Central Bank (Supervision and Enforcement) Bill 2011: Second Stage

I move: "That the Bill be now read a Second Time."

The regulatory failures of the financial crisis have been the subject of extensive and objective analysis. The reports from Professor Patrick Honohan, Messrs. Regling and Watson, theNyberg commission and the Moriarty tribunal point out the problems to be addressed. Poor supervision, an overly-deferential attitude by regulators, poor assessment of risks and a lack of follow-through on enforcement all played a part in the financial crisis.

The Central Bank (Supervision and Enforcement) Bill 2011 draws on the lessons from that experience. It involves a careful overhaul of the statutory basis for the Central Bank's regulatory powers.

The Bill brings clarity to the Central Bank's ability to set requirements. It provides for good information flows and objective analysis to support regulatory supervision. Where things go off course, there is provision for prudential intervention and corrective action. Where the law is broken, there are effective and dissuasive, yet proportionate, sanctions. There are also provisions dealing with restitution and costs after the fact. I should add that my Department and the Central Bank are currently examining further proposals which I may bring forward on Committee Stage.

However, this is not a piece of crisis legislation. It provides a long-term regulatory framework to underpin the regulation of more than 14,000 regulated financial service providers in Ireland which will be covered by the Bill. That includes insurance companies, investment intermediaries, bureaux de change, securities and investment firms and banks.

A financial service involves making money from money and this requires an element of risk taking — risk to investors, risk to consumers and risk to the financial and economic system. The Bill must provide a prudent yet flexible basis for regulating a sector that is varied, fast-paced and ever-changing. That regulation must be prudentially-based, ensuring that firms identify, monitor and control risk both for their own good and to prevent spillover into the wider sector and the economy. However, it must also ensure effective oversight of regulated firms to ensure proper management of risk by them.

No doubt some will raise the issue of under or over-regulation. The choice between regulation and business success is not black or white. Sound regulation ensures that those well-run firms who abide by the rules do not suffer a competitive disadvantage. It requires balance, proportionality and judgment. A regulator must have the qualities of a good referee; he must establish his authority, have eyes in the back of his head and keep the game flowing.

The National Competitiveness Council has identified the need for robust financial services regulation as key in improving the export competitiveness of the Irish financial services sector. It has stated that "Reform of the regulatory environment to ensure greater transparency and to rebuild trust in the system is critical to sustain and further develop the sector".

Earlier this year the Taoiseach launched the Strategy for the International Financial Services Industry in Ireland 2011-2016. The strategy sets out a vision for the future development of the IFSC, with the goal of creating 10,000 net new jobs over the next five years. One of the drivers of growth identified for the IFSC is a credible, responsible and proportionate regulatory regime.

Under the relevant European treaty provisions, the European Central Bank must be consulted on proposed legislative changes affecting national central banks. The ECB published a positive opinion on the Bill on 9 September in which it stated that "the ECB welcomes the draft law as enhancing the supervisory and enforcement tools available to the Central Bank of Ireland".

Of course, legislation alone will not be enough to address the failures of the past. In recent years the level of regulatory activity has intensified with increases in staff numbers and skill levels at the Central Bank. On-site inspections and review meetings have gone from 606 in 2009 to 1,046 in 2010. Staff levels increased by 17% in 2010 to 1,226.

The Central Bank has published an enforcement strategy for 2011 and 2012 setting out its strategic approach to enforcement for the benefit of consumers and the integrity of the Irish financial services sector as a whole. The Central Bank has also taken a number of measures under its new approach to banking supervision. During 2011 it has re-organised its internal banking supervision structures and it has invested heavily in training all supervisory staff. A panel of risk advisers with specialist and industry expertise has been in operation since September 2010.

I will provide an overview of the provisions of the Bill. Part 1 deals with technical matters such as the interpretation provisions and the commencement of the Bill. Of note within the interpretation provisions is the definition of Irish financial services law as this concept recurs throughout the Bill. The term is used as shorthand to refer to the various instruments which make up the body of financial services law and includes the various enactments which regulate each of the sectors of the financial services industry as well as the Central Bank Acts themselves. An important lesson from the financial crisis is the need for the Central Bank to have access to an independent expert view of the position of financial service providers.

