 1942 require directors of the bank and the regulatory authority to disclose any direct or indirect pecuniary interest they may have in matters coming before the board of the bank or the authority. In addition, the directors and senior managers of the bank are required to make declarations under the Ethics in Public Office Act.

Given the overlap between the membership of the board of the bank and the authority and the fact that two members of the authority are executives, seven of the ten members of the authority are already required to make declarations under the Ethics in Public Office Act. Senior staff in the regulatory authority are also required to make such declarations. I am currently considering designating the regulatory authority separately for the purposes of the Ethics in Public Office Act. This will mean that all members and senior staff of both the bank and the regulatory authority will be required to make the declarations described in the Ethics in Public Office Act. There is, therefore, no further need for the provision suggested in the amendment.

The amendment also proposes that all sub-committees or panels under the jurisdiction of the board be required to comply with ethical requirements, including requirements as to declaration of interests. I agree with Deputy Richard Bruton in this regard. While I do not want to rule anything out for the future, as the panels will not be boards, they do not need to be governed by the same requirements as the board of the Central Bank as this would, for example, limit the number of people who may wish to serve on them.

The requirements and public scrutiny currently in place with regard to public appointments make it increasingly difficult to find people to serve on boards. The issue is not only ethical requirements and openness, with which some people do not have a problem, but also the time taken up in such service for minimal remuneration. In addition, the names of board members regularly appear in newspapers and the couple of thousand euro they receive is portrayed as a fortune. The time they give up impinges on their other activities. As I stated on Committee Stage, this problem will get worse.

Deputy Burton referred to the influence of the people who serve on such bodies. It is important that we have people of standing serving on boards and authorities. Experience gained in the public service, politics or large corporations brings expertise to the board.

We tend to look to the same pool of people all the time. There are hundreds of thousands of people throughout the country about whom nobody in Dublin hears. We also have a tendency to believe that everything happens within a mile radius of Kildare Street. Many of those involved in wealth creation, public service and entrepreneurship are outside Dublin but unless one can get one's name into the proper media circles or one drinks in the right places, one is never heard about. One of the good features of our political system is that one is inclined to hear about people from colleagues of all parties. Politicians also hear about people because they generally travel around.

It is important to have a balance, and having people from different parts of the State brings balance to boards. It is important to take on board that people in County Monaghan may not be exercised by the same financial regulation issues as people in Ranelagh.

Deputy Burton referred to some of the people who serve on these boards. It is peculiar that over the years when controversy has arisen concerning the appointment of wives or husbands of members of political parties, the Fianna Fáil Party seems to be the only party mentioned. Prominent wives and partners of members of other parties do not fall into odium and are never mentioned. If the partner of a prominent Fianna Fáil Party activist or associate is appointed, he or she will be referred to in the commentary of the appropriate Dublin press. This does not seem to happen when people are——

Perhaps it is because they do not declare their connections.

These matters are well known. Perhaps Deputy Ó Caoláin has also noticed this tendency. Incidentally, people associated with Deputy Bruton's party are often mentioned. The problem mainly affects the Fianna Fáil Party, but the Fine Gael Party is affected to an extent. When people with a close relationship to other Opposition parties are appointed, it is never mentioned in the public press. This has come to my attention over the years.

Perhaps the House will note that observation.

Amendment put and declared lost.

Amendment No. 6 is out of order.

May I make a brief comment on it?

It must be brief.

The amendment seeks to bring the Bill into effect within 12 months of its enactment. How will that involve a potential charge on the Revenue? The Minister is as keen as anybody to implement the Bill quickly. Will the Ceann Comhairle be good enough to advise about the concept used in that instance?

The Deputy has made the point. The amendment involves a potential charge on the Revenue.

How does that come about?

The Deputy proposes the insertion of a commencement date of no later than 12 months after the Bill's enactment. The effect of the amendment would be to insert a legislative imperative that could potentially cause a charge on the Exchequer through different costs associated with implementing the Bill. It has been ruled out of order in accordance with rules of the House going back to the foundation of the State.

Would it be in order for the Deputy to recommit the amendment?

No, that would not be possible.

Amendment No. 6 not moved.

I move amendment No. 7:

In page 5, between lines 36 and 37, to insert the following:

"2.—Section 33E of the Central Bank Act 1942 (as inserted by section 26 of the Central Bank and Financial Services Authority of Ireland Act 2003) is amended by the insertion of the following subsection after subsection (1):

‘(1A) At least one non-executive person with experience in consumer protection to be appointed to the Board.'.".

Someone with experience of consumer protection should be appointed to the board and should be at the heart of a successful, pro-consumer policy to be implemented by the IFSRA. This person should be in the powerhouse of the authority and should not only be a member of the panels that will trudge along behind the authority. At least one non-executive member of the board of the Central Bank and the financial regulatory authority should have experience of consumer protection. We must go behind the ramparts and appoint someone who is pro-consumer to the heart of the body.

The Director of Consumer Affairs is on the IFSRA board. She is a former employee of the Central Bank and is doing an excellent job but a non-executive member, whose livelihood does not depend on the attitude of those within the authority, should be appointed to the board. We should take the bull by the horns and ensure consumer protection is at the heart of the authority. Everyone suspects it of being weak when it comes to consumer protection. This is a minor amendment but it would go some way to mending the hand of the authority.

There is a widespread perception among Members that the Central Bank's relationship with the banks has been too cosy and it is hostile to the notion of being tough and pro-consumer. Its attitude is banks should be profitable and run prudentially. The Central Bank never poses questions about the stability of the banking sector or the currency. It is right and proper that it should take that attitude but someone who is determined to push pro-consumer codes of practice and regulations should be appointed to the authority to ensure it does not ignore its role in monitoring, for example, the obligation on a bank to only charge that to which it is entitled under law.

The Minister suggested we should not attribute blame to the IFSRA or the Director of Consumer Affairs because for eight years they did not make an effort to police this sector. He stated anyone can make mistakes and any regulatory system can fail. That mistake would not have been made if someone was in place who saw it as their role to champion consumers and who pursued cases in which the rights of consumers were trodden on.

There should be red faces within the authority, the Office of the Director of Consumer Affairs, the office of the Tánaiste and the Minister for Enterprise and Trade and Employment and the Department of Finance because breaches of the law went untouched for eight years. A whistleblower discovered the overcharging in AIB. All the regulators ran around furiously and discovered they could not apply a sanction against the bank for this practice.

I oppose the Minister's view that all is well within the regulatory system. A structure was established, which came a cropper at the first hurdle it met. The system was unable to address an issue that was brought to its attention by a whistleblower and it was found to have failed in fulfilling its obligations.

It proved the opposite.

The Minister replied on Committee Stage that Deputy Rabbitte, the leader of the Labour Party, handled these issues when he served as Minister for State. Why was there no sanction? The Minister, the Tánaiste and their officials spent four years wrestling with the issue of how to introduce decent consumer protection in the financial services sector and they never once examined the sanctions provided in the earlier legislation.

One of the Minister's officials, whom I hope I am not getting into trouble, sent me a letter about this issue and referred to the work of the McDowell group. The letter stated: "The group recommends that an examination of all relevant existing legislation be undertaken to ensure that existing enforcement powers, including powers to enforce sanctions, are adequate and, in so far as practicable, uniform." The Minister, the Tánaiste and their officials did not act on paragraph 7.11 of this worthy report by Deputy McDowell. That is a failure.

The Minister was told to do this before he published the legislation. He drove the legislation through even though we tabled an amendment to defer Second Stage for three months because the legislation was premature and an audit was required to establish whether our consumer protection provisions were in line with best practice. The Minister did not accept the amendment and voted it down. However, consumer protection provisions were found to be inadequate on the first occasion the legislation was tested. No sanction is in place to deal with AIB's offence. AIB did not monitor this activity over a period of eight years. That is not a sign that we have discovered the correct structures were in place.

When the issue came to light, courtesy of a whistleblower, the regulators said they had various powers under licensing provisions and they could do plenty to force the banks to deposit money or they could withdraw their licences. The Central Bank has always had draconian powers but they were never applied in the interest of consumers. When consumers were under pressure, the bank never championed their cause and it has been found out once again. This is a significant problem.

The amendment makes a simple proposal to appoint someone who is a champion of the consumer to the board of the authority. If this is accepted, we will have done a good day's work. It may be only one appointment to a large board but the appointee would have a defined interest, which gets rare expression within the hallowed halls of that institution. This is a worthwhile amendment which would go a little way to mend the hand of the Minister and his colleagues in Government who have let the consumer down in this area.

I support the amendment. I am always fascinated that banks never leave themselves short when they make mistakes. It is always the other way around and the State or bank customers pick up the tab. The banks always get away with paying less than they should. I refer to offshore accounts in this instance. Banks always get the better end of the deal. I agree entirely with the intent of the amendment and I do not understand why the Minister will not accept it. He may provide a reasonable explanation but it will not satisfy us.

At the end of the day, consumers must have confidence in the new body. There is no point in establishing consumer panels for consultation purposes because they will merely serve in an advisory capacity. I hope they push certain issues and their interests are declared. There should be someone at the table whose specific purpose is to protect the consumer, as proposed in the amendment. Surely the main role of the board is to ensure transparency and protection for those who use credit institutions. I am sure stating the contrary will make people very wary.

It is a wonder the recent scandal about overcharging in foreign currency transactions was not spotted long before now. Why did the regulations not apply? Where were the people charged with keeping an eye on such matters and why did they not spot what was happening? The minute the scandal was publicised, the bank came out into the open and stated overcharging occurred and that it would pay people back. However, one wonders whether the overcharging would have continued had the issue not been highlighted. If so, when would we have known about it?