Part 2 provides that the Central Bank may require a regulated financial service provider or a related undertaking — referred to as the "reviewee" — to commission and pay for a report from an independent expert, who is approved by the Central Bank. These reports may be used, for example, for diagnostic purposes to identify risks or issues of concern, or for remedial purposes to follow up on an earlier problem. The Central Bank will prescribe the purpose, scope and form of the report, which must be prepared by someone appearing to the Central Bank to have the necessary skills for the job. The person must also have sufficient detachment to ensure the objectivity of the report — this is important to avoid conflicts of interest or the risk of client bias.

The reviewee will be responsible for the cost of preparing a report. In my Department's consultations with the industry this point was raised a number of times. Of course, I am sensitive to the issue of placing costs on firms. For that reason, a number of features have been included in the Bill which do not appear in the equivalent UK provisions. Before requiring a skilled person report, the Central Bank must first have regard to whether some other of its powers are more appropriate; the relevant knowledge and expertise of the reviewee to do the report itself; the cost implications for the reviewee; the reviewee's resources; and the benefit to the reviewee of the report, for example, where the report leads to an improvement in its systems. The provision has been carefully balanced to meet the regulatory need for objective analysis with the cost burden on firms. It also ensures that the cost is borne by the firms being reviewed rather than by the sector at large through a regulatory fee.

One of the distinctive features of Irish financial services legislation is its sheer volume and complexity. There are over 250 separate Acts, statutory instruments and directives to be navigated and understood. Many of these have been amended time and time again, leading us to the point where even the most nimble legal brains have had some difficulty identifying what the law states. A full consolidation of the relevant legislation will be a substantial task but one that it is intended will be undertaken in due course.

In the meantime Part 3 begins the process of simplification and clarification as far as it relates to the powers of persons appointed by the bank to gather information. The Statute Book contains some 20 different regimes setting out the powers of authorised officers in the banking, building society, insurance, investment and others sectors. This can create confusion for the regulated financial service providers who must comply with the law, and makes the business of information-gathering needlessly complex from the Central Bank's point of view. Part 3 seeks to replace almost all those different regimes, by taking the most useful features of each to create a single regime.

The Bill sets out the persons to whom the authorised officer provisions apply. These include a regulated financial service provider; a related undertaking; any person who holds relevant information; and administrators, special managers and liquidators. An authorised officer may enter a premises being used for the business of a financial service provider or related undertaking or where relevant records are kept. However, an authorised officer cannot enter a private dwelling without a warrant or consent.

Among other things, an authorised officer may search, inspect and secure the premises; inspect and copy records; question persons on action or records; and request a report. This part also provides that an authorised officer may attend meetings of a regulated financial service provider. It is an offence to obstruct or provide false or misleading information to an authorised officer carrying out the functions under this part. Section 6 provides a saver provision in regard to authorised officer powers exercised under enactments now being repealed.

Part 4 provides protection from civil liability and employer penalisation for whistleblowers. Schedule 5 sets out the redress available to employees for penalisation. The provisions are flexible enough to provide for protections outside the strict employer-employee context. The identity of whistleblowers is not to be disclosed without their agreement unless it is necessary to ensure the proper investigation of the matter concerned.

The Bill also provides a mandatory disclosure regime for those performing pre-approval controlled functions — these are prescribed senior or influential positions within financial service providers. Failure to make such a disclosure without reasonable excuse could be grounds for an investigation and action under the fitness and probity regime.

Part 5 deals with the bank's power to give directions. The Central Bank already holds a range of sectoral powers to issue directions and these are not being repealed. The intention of this power is to enhance the bank's capacity to make regulatory interventions across the range of its responsibilities in specified serious circumstances. The bank may issue a direction where it is found that a regulated financial service provider or related undertaking is unable to meet its obligations to its creditors or customers, not maintaining adequate capital or other financial resources, failing or likely to fail to comply with financial services law, or jeopardising the rights and interests of its customers.

A direction by the bank must be made in writing to the regulated financial service provider or related undertaking and can include a direction to refrain from providing a financial service for up to 12 months; to raise and maintain capital or other financial resources; to comply with requirements and conditions imposed by financial services legislation, or to make required modifications to its business practices and dealings with third parties.