I agree with Deputy Richard Bruton that we need someone on the board whose sole responsibility is protection of the consumer's interests, someone who has knowledge of this area. If the consumer is the engine that fires our economy — we are all consumers — surely he or she needs to be protected more than anyone else. It is not that great a leap forward to ask, in the interest of the consumer, that somebody with knowledge of consumer protection be on the board. I do not understand why this cannot be done.

All the scandals of recent years indicate that the consumer needs to be protected rather than the banks and financial institutions. The banks and financial institutions are capable of protecting themselves. The consumer needs to know his interests are being promoted and represented on the board.

Deputy Richard Bruton's amendment seeks to have at least one non-executive person with experience in consumer protection included on the board. Other amendments refer to the representation of consumer interests on the advisory panel but Deputy Bruton's amendment is even more important because it refers to the board itself. I find it difficult to understand the reluctance of the Minister for Finance to accept amendments of this nature. He must recognise that the interaction that has occurred outside this Chamber regarding the Bill has been led largely by consumer interest groups. Their interest in the regulation of the financial services industry is obvious. This interest cannot be questioned. It would be to the benefit of the authority if it had people with such a background and drive included on its board.

The rejection of this amendment would send out all the wrong signals and indicate that there is no interest in consumer protection and that it is not regarded as important. It was obvious that the Minister, in his initial contribution on Report Stage, emphasised prudential issues. As Minister for Finance, he is in a good position to do so. However, the argument made by many on this side of the House is that, in terms of a regulatory authority, the consumer protection industry is as important, if not more so. One way of putting that across is by appointing to the board and the various panels representatives with a consumer protection background who have the consumer interest at heart. If this is not done, the body may be dominated solely by the banking industry itself — the men in grey — or may be unduly influenced by individuals whose political background is such that they are more able to influence the attitude of the Minister for Finance who is in power when the boards are being appointed. The legislation should indicate the desirable backgrounds of the people we want on the board and panels. Otherwise, we could end up with a great imbalance on the board and its sub-committees and panels.

Deputy Richard Bruton's amendment seeks to establish what I regard not only as an important voice but an essential voice on behalf of consumers. Every one of us is a consumer. The Deputy's amendment is specific in what it advocates. It seeks somebody with "experience in consumer protection". Such a person would make a vital contribution to the work of the board that is envisaged. As Deputy Lynch stated, in the current climate failure to accept this very reasonable amendment will undoubtedly be interpreted as an unwillingness to place a voice for consumer protection at the heart of what this Bill seeks to put in place.

Against the backdrop of our concerns about banking institutions, not just the AIB, it is an imperative for the Minister to accede to this very important amendment, which seeks to achieve something essential. I strongly urge him to agree to the appointment to the board of at least one non-executive person with experience in consumer protection, as the amendment advocates. I wholeheartedly support the case.

As I indicated on Committee Stage, this amendment relates to an issue that was fully debated in the course of the passage of the Central Bank and Financial Services Authority of Ireland Act last year. I stated at the time that the board of the financial regulator was intended to be a public interest board. I believe the board has performed very well since its appointment, including in its consumer protection role.

We fully debated the composition of the board during the debate on the previous Act. As the Deputies know, various groups are represented on it and there is now a consumer director taking an active role in the matter pertaining to the AIB, to which Deputy Lynch referred. One member of the authority's board is Deirdre Purcell, who was previously a member of the Insurance Ombudsman Council. Dermot Quigley was former chairman of the Revenue Commissioners.

In the 12 months since the authority was set up — this is a relatively short period — the regulator has taken a number of initiatives, particularly regarding consumer protection measures. Independent consumer guides on mortgages, savings and investments and personal loans and credit have been published. Cost surveys on motor insurance, personal current accounts and credit cards have also been undertaken. A consumer helpline, information office and website have been established.

The consumer director monitors the market and co-operates with the Competition Authority where appropriate and ensures financial service providers act in a fair and transparent way. The authority has supplemented pre-existing codes of practice by issuing an interim code of practice to guide the activities of insurance companies, mortgage intermediaries and moneylenders. A comprehensive review of all codes of practice has commenced and three consultation papers have been published on the conduct of business, the marketing and sale of trackers and mandatory competency requirements of financial services providers when dealing with consumers.

In order for us to monitor financial institutions in the competitive market, new client money requirements that apply to investment firms and stockholders have been amended and new money laundering guidance notes have been issued. New governance requirements for stockbrokers have been introduced and the financial services regulator staff are assisting my Department in reviewing client asset legislation. In the 12 months since the new board was set up, the body has put consumer issues to the forefront. Most independent people would agree that it has been most effective in doing that and this serves the purpose which Opposition Deputies put forcefully to me during the debate on the other Act. They were concerned there would not be a great emphasis on consumer issues in the board but the actions it has taken show that is not correct. The IFSRA board has been exceptionally active in promoting consumer interests.

In response to Deputy Bruton, my experience over many years is that while people might write about great conspiracies and marvellous plans, most events fall into the cock-up category rather than the conspiracy category. People should not get so hung up on conspiracies. It makes life much easier and one sleeps better at night.

The Minister, in suggesting a cock-up theory, is missing the point. The reason cock-ups occur is that people do not have proper compliance standards in place and the reason for that is they believe they will get away with it and they do not regard them as a high priority. In this instance, AIB did not have compliance procedures in place. It appears that senior officials at the bank, even when they discovered this was happening, did not think it constituted anything serious enough on which to act.

The regulator had no monitoring system in place and had imposed no requirement to sign off on compliance. The result might well have been a cock-up but the framework of regulation had created the likelihood that it would occur. The Minister seeking a pat on the back because the consumer director is doing good things is not the answer. Certainly, Mary O'Dea is doing good things and we take our hats off to her. However, that does not get away from the fact that the reason this cock-up occurred was not an accident but was due to an inadequate approach being taken, even under the new regime, to ensure there was compliance. That is the lesson of this event. If there is to be compliance and regulation, they must work effectively and be filtered down in obligations that people take seriously.

The Labour Party's reason for supporting this amendment, and the party has put forward similar amendments, is that it wants consumer champions and advocates on the various regulatory structures of the new body. The consumer director and the director of IFSRA have acted promptly and have been forthcoming in talking to the public and in setting out a public affairs perspective by giving out information. That is welcome.

However, some of the Minister's amendments to the Bill are in response to queries and representations from the existing voluntary ombudsman for banking and insurance. Until now there was a requirement that all consumer complaints be passed to IFSRA. Now, that need only happen under certain, more limited circumstances. In the oversight boards, bodies, panels and so forth, there should be people who are advocates of consumer interests and they should be there as an essential component of oversight.

Much of the content in the reports of the Director of Consumer Affairs, which the Minister correctly applauded, arises from reports by the Consumers Association of Ireland and various other bodies, including financial commentators and journalists who frequently wear a pro-consumer hat when writing about financial matters. In many ways these are the critical influences which have been shown to have borne fruit through the Director of Consumer Affairs. It is even more important that champions and advocates of consumers' rights are among the appointees to the new panels and boards. The case for that is unanswerable.

I am surprised by the Minister. I understand why he does not have a problem with the concept that representatives of the financial institutions should comprise part of these boards. However, why will he not agree to have representatives of consumers on these panels and boards? Various bodies specialise in consumer advocacy and they have detailed and expert knowledge on consumer matters. What is involved here is highly technical. It is real anorak country to know the difference between notices, bank rates, bank charges, the different rates of bank charges and so forth. Few people are specialists in this area unless they have some experience of the industry or of matters related to the industry. For that reason, the Minister ought to seek people who have such experience.

Consumer bodies in Ireland are largely voluntary and they do good work highlighting where consumers are ripped off or get a bad deal. It is surprising that the Minister is not prepared to acknowledge the work they have done as much as he has acknowledged and applauded the banks when he said the AIB problem is due to the cock-up theory rather than a conscious error.

Amendment put and declared lost.

I move amendment No. 8:

In page 6, line 44, to delete "to consumers".

This is a technical amendment. It removes a potential ambiguity in the definition of financial service provider. The definition is meant to cover all providers of financial services, not just those providing such services to private customers. The deletion of the words "to consumers" removes the potential ambiguity.

Amendment agreed to.

Amendment Nos. 10, 50 and 51 are cognate to amendment No. 9. Amendments Nos. 9, 10, 50 and 51 may be taken together by agreement.

I move amendment No. 9:

In page 12, lines 39 and 40, to delete "services" and substitute "service".

These are technical amendments to correct an error in terminology in Committee Stage amendments.

Amendment agreed to.

I move amendment No. 10:

In page 12, line 46, to delete "services" and substitute "service".

Amendment agreed to.

I move amendment No. 11:

In page 14, to delete lines 10 to 46, to delete pages 15 to 25, and in page 26, to delete lines 1 to 45 and substitute the following:

"10.—(1) The Central Bank Act 1942 is amended by inserting the following Part after Part IIIB (as inserted by section 26 of the Central Bank and Financial Services Authority of Ireland Act 2003):

‘PART IIIC

ENFORCEMENT OF DESIGNATED

ENACTMENTS AND DESIGNATED

STATUTORY INSTRUMENTS

CHAPTER 1

Interpretation

33AN.—In this Part—

"contravene" includes fail to comply, and also includes—

(a) attempting to contravene, and

(b) aiding and abetting and counselling and procuring a person to commit a contravention, and

(c) inducing, or attempting to induce, a person (whether by threats or promises or otherwise) to commit a contravention, and

(d) being (directly or indirectly) knowingly concerned in, or a party to, a contravention;

"decision of the Regulatory Authority" means—

(a) in relation to an inquiry held by the Regulatory Authority under section 33AO, a finding made by that Authority in accordance with section 33AQ and any decision of that Authority imposing a sanction under that section in consequence of the finding, or

(b) any decision of that Authority imposing a sanction under section 33AR;

"disqualification direction" means a direction given under section 33AQ or 33AR disqualifying a specified person from being concerned in the management of a regulated financial service provider;

inquiry" means an inquiry held under section 33AO or section 33AR;

"prescribed contravention" means a contravention of——

(a) a provision of a designated enactment or designated statutory instrument, or

(b) a code made, or a direction given, under such a provision, or

(c) any condition or requirement imposed under a provision of a designated enactment, designated statutory instrument, code or direction, or

(d) any obligation imposed on any person by this Part or imposed by the Regulatory Authority pursuant to a power exercised under this Part;

"notify" means notify in writing.

CHAPTER 2.

Power of Regulatory Authority to hold

inquiries

33AO—(1) Whenever the Regulatory Authority suspects on reasonable grounds that a regulated financial service provider is committing or has committed a prescribed contravention, it may hold an inquiry to determine whether or not the financial service provider is committing or has committed the contravention.

(2) Whenever the Regulatory Authority suspects on reasonable grounds that a person concerned in the management of a regulated financial service provider is participating or has participated in the commission of a prescribed contravention by the financial service provider, it may hold an inquiry to determine whether or not the person is participating or has participated in the contravention. Such an inquiry may form part of an inquiry held under this section in relation to the suspected commission of a prescribed contravention by the financial service provider.

33AP.—(1) Before holding an inquiry under section 33AO, the Regulatory Authority shall give notice in writing of the proposed inquiry to the financial service provider or other person concerned.

(2) The notice must——

(a) specify the grounds on which the Regulatory Authority’s suspicions are based, and

(b) specify a date, time and place at which the Regulatory Authority will hold the inquiry, and

(c) invite the financial service provider or person concerned either to attend the inquiry or to make written submissions about the matter to which the inquiry relates.

(3) A regulated financial service provider or other person concerned may, before the date of the inquiry, lodge with the Regulatory Authority any written submissions that the regulated financial service provider or person wishes that Authority to take into account when considering the matter to which the inquiry relates. This subsection applies whether or not the financial service provider or other person has been invited to attend the inquiry.

(4) The Regulatory Authority may adjourn an inquiry from time to time and from place to place, but if it does so it shall ensure that the regulated financial service provider or other person concerned is notified of the date, time and place at which the inquiry is to be resumed.

(5) The Regulatory Authority may proceed with an inquiry in the absence of the financial service provider or other person concerned so long as that financial service provider or person has been given an opportunity to attend the inquiry or to make written submissions to it.

33AQ.—(1) At the conclusion of an inquiry held under section 33AO, the Regulatory Authority shall make a finding as to whether the financial service provider concerned is committing or has committed the prescribed contravention to which the inquiry relates.

(2) At the conclusion of an inquiry relating to the conduct of a person concerned in the management of a regulated financial service provider, the Regulatory Authority shall make a finding as to whether the person is participating or has participated in the prescribed contravention to which the inquiry relates.

(3) If the Regulatory Authority makes a finding that a regulated financial service provider is committing or has committed a prescribed contravention, it may impose on the financial service provider one or more of the following sanctions:

(a) a caution or reprimand;

(b) a direction to refund or withhold all or part of an amount of money charged or paid, or to be charged or paid, for the provision of a financial service by the financial service provider;

(c) a direction to pay to the Regulatory Authority a monetary penalty not exceeding the prescribed amount;

(d) if the financial service provider is a natural person, a direction disqualifying the person from being concerned in the management of a regulated financial service provider for such period as is specified in the order;

(e) if the financial service provider is found to be still committing the contravention, a direction ordering the financial service provider to cease committing the contravention;

(f) a direction to pay to the Regulatory Authority all or a specified part of the costs incurred by that Authority in holding the inquiry and in investigating the matter to which the inquiry relates.

(4) For the purpose of subsection (3)(c), the prescribed amount is——

(a) if the financial service provider is a body corporate or an unincorporated body, €5,000,000, or

(b) if the financial service provider is a natural person, €500,000, or

(c) if the regulations prescribe some other amount for paragraph (a) or (b), that other amount.

(5) If the Regulatory Authority makes a finding that a person concerned in the management of a regulated financial service provider is participating or has participated in the commission by the financial service provider of a prescribed contravention, it may impose on the person one or more of the following sanctions:

(a) a caution or reprimand;

(b) a direction to pay to the Regulatory Authority a monetary penalty not exceeding the prescribed amount;

(c) a direction disqualifying the person from being concerned in the management of a regulated financial service provider for such period as is specified in the order;

(d) if the person is found to be still participating in the commission of the contravention, a direction ordering the person to cease participating in the commission of the contravention;

(e) a direction to pay to the Regulatory Authority all or a specified part of the costs incurred by that Authority in holding the inquiry and in investigating the matter to which the inquiry relates.

(6) For the purpose of subsection (5)(b), the prescribed amount is——

(a) €500,000, or

(b) if the regulations prescribe some other amount of money for paragraph (a), that other amount.

(7) At the conclusion of an inquiry relating to the conduct of a regulated financial service provider, the Regulatory Authority shall notify its decision to the financial service provider. The decision must set out in writing——

(a) its finding as to whether or not the financial service provider is committing or has committed the prescribed contravention to which the inquiry relates, and

(b) the grounds on which its finding is based, and

(c) if the Regulatory Authority finds that the contravention is being or has been committed, the sanctions (if any) imposed under this section in respect of the contravention.

(8) At the conclusion of an inquiry relating to the conduct of a person concerned in the management of a regulated financial service provider, the Regulatory Authority shall notify the person of its decision. The decision must set out——

(a) its finding as to whether or not the person is participating or has participated in the commission of the prescribed contravention to which the inquiry relates, and

(b) the grounds on which the finding is based, and

(c) if the Regulatory Authority finds that the person is participating or has participated in the contravention, the sanctions (if any) imposed under this section in respect of the participation.

33AR.—(1) If, in a case where the Regulatory Authority suspects on reasonable grounds that a regulated financial service provider is committing or has committed a prescribed contravention, the financial service provider acknowledges that the financial service provider is committing or has committed the contravention, the Regulatory Authority may——

(a) with the consent of the financial service provider, dispense with an inquiry and impose on the financial service provider any sanction that it is empowered to impose on regulated financial service providers under section 33AQ, or

(b) hold an inquiry to determine what sanction (if any) should be imposed on the financial service provider in accordance with that section.

(2) If, in a case where the Regulatory Authority suspects on reasonable grounds that a person concerned in the management of a regulated financial service provider is committing or has committed a prescribed contravention, the person acknowledges that the person is participating or has participated in the commission of the contravention, the Regulatory Authority may——

(a) with the person’s consent, dispense with an inquiry and impose on that person any sanction that it is empowered to impose on persons concerned in the management of regulated financial service providers under section 33AQ, or

(b) hold an inquiry to determine what sanction (if any) should be imposed on the person in accordance with that section.

(3) At the conclusion of an inquiry under subsection (1)(b), the Regulatory Authority shall notify its decision to the financial service provider concerned. The decision must set out in writing the sanctions (if any) imposed under that subsection in respect of the relevant contravention.

(4) At the conclusion of an inquiry held under paragraph (b) of subsection (2), the Regulatory Authority shall notify the person concerned of its decision. The decision must set out the sanctions (if any) imposed under that paragraph in respect of the participation.

33AS.—(1) If the Regulatory Authority decides to impose a monetary penalty on a regulated financial service provider under section 33AQ or 33AR, it may not impose an amount that would be likely to cause the financial service provider to cease business.

(2) If the Regulatory Authority decides to impose a monetary penalty on a person under section 33AQ or 33AR, it may not impose an amount that would be likely to cause the person to be adjudicated bankrupt.

(3) If conduct engaged in——

(a) by a regulated financial service provider constitutes two or more prescribed contraventions, or

(b) by a person concerned in the management of such a financial service provider constitutes participation in two or more prescribed contraventions by such a financial service provider,

an inquiry may be held under section 33AO or 33AR in relation to one or more of the contraventions, but only one monetary penalty may be imposed under section 33AQ or 33AR in respect of the same conduct.

33AT.—(1) If the Regulatory Authority imposes a monetary penalty in accordance with section 33AQ or 33AR and the prescribed contravention in respect of which the sanction is imposed is an offence under a law of the State, the financial service provider or other person concerned is not liable to be prosecuted or punished for the offence under that law.

(2) The Regulatory Authority may not impose a monetary penalty on a financial service provider, or on a person concerned in the management of the financial service provider, in accordance with section 33AQ or 33AR, if—

(a) the financial service provider or other person has been charged with having committed an offence under a law of the State and has either been found guilty or not guilty of having committed the offence, and

(b) the offence involves a prescribed contravention.

33AU.—A regulated financial service provider shall ensure that a person is not permitted to be concerned in the management of the financial service provider while the person is subject to a disqualification direction that is in force under this Part.

33AV.—(1) If the Regulatory Authority suspects on reasonable grounds that—

(a) a regulated financial service provider is committing or has committed a prescribed contravention, or

(b) a person concerned in the management of the financial service provider is participating or has participated in such a contravention,

it may enter into an agreement in writing with the financial service provider or person to resolve the matter.

(2) Such an agreement is to be on such terms as are specified in the agreement and is binding on the Regulatory Authority and the financial service provider or person concerned. Those terms may include terms under which that financial service provider or person accepts the imposition of sanctions of the kind referred to in section 33AQ.