A regulated financial service provider or related undertaking may apply to the High Court within 14 days to have the direction set aside. Similarly, the bank may apply to the High Court for an order to enforce a direction made to a regulated financial service provider or related undertaking. Following a direction made by the bank, the consent of the High Court is required before any person may commence or continue proceedings for the winding-up, dissolution, receivership, bankruptcy or related proceedings of a regulated financial service provider or related undertaking. Part 6 of the Bill provides for extended powers for the Central Bank to make regulations to ensure the proper and effective regulation of the financial services industry.

The nature of modern financial regulation both in Ireland and internationally is such that there is a need to provide a mechanism for the regulator to issue binding requirements on matters of detail, procedure and standards across a range of areas. The approach in the Bill allows the primary legislation to set out the policies and principles within which these more detailed requirements may be set out; in other words, the Oireachtas draws the picture and the Central Bank colours it in.

Some of the matters covered in this Part of the Bill may already be the subject of Central Bank codes. The Bill provides a mechanism for these requirements to be set out in a more formal way through regulations. This approach also brings greater clarity to the scope of the Central Bank's powers to impose regulatory requirements in this way.

The areas in which the Central Bank would be empowered to make regulations include the management and mitigation of risks; administrative, accounting, auditing and reporting arrangements; the training and qualifications of those working in the financial sector; protections for consumers including provision for customers in financial difficulty; the making of loans and other credit facilities; related party lending; and switching.

When making regulations, the Central Bank must consider the need to ensure that the requirements imposed by the regulations concerned are effective and proportionate, having regard to the nature, scale and complexity of the activities of regulated financial service-providers or the class or classes of regulated financial service-providers to whom the regulations apply. The Bill also provides for consultation with the Minister for Finance and broader consultation before the introduction of regulations. Once made, the regulations must be laid before the Houses of the Oireachtas.

Part 7 of the Bill deals with enforcement. Section 44 allows the bank to publish a notice warning the public where it reasonably believes a company is providing a regulated financial service without proper authorisation. Section 45 provides for restitution where a regulated financial service-provider has been found to have committed a breach of Irish financial services law and has become unjustly enriched or other persons have suffered loss. The Bill provides that the Central Bank may apply to the High Court for a restitution order to require the regulated financial service-provider concerned to provide to the Central Bank an amount equal to the unjust gain or loss, which the Central Bank would then distribute to persons who have suffered a loss as a result of an offence. This Part also provides for the bank to recover the costs of an investigation from a regulated financial service-provider convicted of an offence. It is only fair that the burden of funding the investigation of serious wrong-doing falls on the offender rather than law-abiding financial service-providers. Section 47 provides an assurance to all those who may be requested to provide information to the Central Bank in the course of carrying out its regulatory functions that they will not have any liability in contract or tort to employers, customers, counter parties or anyone else, for having provided that information.

Part 8 of the Bill deals with amendments to the administrative sanctions regime provided for in Part IIIC of the Central Bank Act 1942. Administrative sanctions may be imposed on regulated financial service-providers by the Central Bank for prescribed contraventions of Irish financial services legislation in accordance with Part IIIC of the Central Bank Act 1942. The changes proposed in this Bill are intended to increase the penalties the Central Bank may impose for breaches of the law by all regulated financial service providers affected. A number of technical changes are provided for in this Part including enhancements to the bank's powers to compel witnesses to attend before an inquiry under Part IIIC; clarification of the situation where individuals are party to breaches of Irish financial services law by regulated financial service-providers; and improved powers to ensure compliance with an agreed settlement. Significantly, the Bill doubles the maximum levels of financial sanction to €10 million or 10% of turnover, whichever is the higher, for a body corporate and €1 million for a natural person. Part 8 also provides that the Central Bank may suspend or revoke an authorisation as a sanction. This decision would be appealable to the Irish Financial Services Appeals Tribunal.