(3) The Regulatory Authority may enter into an agreement under this section—

(a) without having held an inquiry into the matter under section 33AO or 33AR, or

(b) after beginning (but not after completing) such an inquiry.

(4) The Regulatory Authority may, by proceedings brought in a court of competent jurisdiction, recover as a debt due to the Bank the amount of any amount agreed to be paid under an agreement entered into under this section.

33AW.—(1) A decision of the Regulatory Authority imposing a caution or reprimand takes effect—

(a) if no appeal against the decision is lodged with the Appeals Tribunal within the period allowed for lodging such an appeal—at the end of that period, or

(b) if such an appeal is lodged with the Appeals Tribunal within that period and the decision is confirmed by that Tribunal (with or without variation) — at the time when the period allowed for lodging an appeal with the High Court against that decision has ended, no appeal having been lodged within that period, or

(c) if such an appeal is lodged with the Appeals Tribunal within that period but is later withdrawn — at the time of the withdrawal of the appeal, or

(d) if an appeal is made to the High Court against the determination of the Appeals Tribunal in respect of the decision and, on the hearing of the appeal by that Court, that determination is confirmed (with or without variation) — at the time of confirmation of that determination, or

(e) if an appeal is made to the High Court against the determination of the Appeals Tribunal but is later withdrawn — at the time of the withdrawal of the appeal.

(2) A decision of the Regulatory Authority directing payment of a monetary penalty, a refund of money or costs takes effect—

(a) if—

(i) the amount of the penalty, refund or costs is not paid to the Regulatory Authority within the period allowed for appeals against such a decision, and

(ii) no appeal to the Appeals Tribunal is lodged within that period or, having been lodged within that period, is later withdrawn,

at the time when the decision is confirmed by an order of a court of competent jurisdiction,

or

(b) if such an appeal is lodged with the Appeals Tribunal within that period and the decision is confirmed by that Tribunal (with or without variation) — at the time when the period allowed for lodging an appeal with the High Court against the determination of that Tribunal in respect of the decision has ended, no appeal having been lodged within that period, or

(c) if such an appeal is lodged with the Appeals Tribunal within that period but is later withdrawn — at the time of the withdrawal of the appeal, or

(d) if an appeal is made to the High Court against the determination of the Appeals Tribunal in respect of the decision and, on the hearing of the appeal by that Court, that determination is confirmed (either with or without variation) — at the time of confirmation of that determination, or

(e) if an appeal is made to the High Court against the decision of that Tribunal but is later withdrawn — at the time when the appeal is withdrawn.

(3) A disqualification direction takes effect—

(a) if no appeal to the Appeals Tribunal is lodged within the period allowed for bringing such an appeal, or is lodged within that period but is later withdrawn — at the time when it is confirmed by an order of a District Court, or

(b) if such an appeal is lodged with the Appeals Tribunal within that period and the direction is confirmed by that Tribunal — at the time when the period allowed for lodging an appeal in the High Court against the determination of that Tribunal in respect of the direction has ended, no appeal having been lodged within that period, or

(c) if such an appeal is lodged within that period but is later withdrawn — at the time when the appeal is withdrawn, or

(d) if an appeal is made to the High Court against the determination of the Appeals Tribunal in respect of the direction and, on the hearing of the appeal by that Court, that determination is confirmed (with or without variation) — at the time of confirmation of that determination, or

(e) if an appeal is made to the High Court against the determination of the Appeals Tribunal but is later withdrawn, at the time when the appeal is withdrawn.

(4) Any other decision of the Regulatory Authority under this Part takes effect—

(a) if no appeal against the decision is lodged with the Appeals Tribunal within the period allowed for lodging such an appeal, at the end of that period, or

(b) if such an appeal is lodged with the Appeals Tribunal within that period and the decision is confirmed by that Tribunal (with or without variation) — at the time when the period allowed for lodging an appeal with the High Court against the determination of that Tribunal in respect of the decision has ended, no appeal having been lodged within that period, or

(c) if such an appeal is lodged with the Appeals Tribunal within that period but is later withdrawn — at the time of the withdrawal of the appeal, or

(d) if an appeal is made to the High Court against the determination of the Appeals Tribunal in respect of the decision and, on the hearing of the appeal by that Court, that determination is confirmed (with or without variation) — at the time of confirmation of that determination, or

(e) if an appeal is made to the High Court against the determination of the Appeals Tribunal in respect of the decision but is later withdrawn — at the time of the withdrawal of the appeal.

(5) A court of competent jurisdiction may hear an application by the Regulatory Authority under this section otherwise than in public if—

(a) evidence may be given, or a matter may arise, during the hearing that is of a confidential nature or relates to the commission, or to the alleged or suspected commission, of an offence against a law of the State, or

(b) a person’s reputation would be unfairly prejudiced unless the court exercises its discretion under this section.

33AX.—A decision of the Regulatory Authority made at the conclusion of an inquiry held under setion 33AO or section 33AR is an appealable decision for the purposes of Part VIIA.

CHAPTER 3

Conduct of Inquiries

33AY.—(1) The Regulatory Authority shall conduct an inquiry with as little formality and technicality, and with as much expedition, as a proper consideration of the matters before it will allow.

(2) At an inquiry, the Regulatory Authority shall observe the rules of procedural fairness, but is not bound by the rules of evidence.

(3) The Regulatory Authority may be assisted by a legal practitioner when conducting an inquiry.

(4) A financial service provider or other person who has, in accordance with section 33AP, been invited to attend an inquiry or a part of it is entitled to be represented at the inquiry or part by a legal practitioner or, with the leave of the Regulatory Authority, by any other person.

33AZ.—(1) Except as provided by subsection (2), the Regulatory Authority shall hold its inquiries in public.

(2) The Regulatory Authority and the financial service provider or other person to whom an inquiry relates may agree that the inquiry should be held in private, but even if they do not agree, that Authority may nevertheless decide to hold an inquiry in private if it is satisfied that—

(a) evidence may be given, or a matter may arise, during the inquiry that is of a confidential nature or relates to the commission, or to the alleged or suspected commission, of an offence against a law of the State, or

(b) a person’s reputation would be unfairly prejudiced unless that Authority exercises its powers under this section.

(3) The Regulatory Authority may at any time vary or revoke a decision made under subsection (2).

33BA.—(1) At an inquiry, the Regulatory Authority may, in writing—

(a) summons a person to appear before the inquiry to give evidence, to produce specified documents, or to do both, and

(b) require the person to attend from day to day unless excused, or released from further attendance, by that Authority.

(2) The person presiding at an inquiry may require evidence to be given on oath, and may for that purpose—

(a) require a witness at the inquiry to take an oath, and

(b) administer an oath to the witness.

(3) The oath to be taken by a person for the purposes of this section is an oath that the evidence the person will give will be true.

(4) The person presiding at an inquiry—

(a) may require a witness at the inquiry to answer a question put to the witness, and

(b) may require a person appearing at the inquiry in accordance with a summons issued under this section to produce a document specified in the summons.

(5) The person presiding at an inquiry may allow a witness at the inquiry to give evidence by tendering a written statement, which, if the person presiding so requires, must be verified by oath.

33BB.—(1) The Regulatory Authority may, on its own initiative or at the request of the financial service provider or other person concerned, refer to the Court for decision a question of law arising at an inquiry.

(2) If a question has been referred under subsection (1), the Regulatory Authority may not, in relation to a matter to which the inquiry relates—

(a) give a decision to which the question is relevant while the reference is pending, or

(b) proceed in a manner, or make a decision, that is inconsistent with the Court’s opinion on the question.

(3) If a question is referred under subsection (1)—

(a) the Regulatory Authority shall send to the Court all documents before that Authority that are relevant to the matter in question, and

(b) at the end of the proceeding in the Court in relation to the reference, the Court shall cause the documents to be returned to that Authority.

33BC.—(1) If on the holding of an inquiry under section 33AO the Regulatory Authority has found that—

(a) a regulated financial service provider is committing or has committed a prescribed contravention, or

(b) a person concerned in the management of the financial service provider is participating or has participated in such a contravention,

it shall publish the finding, and details of any sanction imposed in consequence of the finding, in such form and manner as it thinks appropriate.

(2) If the Regulatory Authority has, in accordance with section 33AR, imposed—

(a) a sanction on a regulated financial service provider in respect of the commission of a prescribed contravention, or

(b) a sanction on a person concerned in the management of a financial service provider in respect of the person’s participation in the commission by the financial service provider of such a contravention,

it shall publish details of the sanction imposed, in such form and manner as it thinks appropriate.

(3) Subsections (1) and (2) do not apply to findings or details that the Regulatory Authority determines—

(a) to be of a confidential nature or to relate to the commission of an offence against a law of the State, or

(b) would unfairly prejudice a person’s reputation.

(4) The Regulatory Authority shall publish annually, in a summary form, information on its actions under this Part.

33BD.—(1) The Regulatory Authority may prescribe guidelines with respect to the conduct of inquiries under this Part, and may for that purpose, incorporate by reference any procedure prescribed by Rules of the Superior Courts as in force at a specified time or as in force from time to time.

(2) The Regulatory Authority may at any time amend or revoke guidelines prescribed under this section.

(3) Guidelines prescribed under this section, and any amendment to, or revocation of, those guidelines, must be in writing and be published in a manner determined by the Regulatory Authority.

33BE.—The Chief Executive, and such other officers of the Regulatory Authority and such employees of the Bank as the Regulatory Authority designates from time to time, are responsible for performing and exercising the functions and powers of the Regulatory Authority under this Part.

33BF.—An application for leave to apply for judicial review of a decision of the Regulatory Authority under this Part must be made—

(a) within 2 months after the date on which notice of the decision was first notified to the financial service provider or the person concerned, or

(b) if the High Court makes an order extending that period, within that extended period.”.

Amendment put and declared carried.
Amendments Nos. 12 and 13 not moved.

Amendment No. 14——

I did not receive any correspondence about amendment No. 13.

It was decided with the discussion on amendment No. 1. That amendment was accepted so a number of other amendments fell as a result and amendment No. 13 was one of them. Amendments Nos. 14 and 15 are out of order.

Amendments Nos. 14 to 28, inclusive, not moved.

Amendments Nos. 29 to 32, inclusive, 99, 100 and 105 are related and may be discussed together by agreement.

I move amendment No. 29:

In page 27, between lines 12 and 13, to insert the following:

"12.—Section 57G of the Central Bank Act 1942 (as inserted by section 28 of the Central Bank and Financial Services Authority of Ireland Act 2003) is amended by inserting the following subsection after subsection (1):

‘(1A) A decision of the Regulatory Authority is not an appealable decision for the purposes of this Part if the Governor certifies in writing that the Governor has exercised the powers conferred by subsections (9) and (9A) of 33C in relation to the decision, but instead a person who is dissatisfied with the decision may appeal to the High Court against the decision, within 28 days after the date of notification of the decision or within such extended period as that Court allows.'.".

I have two main reasons for these amendments. I wish to address a concern of the European Central Bank on the Bill that a non-judicial body such as the appeals tribunal should not have the power to overrule the decision of the regulatory authority in relation to which the Governor of the bank has exercised his powers on financial stability grounds. I also wish to address a broader concern of the regulatory authority that that the appeals tribunal does not become a substitute supervisory body. The effect of the new section 11A will be that if the Governor certifies in writing that he has exercised his powers under section 33C(9) or 33C(9A) of the Act regarding the decision of the regulatory authority, that decision will not be appealed to the appeals tribunal but may be appealed to the High Court.

The effect of the new section 11B and 11C will be that in the event of an appeal to the appeals tribunal against a supervisory decision of the regulatory authority, the only options open to the tribunal will be to affirm the decision or remit them for reconsideration by the authority in accordance with any directions or recommendations of the tribunal. In the case of appeals against the decision of the regulatory authority to impose a sanction on an institution, the appeals tribunal will continue to have the power to stay, vary or substitute the decision.

The new section 11D puts a time limit of 28 days for appeals to the High Court against decisions of the appeals tribunal unless the High Court decides to extend this period. Amendments Nos. 99 and 100 are consequential amendments on supervisory decisions affecting regulated businesses. Amendment No. 105 inserts a right of appeal to the appeals tribunal on decisions under the Investment Intermediaries Act, which was omitted in error.

I referred to this matter earlier. IFSRA is being somewhat precious about its view that nobody can second-guess its decisions on supervisory matters and, if an appeals body existed, it would undermine its position. Everyone can see it is the main player and that an appeals body would only be used in the rare event of a challenge coming through. I do not understand why the Minister would establish an appeals body and restrict it to rubber-stamping the decision already made or put it back into the loop again. This is not a satisfactory appeals mechanism. The Minister should explain why the process of supervision is so sacred that nobody can be allowed to establish where an injustice had occurred in a decision by the authority on its initial consideration. I do not understand why we are taking such a circumspect view of the authority and I ask the Minister to explain this in his contribution.

Do the proposed changes arise from the advice of the Attorney General that the previous structure which was on offer up to Committee Stage was likely to prove unconstitutional? The Minister is seeking to create a structure which is likely to be more favourably regarded by the courts in that IFSRA will be the principal regulatory body and the appeals tribunal will be just that and represent an alternative route to heading straight for the High Court. In the Minister's earlier structure, the appeals tribunal had a much more prominent role in addressing concerns about the levels of fines etc. The Minister seems to be going back to the McDowell model and drawing in his horns considerably compared with the original structure, which I presume the Department of Finance and the Central Bank wanted.

The Minister should explain the significance of all of this. Since IFSRA has been established, its executives may have developed much stronger views of what their powers ought to be and the Minister may have listened to these. The critical question is who minds the minders. Bearing in mind earlier comments, the appointments to the oversight body will be crucial in the context of how the Minister has restructured this. I believe this proposal is likely to be more constitutional and I presume that is part of the Minister's reason for going back to it.

Deputy Boyle asked about a number of amendments, which cannot be moved. While they were discussed with amendment No. 1, they cannot be moved because amendment No. 11 was accepted.

I presumed that was the case. As I missed the beginning of the debate, I take some of the responsibility for not knowing that.

I note that the advice of the European Central Bank determined some of what is being proposed here. It is a somewhat rich irony that the comments and views of the European Central Bank seem to carry more weight in how our legislation is changed than the views of many Members on this side of the House. Perhaps this might change over a period. Following the Committee Stage discussion, it was clear we needed to examine getting the balance right between IFSRA's need to deal with problems within the banking and financial industry quickly and efficiently and keeping on the right side of the laws of natural justice.

This was being compromised in two general areas: the right to further appeal and the principle of not being a judge in one's own court, which still might not have been fully addressed. We will only find out to what extent we are still operating within the laws of natural justice when this is enacted and in practice. We are still in the process of finding that balance. Given the constitutional constraints under which we operate, a somewhat fair balance has been achieved. However, I suspect that on testing this legislation, some flaws will become apparent, which needs to be placed on record.

I was looking for a certain reference that I had noted on my first reading of the Minister's amendments. I note in particular the point Deputy Richard Bruton made that there is unquestionably — I am unable to refer to the particular section — almost an incredible arrogance in terms of second-guessing what position the authority might take. It is trite to say the least. I hope the Minister will throw further light on this and we can have a better understanding of what is mooted in this sequence of amendments which must give rise to some concern.

As I pointed out in my reply, on foot of the changes which came about as a result of the intervention by the European Central Bank we were anxious to ensure in the legislation that where the Governor of the Central Bank has exercised his powers on financial stability grounds there can be no appeal. We have no discretion in this matter. That is what we have signed up to and anything which touches on the independence and powers of the Governor of the Central Bank will always be knocked — anything which even hints at that will be rejected. It was the same with the last Act and it will be the same with any subsequent Bill I bring before the House.

The regulatory authority was concerned to ensure that the appeals tribunal should not become a substitute supervisory body. The changes we have made have not been the result of advice from the Attorney General. This issue has exercised the regulatory authority since I first published the Bill. The authority was not happy that the Bill provided for an appeals tribunal above it which would become a kind of second regulatory authority. The key change applies to regulated matters such as licensing and authorisations where the role of the regulator is clearly pre-eminent. Where financial penalties are concerned, the appeals tribunal may set aside a decision.

The Minister is simply telling us again what the amendments provide and why it was felt necessary to table them. I am not terribly persuaded by his arguments. There is no question of an appeals body becoming an alternative regulator as it will handle rare cases. It seems a strange provision.

When does the Minister expect to have a consolidated Central Bank Act? A problem when discussing this legislation is the number of detailed amendments to the Central Bank Act. We now have three substantial Acts addressing regulation. It is very difficult to understand the regulations. Refining the appeals mechanism may assist with the constitutionality of this Bill.

Over the past few months we have been considering in the Department an informal consolidation of the regulations which we could publish on our website. A formal consolidation may take a little longer — perhaps it can take place in 2005. I agree with the Deputy that there is a need to consolidate legislation in this area as it is very confusing. Only specialists are in a position to follow the way we have amended certain Acts through this Bill. Hopefully, we will be able to at least conclude the work on consolidation in 2005. It may be a little later before a consolidated Bill can come before the House.

Amendment agreed to.

I move amendment No. 30:

In page 27, between lines 12 and 13, to insert the following:

"13.—Section 57R of the Central Bank Act 1942 (as inserted by section 28 of the Central Bank and Financial Services Authority of Ireland Act 2003) is amended by inserting the following subsection after subsection (2):

‘(2A) Subsection (2) applies only to an appealable decision made under Part IIIC.'.".

Amendment agreed to.

I move amendment No. 31:

In page 27, between lines 12 and 13, to insert the following:

"14.—Section 57Z of the Central Bank Act 1942 (as inserted by section 28 of the Central Bank and Financial Services Authority of Ireland Act 2003) is amended—

(a) in subsection (2), by substituting the following paragraph for paragraph (d):

‘(d) remit the matter concerned for reconsideration by the Regulatory Authority, together with any recommendation or direction of the Appeals Tribunal as to what aspects of the matter should be reconsidered and, in the case of an appealable decision made under Part IIIC, set aside the decision.’;

(b) by inserting the following subsection after subsection (2):

‘(2A) Paragraphs (b) and (c) of subsection (2) apply only to an appealable decision made under Part IIIC.’.”.

Amendment agreed to.

I move amendment No. 32:

In page 27, between lines 12 and 13, to insert the following:

"15.—Section 57AK of the Central Bank Act 1942 (as inserted by section 28 of the Central Bank and Financial Services Authority of Ireland Act 2003) is amended by substituting the following subsection for subsection (3):

‘(3) An appeal under this section must be made within 28 days after the notification of the decision or within such extended period as that Court allows.'.".

Amendment agreed to.

Amendments Nos. 33 and 34 are related and may be discussed together, by agreement.

I move amendment No. 33:

In page 28, between lines 42 and 43, to insert the following:

"(iii) to provide reports on the experience of his/her office and the climate for consumers in the Financial Services Sector which would better inform policy makers within and outside the Authority of the position of consumers;".