Part 9 of the Bill deals with miscellaneous matters. The first item, co-operation with overseas regulators, provides that the bank may use its information-gathering and authorised officer powers to collect information in co-operation with overseas regulators. In doing so the bank must be satisfied that the overseas regulator it is assisting is duly authorised to perform corresponding functions in its jurisdiction. In some instances the Central Bank may require the overseas regulator to contribute towards the cost of an investigation being undertaken at its request. This provision is necessary to allow the Central Bank to become a signatory to the multilateral memorandums of understanding of the International Organisation of Securities Commission and the International Association of Insurance Supervisors. There is also an amendment to the Personal Injuries Assessment Board Act 2003 to allow the Governor of the Central Bank to nominate an employee of the Central Bank for appointment as a member of the Personal Injuries Assessment Board.

The Schedules to the Bill provide largely for repeals, revocations and amendments to various Acts and statutory instruments consequent upon the changes set out in the Bill.

On publication, I referred the Bill to the Commission on Credit Unions for a recommendation on its application to credit unions. In its interim report, the commission recommended that the powers and functions intended under the Bill should be applied to credit unions. The commission noted that there is an urgency to the issues involved. However, the commission could not arrive at a single position as to the statutory mechanism for applying these powers and functions to credit unions, in other words, whether these powers would apply through this Bill or the credit union-specific legislation being prepared. I will give this issue further consideration as work on both Bills progresses.

This Bill is essential if we are to rebuild confidence in our financial system. The Bill's importance is underlined by its inclusion as a structural benchmark in the EU-IMF programme. My Department has been engaged in consultation with various stakeholders since publication of the Bill and I remain open to considering constructive suggestions whether made inside this House or otherwise. I commend the Bill to the House.

I wish to share time with Deputy Billy Kelleher, with 15 minutes each.

Is that agreed? Agreed.

I welcome the opportunity to contribute on Second Stage of the Central Bank (Supervision and Enforcement) Bill 2011. This Bill was commenced last year following the adoption of the Central Bank Reform Act and it forms part of an overall package of measures designed to reform the regulatory system which is crucial for the future of our economy.

We all recognise the abject failure of the regulatory system in Ireland to properly supervise the financial sector during the years of the Celtic tiger. This was, undoubtedly, one of the key factors leading to the severe economic difficulties we now face. The taxpayer has been left with a bill in order to recapitalise the banks. To date, direct capital support by the State runs to approximately €64 billion, which exceeds 40% of Irish GDP. By any international comparison, this is a remarkable figure and it is a measure of the scale and the extent of the failure of the regulatory system to supervise and intervene where necessary in respect of the actions of the very large financial institutions in particular.

We all recognise that the system of regulation was seriously deficient, deferential to the banks and lacked teeth. There was also an unwillingness to act within senior levels of the regulatory system.

It was not just a failing at the level of the Financial Regulator. The Central Bank also failed in its duty to raise any red flag on the prudential side or to warn Government in a robust and vigorous way of the implications for the broader economy of the over-reliance on the construction sector or of the scale of lending that was going on among the principal banks here and the foreign banks. While reckless lending was undoubtedly a prominent part of the system for many years, others in the banking system were possibly also guilty of fraudulent and criminal activity. We should take the opportunity in this debate to say how galling the lack of progress on the investigations is for ordinary people. The investigations into certain transactions at Anglo Irish Bank and other institutions have been going on for almost three years.

We will have to vote "Yes" in the referendum.

It was back in February 2009 that the fraud squad raided the offices of Anglo Irish Bank, but now towards the end of October 2011, while some files are with the DPP, no prosecutions have been brought and no charges have been laid before any court in Ireland with regard to the practices that went on. For the sake of confidence in the democratic and political system, it is essential those matters are brought to a conclusion in the short term.

It was interesting to note the comments from the outgoing Director of Public Prosecutions in a Sunday newspaper at the weekend that it may be necessary to bring in specialist jurors or to provide training and expertise for lay jurors so that they will have the know-how and wherewithal to adjudicate on some of these complex criminal cases should they come before an Irish court. I hope the Government is taking this matter seriously, because the last thing we want is for cases to come to court and for there to be no satisfactory process whereby justice can be served.

On a positive note, we would all agree that the appointments by the former Minister for Finance, the late Brian Lenihan, of Matthew Elderfield as Financial Regulator and Patrick Honohan as Governor of the Central Bank were landmark appointments. There is wide acceptance across the House and outside of it that these two individuals are performing their functions to the highest standards. They are certainly introducing a new culture in the Central Bank and the financial regulatory system and that is welcome. The Central Bank, which now incorporates the financial regulatory function, now has more staff and a better skills mix. This too is welcome. The figures on the numbers employed by the Central Bank have been outlined and they are significantly higher than the numbers employed in recent years.