This amendment deals with the objectives of the financial services ombudsman. According to the existing legislation, the objectives of the ombudsman are to investigate, mediate and exercise such other jurisdiction as is conferred on his or her office. I suggest that in addition to simply investigating, mediating and adjudicating, the ombudsman should provide reports to the Oireachtas, in particular, and other policy makers in the field detailing the experience of the office and the climate for consumers in the financial services sector. Such reports would better inform policy makers and outside authorities of the position of consumers. On Committee Stage, the Minister indicated kindly that he would bring forward a Report Stage amendment in this area. While I do not wish to be churlish and object when the Minister seeks to make a provision I sought, he seems to have limited the type of information the ombudsman will produce. Reports will only relate to complaint procedures but I was looking for a more general provision.

We have seen the development of a number of abuses and unhappy practices not all of which have been the subject of formal complaints. I would prefer to provide the financial services ombudsman with a freer hand. Deputy Boyle referred to the misselling of products to certain persons. It seems the people involved would not be subject to the same level of regulation and requirements of prudence and good practice if they were chartered accountants like the Minister advising clients on investments. It would be desirable if the financial services ombudsman were in a position to alert policy makers to the issues or practices he or she felt were unsatisfactory even if they fell outside his or her limited remit to handle the complaints to which the Minister's later amendment seems to confine the office. While there is merit in the Minister's proposal, he should choose the wider canvas offered by my amendment.

I welcome the acceptance by the Minister in amendment No. 34 of the need for the IFSRA and the ombudsman to improve public understanding of issues raised in complaints against financial service providers. Why is the Minister changing the requirement that a copy of every complaint made to the banking and insurance ombudsman schemes must be provided to the IFSRA? If we are to get a handle on the volume of complaints about the insurance industry and the banking and financial services industry the ombudsman must be made aware of them all. I understand from the Minister's officials that the requirement was dropped because the ombudsman schemes of the banking and insurance industries suggested that as complaints to the ombudsman were confidential, sending them to the IFSRA would breach confidentiality requirements. This is specious reasoning. A complaint is a complaint, and we are trying to ensure that consumers receive the best possible service whether they are business or individual bank customers.

We are also trying to envisage the kind of public reporting the ombudsman would undertake to draw attention to ways in which consumers are likely to be cheated and areas where they should be careful. Already today we have mentioned a number of specific examples, including that of financial institutions advising elderly people with money safely on deposit. While Deputy Ned O'Keeffe would claim that pensioners would not receive interest on such accounts, is it appropriate to advise them to put their money into a long-term investment that they cannot then access? A recent media report highlighted the case of a 90 year old woman who was advised to move her money from a boring yet safe deposit account into a ten year bond. Subsequently, the lady died but the money was still locked into the bond, unavailable to her representatives and heirs. This type of classic complaint is one with which I would expect the banking ombudsman would concur and would seek redress. The ombudsman under the IFSRA Act must have an oversight and overview. I can understand why the ombudsman might not go into the nitty gritty of a case, rather like the appeal panel referred to by the Minister. If the ombudsman at the industry level is doing a good job, then the whole case does not need to be re-investigated in detail. However, the information is necessary and I do not understand why the Minister for Finance has dropped this provision in his amendment.

I welcome the main thrust of amendment No. 34 but it does not go as far as Deputy Richard Bruton's proposal on Committee Stage. Some of the Minister's amendments seem more than a little contradictory.

The real divide in the House is that, while the Opposition believes there is no such thing as too much information, the Government believes there is more than enough already. On those grounds, Deputy Richard Bruton's amendment is to be supported. The uncertainty and lack of consumer confidence in the general banking and financial sector has come about because of how information is disseminated and made accessible. No price can ever be put on the value of information being made available at every opportunity.

While the Minister's amendment is an advance on discussions on Committee Stage, it refers only to the general area of complaints, showing the same ministerial mindset during the debate on the Freedom of Information (Amendment) Act. Whereas the listing of complaints is a value in itself, the quality of information received informs what has changed over time and what must be done to prevent the recurrence of bad practices. Without the in-depth information regular reports provide, the Minister's amendment is meaningless. While I recognise the advance the Minister has made, his amendment would be enhanced if he accepted the spirit and practice of Deputy Richard Bruton's amendment.

I support Deputy Richard Bruton's amendment but I have some concerns as to the Minister's one. It may be a small matter but one of the key differences between the two is the absence of a prescriptive approach to the role of the financial services ombudsman in imparting the information. The Minister's amendment seeks to improve public understanding on issues related to complaints against regulated financial service providers and consumer protection matters. However, the amendment gives no indication as to how this will be achieved. Does "public understanding" refer to a broader understanding or to an understanding by members of the public who engage with the office of the financial services ombudsman?

Deputy Richard Bruton's amendment, however, specifically proposes the provision of reports on the experience of the ombudsman's office and the climate for consumers in the financial services sector. This would better inform policy makers as to the position of consumers. Reports should be published on a regular basis. The office of the financial services ombudsman will have an important role, as underscored by both amendments, in keeping society aware of developments in consumer protection matters. The placing of amendment No. 33 in terms of its association with the elements of the ombudsman's key functions and role is the appropriate location in the legislation for such a measure. Accordingly, I support Deputy Richard Bruton's amendment.

Amendment No. 34 in my name arises from an amendment tabled on Committee Stage by Deputy Richard Bruton which he has resubmitted as amendment No. 33. My amendment provides that one of the purposes of this Part is to improve public understanding of issues that give rise to complaints against financial institutions and how they might be addressed. Under other sections, the financial services ombudsman will have specific obligations to publish information on his or her activities and to advise the regulatory authority on steps it might take to address persistent patterns of complaints so as to improve how financial institutions deal with them. The difference between my amendment and Deputy Richard Bruton's reflects the view of the parliamentary counsel on what is an appropriate formulation for sections setting down the object of this Part.

Deputy Burton raised the transfer of information from the ombudsman to the IFSRA. That matter is dealt with in amendments Nos. 53, 54, 56 and 66, some of which are in my name. These amendments arise from concerns expressed by the existing voluntary ombudsman schemes that complaints should be treated as confidential matters between the complainant, the ombudsman and the financial institution. A separate provision for co-operation between the ombudsman and the authority provides adequate scope for the authority to be informed about patterns and trends rather than individual complaints. The various ombudsman schemes believed this was best practice.

The Minister's amendment will curtail the ombudsman's freedom to report findings on, say, misselling of products. However, these might not eventually be eligible to be considered as complaints that could be investigated under the terms. I will be satisfied if the Minister can give assurances that the ombudsman will not be curtailed in making reports to all policy makers instead of those reports being filtered through the regulatory authority.

That is the intention.

Amendment, by leave, withdrawn.

I move amendment No. 34:

In page 29, line 3, to delete "manner." and substitute the following:

"manner;

(d) to improve public understanding of issues related to complaints against regulated financial service providers and related consumer protection matters.”.

Amendment agreed to.

Amendments Nos. 35, 36 and 39 are related and may be discussed together by agreement.

I move amendment No. 35:

In page 29, line 10, after "persons" to insert "(a majority of whom shall be consumer representatives)".

The purpose of this amendment is to ensure that consumers of financial services and consumer organisations are represented on the financial services ombudsman council. There are also a number of financial journalists who do good work in highlighting wrongs done to consumers. The majority of persons on the panel should be consumer representatives. I do not see why the Minister cannot easily agree to this. We are talking about the financial services ombudsman, which is part of the general structure of financial services regulation. This Bill is a large camel. Rather than having one or two humps, it appears to have about ten.

The ombudsman, by definition, will be dealing with complaints, inquiries and incidents of confusion. People will not be writing to thank the banks, like Deputy Ned O'Keeffe, for their wonderful services to borrowers and lenders. They will be people who for different reasons believe they have been badly dealt with. It is appropriate in light of recent cultural changes that we include representatives of bodies such as the Consumers' Association of Ireland. As I said, there are also a number of financial journalists who have carried out outstanding work through the years, since the days when Gay Byrne used to be on the radio. I remember, as I am sure the Minister does, listening to journalists such as Colm Rapple explaining what people could do. That tradition has continued. Down through the years these journalists have highlighted various ways in which banks and financial institutions were in default. Looking back at a number of scandals, including those involving investment intermediaries, one remembers that a number of financial journalists warned about risks to consumers.

While I do not want to dictate precisely who the appointees ought to be, there are people available who have acted as consumer defenders in the past as well as those who have an understanding of the seamier side of the financial services industry. I remind the Minister that there are institutions in Dublin and throughout the country that are effectively charging interest rates of 200% to 300%. In another age they were simply called moneylenders. Now they are licensed moneylenders. The argument rages about whether these merchants are better than unlicensed people who call to the door. Nonetheless, there are financial services that operate at extraordinary cost to their customers. I see nothing wrong with this area coming under the remit of people with expertise.

On Committee Stage I gave the Minister two examples of people and organisations with such expertise. One was the members of the Society of St. Vincent de Paul who specialise in assisting people who have fallen into debt and are in trouble with moneylenders, licensed and unlicensed. The other example is the State's own money advice and budgeting service with which I was involved when I was Minister of State at the then Department of Social Welfare. The then Minister, Deputy Woods, and I worked on expanding the service. This was partly because both of us represent constituencies in which there are significant numbers of people who obtain credit on a door-to-door basis. Men drive up, come to the door and give a person €200 or €300 for a Holy Communion or some other event, which sum the person pays back at the door week by week. The charges for these services are astronomical. It is a highly specialised area of financial services and is desperately important for people who are not well off.