We all accept the need to have the right regulations in place and for those regulations to be enforced in an appropriate manner and that is the thrust of this Bill. Its aim, along with the other legislation that has been advanced, is to ensure we have a regulatory system in this country that is fit for purpose and that ensures the scandalous, reckless management of banks, which was allowed to happen for a number of years, never happens again. We can also agree that the model of regulation must focus attention on the areas of most risk. This is an area where there were failings within the financial institutions. The risk assessment systems they employed were almost non-existent. Also, the assessment of risk within the regulatory authority, where the threat to the economy was resting, and the action following that assessment were severely lacking. While we all recognise that the larger banks and financial institutions, which are regulated by the Financial Regulator, clearly contain the highest areas of risk, this Bill applies to over 14,500 financial service providers here, ranging from the major banks to small local insurance providers and all other regulated financial service providers.

The Office of the Financial Services Ombudsman does tremendous work and some 6,000 to 7,000 complaints are lodged every year with the ombudsman. That office holds a wealth of knowledge and experience that can be used and can feed into a proper regulatory structure. I am not sure how much of a tie-in there is between the ombudsman's office and the regulatory structure, but it is something we should look at. Individuals are coming forward with complaints based on their personal experience of dealing with the regulated entities and are, in effect, doing the work for the regulatory function. They are highlighting the areas where there are deficiencies and the areas of risk. Those complaints are being adjudicated on by the ombudsman, but I would like to see clarification from the Minister as to whether all of that information is fed into the regulatory system and is used by the Financial Regulator to ensure, for example, that hire purchase companies, money lenders, mortgage and credit intermediaries perform their functions properly. Insurance companies are also subject to scrutiny by the ombudsman's office and this area will be an increasing area of activity. Last night we had floods in Dublin and we had them in Cork a couple of years ago, where huge issues arose with regard to insurance. This is an area where we can expect to see a growing number of complaints.

It is appropriate that the EU-IMF programme entered into last November contains an emphasis on an improvement to the regulatory system and a requirement that this Bill be advanced. The Bill was published in July and aims to provide the Central Bank with sufficient powers to oversee and enforce the effective regulation of the financial services sector in Ireland. We would all agree that the combination of a well resourced central bank, staffed by skilled personnel, equipped with regulatory powers and within a strong framework is key to the effective regulation of the financial services sector here into the future. The Bill seeks to address a number of the resource concerns, which were identified by the Central Bank in its enforcement strategy 2011-12 and by the new Central Bank enforcement directorate.

Turning to some of the specific elements of the Bill, the provision dealing with the "skilled persons reports" allows the Cental Bank to request an independent report into a regulatory matter. This means the Central Bank does not have to rely upon the information provided by the financial services provider in question, but can require an expert independent report on the issue, paid for by the firm. I welcome that the Bill recognises the need to have regard to the cost implications for the firm being reviewed. However, I would like to raise an issue with regard to this. The company in question nominates a firm or individual to prepare the report, which the Central Bank approves, or if it fails to nominate a firm or if confirmation is denied by the Central Bank, the Central Bank will appoint the firm to conduct a review. I suggest a better system would be for the Central Bank to appoint the firm that will carry out the review so that the onus would not be placed on the company which is subject to the review to identify an appropriate reviewer. It would be a more meaningful review if it was conducted by an independent firm selected by the Central Bank. I am sure it could put together a panel of suitable firms to conduct such reviews, similar, for example, to the various framework agreements the OPW entered into in the context of procurement.

It is important to emphasise the need for real independence when the Central Bank assesses the firm that will undertake the report. Firms with clear financial links to the company concerned might compromise the independence of the report. Sometimes it may be difficult for the Central Bank to get under the skin of the transaction and to determine whether there is a connection between the company seeking the review and the company conducting the review. That is the reason it would be more robust and independent for the Central Bank to arrange for the review to be carried out. In addition, given that many of the financial service providers covered by the Bill are small operations, we all recognise that costs must be kept to a minimum. I will return to that issue shortly.

On the question of authorised officers, the provision consolidates the existing 20 authorised officer regimes into a single regime. The Minister has outlined the legislative challenge it poses. These officers are the front line investigators of regulatory compliance and simplifying the regimes they operate under makes it significantly easier to ascertain information. Under the Bill, they are being given extensive powers and we need to ensure that people of the utmost integrity are being appointed to these positions, people who will not seek to abuse the extensive powers they are granted. They are in a privileged, sensitive position when conducting their work and it is essential there is a proper code of conduct in respect of these authorised officers under the new system.

The whistleblower protection provision protects whistleblowers from victimisation by their employers and from civil liability. If a staff member informs the Central Bank of misdemeanours in the company, he or she will be protected from punishment by that company. We all welcome that in general terms but a number of issues have been raised. In researching this Bill, I came across a number of documents and responses to the legislation. Some of the issues raised are valid, and some of them have been raised by legal firms, accountants and others. While a person who makes a report under the Bill will receive whistleblower protection, it is not yet clear how the reporting obligation will operate in terms of timing. Must reports be made to the Garda Síochána and the Central Bank at the same time? It is not clear what due process, if any, should take place in an organisation before a person makes such a report. Is protection afforded irrespective of whether an internal process has been exhausted? Under the Criminal Justice Act 2011, a person who fails, without reasonable excuse, to report information that could be of material assistance regarding a relevant offence under that Act, or a suspected relevant offence, to the Garda Síochána will be guilty of an offence. However, under the current Bill, the responsibility to report activities is confined to individuals in pre-approved control positions and senior management, not all personnel as set out in the Criminal Justice Act 2011.

Regarding directions, sweeping powers are afforded to the Central Bank and, in general, we do not have a difficulty with this. Similarly, on the issue of making appropriate regulations, a proper framework whereby the Central Bank can conduct intervention actions where appropriate was lacking and has been corrected in this legislation. I also welcome the increase in the level of fines. The lack of a proper deterrent and a lack of willingness to impose the deterrent was one of the factors that contributed to the malaise and the light touch regulatory system in Ireland for some time.

On the issue of sanctions, the Central Bank may revoke the authorisation of a financial services provider, which is welcome. A number of other areas, such as restitution orders and co-operation with overseas regulators, are to be welcomed but I emphasise to the Minister the need to ensure proper consultation with the industry. He referred to consultation in his opening remarks and perhaps he can elaborate on the type of consultation and who he consulted with. Were the representative bodies of small players in the industry consulted? They are the most vulnerable in many respects and the cost implications of ensuring they comply with this legislation will be a major burden for them. We need to ensure that while we weed out any cowboys in the financial services sector, we do not want to stifle the many good operators. At a time when we are trying to restore competitiveness to our economy, costs associated with compliance must be at the forefront of our consideration of this matter.

I refer to the bodies and entities not regulated by this Bill or any legislation, such as debt management advisers and companies such as Home Payments Limited, which collapsed in August with devastating consequences for thousands of its customers in Dublin. While great emphasis is rightly being placed on ensuring regulated entities are comprehensively regulated, we must move with the same urgency to ensure that people in vulnerable positions, such as people struggling with personal debt and mortgage arrears, are also protected from the companies and businesses providing services. We have published a Bill, which is sitting on the Order Paper, providing for the regulation of debt management advisers. The Minister has asked the Central Bank for feedback and is awaiting it. I urge the Minister to move on that issue with the same speed and urgency with which this Bill is making progress. I look forward to detailed engagement on Committee Stage.

I welcome the opportunity to speak on this Bill, which is a case of bolting the stable door after the horse has gone down the paddock in the context of oversight, regulation and a lack of enforcement and supervision of the banking sector in recent years. I hope this Bill will go a long way to restoring the confidence of the people, inside and outside Ireland, in ensuring we have a strong, robust regulatory system that sends a strong signal, internationally and nationally, that we are seen to have proper supervision of financial services. Critically, in an international context, the Irish financial services centre is a key component of the Irish economy. It generates a major amount of employment and is seen as an important hub in the provision of financial services. Anything that undermines the confidence of international investors, in terms of banking supervision and regulation, could potentially damage financial services. The financial services sector here has withstood, in general terms, the broader world recession and the damage caused to financial services across the world in respect of employment. The sector is now growing. When speaking publicly about the lack of oversight of banks and financial services in this country, it is important that we do not damage the integrity of the country in broad terms.