My first experience of financial services was arranging to pay money into a Christmas club, which was for the benefit of the people who lived on my street, for a lady who lived on another street. Arrangements such as these are still very much part of life today. Not everyone has a bank account or the services of a local credit union. When we think of financial services we think of the IFSC and people doing big deals, but there is also a significant financial services business at the poorer end of the market. Some of the people in this area make extraordinary amounts of money because of what they do to consumers.

I expect the Minister to bear in mind the needs of consumers and agree to appoint consumer champions and advocates. I have offered him a range of bodies, including non-governmental, not-for-profit organisations which have a good reputation in Irish life and would bring to the area the breadth of their experience.

I am concerned about the number of people who, because they can easily obtain store cards and so on, end up acquiring credit cards which carry high rates of interests. When the Director of Consumer Affairs published a report recently, she did not include store cards. She is probably carrying out a study in this area. I and other Members, along with people in similar jobs, often deal with people who quickly run up large debts. It is their own decision. I am not talking about nannying people. However, once they are in default, the penalties are horrendous. Their debts are often sold on to solicitors and financial legal debt agencies and once they get into the clutches of these people, another set of charges is added. MABS, the Society of St. Vincent de Paul and other institutions often come to the rescue of such people, holding off the agencies and trying to make a sensible settlement. It would be wise of the Minister to ensure that consumer advocates and people with a knowledge of the less publicised side of the financial services industry are also represented on the council.

These three amendments — those of Deputy Burton, Deputy Richard Bruton and myself — have the same aim but attempt to achieve it through three different mechanisms. Deputy Burton wants a majority of consumer representatives on the financial services ombudsman council, while Deputy Bruton wants a majority who are not involved in the financial services sector. I suggest that no more than 50% of the council's membership should consist of people from the financial services sector.

Running through all the discussions on this Bill has been a theme of getting the balance right between prudential regulation and consumer protection. It is interesting that the Minister has yet to accept any amendments that include the words "consumer protection". The only one of the Minister's amendments that referred to the word "consumer" was one that deleted the word. That should not be the message that comes from Report Stage. I would be disappointed if the Minister did not take the opportunity to correct that balance. Each of the amendments is self-evident and either would achieve what many of us have been arguing for. I urge the Minister to accept one or other of the amendments.

As Deputy Boyle said, the amendments are self-evident. We are talking here about the council which will deal with and appoint the financial services ombudsman. It is important that the body responsible for the appointment, issuing guidelines and developing the framework within which the financial services ombudsman operates should be a pro-consumer council rather than one that could be construed as having a majority of people who are on the gamekeeper as opposed to the poacher side. We are trying to protect consumers, not financial institutions. They have a view which must be heard, but the logic of what is being sought is fairly obvious.

I support the amendments which propose to ensure that the financial services ombudsman council is neither dominated by nor becomes the preserve of those who represent the financial services sector. I hope the Minister will concur with that view because it will erode efficiency and public confidence in this body, which will number between five and ten people, and which we have already argued must be addressed in terms of gender balance. In this instance, we want to see an imbalance in favour of broad consumer interest, which is the broad thrust of the amendments. I hope the Minister will concur this is a requirement in the body.

As I indicated on Committee Stage, some of the amendments are based on a misunderstanding of my intentions in regard to the ombudsman council. The idea of the council arose from the public consultation process on the Bill. Both existing voluntary ombudsman schemes have such councils. There has been no objection to the principle of such a council. The council will play an important role in setting out the detailed regulations covering the ombudsman scheme, as well as appointing the ombudsman and the deputy ombudsmen. The intention is that there should be a broad balance between representatives of the financial services industry and representatives of consumers, and the chairperson should have knowledge or experience of consumer issues. Given its central role, it is important that the council should have the confidence of consumers and the financial services industry. The provisions for appointment of its members are drafted accordingly.

The Bill provides that I must consult with my colleague, the Minister for Enterprise, Trade and Employment. In addition, I am expected to consult widely among both consumer and industry bodies before making appointments to the council, therefore, I cannot accept the amendments. There are currently two non-statutory ombudsman councils. There will now be one statutory council due to rationalisation. I intend to ensure that representation on the council will include consumer advocates and public interest persons.

I welcome the Minister's assurance that there will be consumer advocates and consumer champions on the new council. The ombudsman will deal with complaints against the financial services industry. What is the point in this if the majority of the council is composed of people from the financial services industry? In this country we know that self-praise and self-regulation normally does not amount to a hill of beans. I wish the Minister would break out of the straitjacket of fear of the Central Bank so that consumers can exert their rights and balance the financial regulatory structure. It is important that while there may be representatives of banks on the council, the majority should not be people from the industry. They should include people who are genuinely independent who can act on behalf of consumers, particularly those who make complaints about being ripped off, misled, lied to and overcharged and who get a very bad service.

Amendment put and declared lost.

I move amendment No. 36:

In page 29, line 11, after "decides" to insert the following:

", a majority of whom shall be persons independent of ties to business engaged in the provision of financial services".

Amendment put and declared lost.
Amendments Nos. 37 to 39, inclusive, not moved.

Amendments Nos. 40, 41, 69, 70 and 82 are related and will be discussed together.

I move amendment No. 40:

In page 29, lines 14 and 15, after "Employment" to insert the following:

"and after the advertising of the positions for application by individuals and after a process of independent short listing of applicants with suitable experience".

The amendment proposes to make the appointments from the best available candidates. The approach to generate that membership should be to publicly advertise the positions so that the best people would have an opportunity to apply. The applicants should be short listed to select those with suitable experience.

As I said on Committee Stage, my experience is that when the Government advertises posts — it would be worthwhile to have a similar approach to many of the State boards — the quality of candidates is remarkable. Ministers or their officials would never think of appointing these people to bodies. As Deputies have said, we should break away from the usual suspects in making appointments to this group, and the best way to do this is to hold an open competition where anyone who is interested can apply. I hope the Minister will accept my amendment which is similar to Deputy Ó Caoláin's.

I wish to speak to amendment No. 40 and amendments Nos. 41, 70 and 82 in my name. I have employed the same wording in each of the three amendments, applying them to their respective location within the Bill. Appointments should be made from a short list of candidates drawn up following an open competition which is publicly advertised, and interviews of short listed candidates, based on published criteria of qualification.

This is a reasonable proposal. We addressed this argument in previous Bills and earlier today during the debate on gender equality. It is appropriate that the appointments procedure to all State boards be revisited. It should be open, transparent and free of cronyism. If the maximum number are to be employed on the various councils and panels, then 50 people will be appointed. Will there be duplication with people on other State boards, committees and quangos or will the Minister look at a new group of people? I encourage the latter option, and the only way that can be done is to open up the process of appointment to the wider public. Appointments need to be made on a clear, transparent basis that can be supported by everyone.

There are many people who would more than adequately fill any of these positions. However they do not move within circles to which the Minister or his colleagues in the Department and other parts of the country belong. If they are not moving in these circles, their names will not be made known to the Minister and, therefore, we can not make a choice.

If consumers are to have trust in these bodies, they will have to see a process that is free even of the hint of favouritism and any party political association. That is not to say that people who support political parties or are involved in them are not entitled to consideration. What will make the critical difference in public confidence is how the Minister goes about his business. We need a process that is open, competitive, publicly advertised and with interviews arranged from a shortlist of candidates. It must also be based on published criteria of qualification.

I have no doubt that it would open up a new vista for State boards in the future. The Taoiseach would not then have the complaint that the main task with which he must deal in State board appointments is the arm-twisting of those with special knowledge to take up these roles. There is no body of people with a monopoly over such special knowledge. There are people throughout this country capable of fulfilling these roles and who may have even better qualifications and a keener sense of what needs to be done. We might have trust in these people and recognise that they want to bring their professional experience to the patriotic service of their people.

I support the general thrust of the amendments put forward by Deputy Bruton and Deputy Ó Caoláin. The Minister complains that he can not get anyone to fill boards. The way to do that is to take a radical look at how people are appointed to boards. To restore confidence in boards, the Minister should take lessons from the US and France, two republics where public service is as an important element, and subject those who undertake that service to hearings and an examination of their qualifications. A public appointments advertisement process would enhance this. The idea is not to limit appointments to boards but rather to extend them from the usual suspects.

What has been the greatest financial scandal in this country in the past 30 years? A section of the elite of society robbed the public purse by failing to pay their due taxes. We can look at the chaos in the health services and the underfunding of education, and then we can look at pillars of the Fianna Fáil establishment on the Ansbacher list and at tribunals. They failed to be compliant with the law. Many of these people served on boards in this State at different times. Anyone can make a mistake and people are entitled to order their tax affairs to mitigate their tax bill, yet this elite was in a conspiracy to avoid paying any tax by putting it off shore. These people served on top notch boards and let us down badly.

When the Minister spoke on Second Stage, he referred to the erosion of confidence in public institutions in Ireland, ranging from various religious bodies, to politicians and so on. People do not have complete confidence in financial services either or in many of those at the top of the financial institutions. This is because they were in part aiding and abetting tax avoidance and tax evasion in this country. Tax avoidance is legal but morally questionable. Ordinary people who serve their local community and ordinary business people who pay their taxes, are not in the golden circle from which the appointments to these bodies will be made.

If the Minister wants to restore confidence in public institutions, then they should be opened up. Candidates should state their qualifications, be examined on them, be allowed to serve for three, five or seven years and then make way for others. That should be done in the open so that a structure would be created which would allow people to be proud to serve this State in different capacities. It is an honourable and a proper thing to do in a republic.

If the Minister does this, the culture will change and that which has been disclosed in recent years will be put in the past. No one should argue that prudence is best served by the same suspects placed on the boards. One can look at what happened to tax collection in this country at the hands of those people in the financial services and those often appointed as top company directors. I would prefer to put my faith in a wider range of ordinary people, and I encourage the Minister to do that.

As I indicated on Committee Stage, I do not accept that an open competition method of recruitment would be suitable for either the ombudsman council or the consumer or industry panels.

In the case of the ombudsman council, it is necessary to ensure an appropriate balance between industry and consumer representatives. As required in the Bill, I will consult the Minister for Enterprise, Trade and Employment before making the appointments. I also intend to consult industry and consumer representative groups.

In the case of the panels, the Bill again obliges me to consult the Minister for Enterprise, Trade and Employment and, in the case of the industry panel, the Taoiseach, because of the close involvement of his Department with the international financial services sector. The Bill also obliges me to consult the industry and consumer representative groups. These methods of selection are the most appropriate in the circumstances.

I am open to trying to widen the base of expertise available to me to choose the various people for these panels, and I am willing to consider some of the ideas that have been put forward. I will examine them to try to be as inclusive as possible, but I cannot accept the amendments as put down.

I am disappointed with that response for all the reasons that have been articulated on this side of the House. We need to open up access to State boards to a wider range of people than those who are considered. I am aware the public service has many contacts but they do not have all the contacts that might be worth tapping into, and the best way of generating those contacts is by open advertisement and allowing people put themselves forward. If the Minister tried this once, even if he is not willing to accept it on a statutory basis, he would be surprised by the high quality of people who would come forward. If he is saying he is open to experimentation, I hope he will do this in respect of at least one of the groups he is to appoint to see how it works.

It is difficult to understand the Minister's resistance to this straightforward formula which is open and transparent and in which we can have public confidence. I do not understand the reason there is such resistance to adopting this new method of recruitment and appointment to State bodies. Like Deputy Bruton, I again appeal to the Minister to take the bold step and not have any fear as to what may be involved. On the contrary, we should regard it as an exciting new departure that offers real equality of opportunity to all citizens to give service at State board level. That is an important aspect of real equality in practice, and the practice heretofore has been elitist and exclusive. It has marginalised and excluded many people from consideration and I have no doubt, with all respect to those who have taken up these positions and whose suitability I do not question, that we have been less well served as a result of our failure to accommodate an open policy of appointment to these bodies.

As I have exhausted the arguments in this regard on so many occasions in the past, I tire at this point and remain incredulous of the stoic refusal of the Minister and his colleagues, the Taoiseach in particular, to make these effective changes. I appeal to the Minister once. We will try again.

Amendment put and declared lost.

I move amendment No. 41:

In page 29, lines 14 and 15, after "Employment." to insert the following:

"Appointments shall be made from a short-list of candidates drawn up following an open competition, publicly advertised, and interviews of short-listed candidates based on published criteria of qualification.".

Amendment put and declared lost.

I move amendment No. 42:

In page 30, between lines 10 and 11, to insert the following:

"(f) to report to the Oireachtas any matter in relation to public policy or to legislation which it views as important to ensure an efficient, competitive and consumer oriented Financial Services Sector, and”.

To some extent this amendment has been debated already. The one aspect on which I would like to get the Minister's views is the extent to which he sees the Oireachtas playing a role in supervising the activity of all the financial service regulatory vehicles we are now putting in place.

Through the committees.

Exactly. How does the Minister intend that the committee would effectively do its work in this area? A report was produced recently by Professor Westrup in which he set out the case that to have a regulatory system which worked well in the long term, we needed an Oireachtas committee armed with the capacity and the inclination to supervise performance under all these criteria. Most people considering the resources available to the Committee on Finance and the Public Service and the capacity to do these functions would say it is very weak. I wonder whether the Minister agrees with the view of that academic that a significant part of a successful regulatory structure is having an Oireachtas element where these agencies are held to account in an intelligent and well-informed way or does he share Professor Westrup's view that without that, we do not have a long-term, appropriate regulatory body.

I am aware the Minister is supportive of the development of the powers of the Oireachtas but as we sign off on this Bill, we should at least be also envisaging the need to strengthen the Oireachtas scrutiny in this area. There will be a real problem with the Oireachtas Committee on Finance and the Public Service in terms of the sheer complexity of what we are putting in place without significant professional input to hold those bodies accountable in the way many say we should.

I support amendment No. 42 in Deputy Bruton's name regarding the financial services ombudsman council. The arguments are well put. Reporting to the Oireachtas must be an important function of the ombudsman council in terms of any matter regarding public policy, as the amendment states, or legislation which it views as important to ensure an efficient, competitive and consumer oriented financial services sector. That information flow is important. The emphasis is on the Oireachtas and all Members participating having the opportunity to be informed of the different views.

The situation regarding finance spokespersons from the Opposition parties is that we are denied access and exposure to many information flows that are geared solely within the Department and to the respective Ministers who come before our committee. Apart altogether from the barrage of information we must try to assess on European directives, there is a serious deficit and it is important that information the ombudsman council would view as important to bring to public scrutiny and attention would be directed in report form to both Houses of the Oireachtas in order that Members can then address and seek redress of whatever deficiency problem or issue they highlight.

I am aware the Minister has always been sympathetic to the argument that the Oireachtas should be better resourced and I understand he allocated significant sums of money to the Houses of the Oireachtas Commission recently when that Bill was going through the House.

There is a serious problem. Deputy Bruton referred to a lecture by Mr. Jonathan Westrup who worked in Trinity College Dublin, having previously worked in the financial services industry. He argued that the capacity of the Oireachtas, particularly the Joint Committee on Finance and the Public Service, to act in an oversight capacity was limited because of a lack of resources. In a lecture to the ACCA which the Minister was listed as having attended, Mr. Westrup pointed out that the joint committee does not even use a newspaper cuttings service of articles relating to financial regulation. It is my recollection that most Departments use such a cuttings service for news coverage of interest to the Department. Some committees also use such a service. The Joint Committee on Transport does so, for example, due to Deputy Eoin Ryan being slightly more modern than others. Members of the Oireachtas are trying to pursue regulatory and oversight issues without support. This is difficult and is part of the reason people have so little confidence in institutions such as the Dáil and committees of the Oireachtas. These bodies are either slow to react or do not react at all.

The Government's model of regulation, based on the EU model, is to establish expensive regulatory structures. It then becomes difficult to question Ministers directly because regulation is a matter for the regulatory body. The body is only required to send an annual report six or eight months after the end of a particular year. This takes all the dynamism out of the structure. It probably makes life easier for Ministers but it is a bad model. This neo-liberal model devised by the EU takes regulation further away from ordinary people and businesses, small and large, and is part of making politics more remote from people. This is why people become increasingly less connected with politics.

I hope the Minister will monitor the implications of this new structure. Is it to be mere self-advertisement by IFSRA? A significant amount of that has been done and much of it is welcome because it also informs customers. However, there is little oversight provision and that is a fundamental weakness.

I indicated on Committee Stage, this amendment does not take account of the existing provisions of the Bill which provide for extensive accountability arrangements to the Oireachtas for the ombudsman scheme. Section 57BH provides that the chairperson of the council must appear on request before an Oireachtas committee and provide such information, including documents, as the committee specifies. Section 57BW imposes a similar obligation on the financial services ombudsman. Section 57BH provides that I must lay the detailed regulations governing the ombudsman scheme before the Houses and that either House can annul these regulations. There is also provision for the publication of various reports from the ombudsman and for the laying of his or her strategic plan before the House of the Oireachtas.

The existing provisions of the Bill provide for ample accountability to the Oireachtas, including, crucially, my accountability as Minister for policy legislation governing the ombudsman and, more generally, the financial services sector. Therefore, I do not propose to accept the amendment.

I have looked at many SMI reports by agencies which are intended to assist accountability. Generally, they are designed to show how clever the agency is and not to assist accountability. The capacity of the Oireachtas to supervise the strategic performance of a complex agency such as this will become an issue. Mr. Westrup, in his paper, states: "The fact remains that the Oireachtas has given regulators great powers but has largely chosen to leave them to their own devices, leaving a major gap in any accountability structure." There is a dimension of accountability here to which the Oireachtas is not getting to grips.

I know the Minister will see his responsibility as having been fulfilled when this Bill is enacted and he can hightail it having seen the last of the IFSRA legislation for his lifetime. Nevertheless, how does the Oireachtas set about holding agencies to account? The Minister should bend his thoughts to how that will be done. Perhaps he should, by ministerial order, set performance indicators on which quarterly, six monthly or annual reports would be made to the Oireachtas. This would give the Oireachtas ammunition for real scrutiny of the performance of an agency such as this. It will be difficult for the Oireachtas itself to develop and devise such a framework but the Minister might be able to do it by way of order. This would be immensely helpful to the Oireachtas and would leave a permanent way of scrutinising the performance of such agencies.

The Irish Financial Services Regulatory Authority is required to publish a statement of strategy and not just an annual report. That would be an opportunity to consider not just what IFSRA has done but what it plans to do.

Does the Minister have the power to set out guidelines as to how the authority does that?

Would he consider including in those some specific reportage to the Oireachtas on performance indicators he believes are relevant and which the Oireachtas should be watching?

The joint committee is the adequate body to do that.

The Minister is not living in the real world.

To task the joint committee with that when it has no powers to do it is absurd.

The committee could have IFSRA before it tomorrow if it wished.

The power to call someone occasionally is not the same as a genuine oversight power. Bodies are being created by the Government in several areas. Ministers will not answer questions because the bodies have been established and another layer of bureaucracy, on a neo-liberal model, is being created. This model is very expensive and when customers of banks and the taxpayers are paying for the regulatory structure, it is important that it be made accountable to the Dáil.

Amendment put and declared lost.
Debate adjourned.