This is my first opportunity to speak on financial matters since the return of the Dáil. We must be honest about what we are trying to achieve, which is to ensure that we do not have banks capable of engaging in cowboy activities and reckless lending and becoming so big that they cannot be allowed to fail. That is what happened in recent times. I will take a certain amount of criticism as I was sitting on the Government side of the House for a long period of time. At the time, not only did the Financial Regulator, the Central Bank and the Department of Finance fail, this House failed substantially. It failed because it did not hold anyone to account by raising concerns that we all have now, with the benefit of hindsight, about what the banks were doing. They were involved in speculative lending and forced property prices up, which all fell on mortgage holders in this State.

This was coupled with the emergence of the eurozone and the fact that our economy was out of sync with many other economies. We needed high interest rates and we got low interest rates. The euro was not at the correct value when we joined it, from the point of view of the cyclical nature of our economy. These are historical facts but they lead us to a situation where we have tens of thousands of mortgage holders under major financial pressure because of the activity in the banking sector, developers, the lack of oversight and policy failures. This applies in the context of Government but also in the context of this House. I am not going to apportion blame but trying to highlight the fact that this House never discussed any issue to do with banking, nor did we have a broad debate on banking over many years. There was a general consensus in the House that there would be a soft landing and that we would have potential growth of between 2% and 4% in the years after the rapid growth of the Celtic tiger era. That failed to materialise for a number of reasons. If we want to genuinely address the challenges facing the Minister, this Government and our people in the years ahead, we must be honest about how we arrived at this point and about how we deal with getting out of the equation.

There is a genuine need for an honest investigation into what went wrong and how we can arrive at policy decisions in the years ahead which will ensure it does not recur. A referendum will take place this coming Thursday which seeks to afford the House of the Oireachtas powers of inquiry into matters of public importance. However, under the Commissions of Investigation Act 2004, passed by this House some years ago, we could already have had an inquiry up and running into what went wrong and where the failures arose. The Nyberg report, Honohan report and Regling and Watson report, as well as findings by the Financial Regulator, Mr. Matthew Elderfield, pointed clearly to a lack of oversight in financial regulation as well as policy failures across the board. Instead of waiting an indeterminate period and allowing a political charade to take place in this House, we should have an honest debate on how to get out of our difficulties in a manner which has the support of the public.

We must examine how we can ease the burden on those facing unemployment, mortgage arrears, threatened repossession of the family home and all the other challenges the Minister for Finance faces in framing the budget this December. He must not only devise a sustainable budgetary framework for the coming years which facilitates us in returning to the bond markets but must also ensure it complies with our memorandum of understanding with the EU-IMF-ECB troika. In that context, the Minister must surely accept that we have not yet had an honest debate in this House on all of these issues. Even as early as January and February of this year, a sustained deceit was in evidence in the context of election campaigning. People were promised, for example, that bondholders would be burned and that mortgage interest relief would be extended for those most burdened by mortgage debt as a consequence of negative equity. No action has been taken on either of these issues. Before its publication, the Keane report was held up as a panacea that would address the fundamental issues of mortgage arrears and negative equity. It has not addressed those concerns. We all accept there is no easy solution, but the reality is that people were led to believe that bondholders would be burned, thus reducing the cost to the State of the bank bailout and facilitating some leeway in assisting mortgage holders. That undertaking was clearly given by several political parties at the beginning of the year.

There are great challenges to be faced, unemployment being the most obvious, as well as mortgage arrears, negative equity and Ireland's international reputation. Our objective is to return to the bond markets and to self-sufficiency in funding our activities. Regarding the memorandum of understanding with the troika, I spoke about it to the former Minister for Finance, the late Brian Lenihan, on several occasions, including only several weeks before he passed away. He was clearly of the opinion that we were bullied by the European Central Bank in terms of accessing the bailout fund. Moreover, we received no support from the European Commission.

I have made the point repeatedly that the Commission is meant to be the guarantor of the various treaties ratified since the Treaty of Rome. However, it has singularly failed to ensure that small nations such as Ireland and Portugal get a fair crack of the whip. No bondholders have been burnt and the burden on taxpayers in this State has not been lessened. Rather, we have been saddled with the full debt. We can argue about whether the bank guarantee was the right action to take but, at the time, the view was that there was no choice in the matter. We now have a situation where promissory notes are being issued on a regular basis to fund the bailout of Anglo Irish Bank. There is a clear obligation on the Government to seek to lighten the burden on this State in order to allow it to become self-sufficient by returning to the bond markets.

The debate in this House, particularly against the backdrop of the general election, was deceitful and dishonest in many cases. People were led up the garden path in being told there was an easy route out of the great difficulties we face. I accept my portion of the blame, but rewriting history at this early stage does no service to what we all wish to achieve, namely, to get this State back on its feet and back into the bond markets. Ireland has a good reputation internationally and we are a very capable people. In recent days there has been an acknowledgement at European level that we are resilient, resourceful and willing to make tough decisions and to carry our fair share of the burden. However, we are not getting fair treatment from the European Commission in terms of its responsibility to stand up for the rights of small nations. Likewise, the European Central Bank intimidated and bullied this State into accepting a bailout.

On the challenges facing individuals, I recall speaking in this House some years ago about escalating house prices. Many Deputies were making such points. We were aware for a long time that there was a difficulty in regard to escalating house prices, and previous Governments made several interjections, such as serviced land initiatives, amendments to the tax regimes and so on, in an effort to curtail house price increases. Clearly, those initiatives did not work. We were all assured at that time that there would be a soft landing, everything would proceed in a smooth manner and there would be no great difficulties arising from the large debts accrued by individuals. That has not turned out to be the case and we have made no inroads in addressing those problems.

We have, however, made a start in restoring our international reputation, as has been acknowledged by EU leaders. There will be discussion at tomorrow's summit of the debt crisis facing Europe. For several years, in this Chamber and across all commentary, the only acceptable view was that Ireland's difficulty was entirely our own fault. That is clearly not the case. There is a broader, European context to the debt crisis. For several years we were told that if we got our house in order in addressing our budget deficit, which we began doing in 2008, that all would be well. That has not happened. The Minister will have the support of everybody in this House if he seeks a genuine renegotiation of our bailout terms. However, there is no point in pretending that he has already succeeded in renegotiating several aspects of the memorandum of understanding. The Minister has renegotiated around the edges. On the fundamental issues, in respect of which the Government made commitments to the Irish people in February this year, there has been no renegotiation. Not a single bondholder has been burnt.

In regard to failures of oversight, there is much talk of prosecutions and investigations into potential criminal activity. Charges were made in this House that the previous Government was hiding bankers from being prosecuted. However, in the eight months since this Government assumed office, no banker has been charged with any crime. A little honesty on all sides of the House might persuade the public that we have the capacity to deal with the fundamental challenges facing us all.

I will resist the strong temptation to pick up the challenge raised by Deputy Billy Kelleher in addressing the issue of "sustained deceit" in Irish political life. I will also stay away from Fianna Fáil revisionism and its bout of chronic amnesia, which we have just seen rehearsed in this Chamber.

The Bill before us this evening strengthens the power of the Central Bank to supervise financial service providers and, where they are found to be in breach of existing regulations, to impose sanctions aimed at protecting the integrity of our financial system and the interests of the users of those services. The Bill also provides valuable safeguards for whistleblowers in order to encourage people to come forward and report suspected wrongdoing, safe in the knowledge that they will not experience negative consequences. It is an important Bill and it has the support of Sinn Féin. Much of its content is of a technical nature. Given the sheer number of financial service providers covered — the Minister referred to 14,000 — that is not surprising. The Minister outlined the detail of the provisions for skilled person reports for authorised officers as well as sanctions and fines. I will not rehearse these aspects of the Bill.

However, I wish to refer to Part 4. Whistleblowers provide a vital function in exposing breaches not only of law but of good practice in public and corporate life. We must ensure the fullest protection for those brave women and men who are willing to expose bad practice.

I am pleased that the Bill protects whistleblowers from civil liability and victimisation. I am also pleased that this protection extends not only to employers who are implicated in the detail of the information provided but also those outside the employer-employee relationship.

Debate adjourned.