Vol. 529 No. 4
34 Mr. Rabbitte asked the Tánaiste and Minister for Enterprise, Trade and Employment the progress she has made on the preparation of legislation to provide for a single financial regulator; when she expects the matter to be finalised given the length of time a decision has been outstanding; and if she will make a statement on the matter. [2991/01]
I am discussing with my colleague, the Minister for Finance, new proposals aimed at implementing the McDowell report on the single regulatory authority in a manner that ensures there is no loss of synergy between monetary policy and banking supervision. We intend to bring these proposals to Government in the next few weeks. Following the Government's decision, the legislation required for the establishment of the authority will be promoted by the Minister for Finance.
Does the Minister accept that damage is being done to the financial services sector arising from the uncertainty from this long-running and apparently interminable dispute between herself and the Minister for Finance? Does she agree that, as far as the sector is concerned, it is more a matter of seeking a decision and certainty about where the financial regulator should repose? When will this legislation be published?
I accept it is regrettable that the making of a decision has taken so long but, as I said before in the House, it is better to make the right decision – we only have one opportunity to get this right – than to make a rushed decision. I accept that, since it is almost two years since the report was published – it will be two years this summer – it is longer than anyone would have wished.
However, I can say there is some white smoke and there is light at the end of the tunnel. I expect the legislation to be published either before or during the summer of this year.
I hope the white smoke does not cloud the end of the tunnel. Does the Minister accept the stature of the Central Bank is being undermined by the current controversy? Is it not likely that one of the twin pillars will be dominant over the other and that the apparent compromise emerging will be no clearer than what we have at present?
I do not accept that. It is fair to say that the twin pillar approach is the one being advanced, without speaking in advance of a Government decision. The solution may lie in the Forfás model vis-à-vis the IDA and Enterprise Ireland which has worked very well. No one could say Enterprise Ireland and the IDA are not separate organisations acting separately with their own boards and chief executives. However, there is co-ordination on policy which is done by Forfás. A decision along the lines of that type of model may well be where the solution lies.
I do not accept the role of the Central Bank is being undermined. I am sure everyone understands the need for change and to ensure, especially in the context of this economy and what has happened within it, that we have the most effective system of regulating the financial services sector. Although it is a sector which cannot be exclusively regulated domestically given what is happening in the sector and the way it will change fundamentally in the years ahead, we have a duty to ensure within our jurisdiction that we have an effective regime as far as consumers and the public are concerned. We will have something very new and dynamic when the legislation is published later this year.
Do I take it from that it is now understood the Governor of the Central Bank will be the prime authority?
No, no one could accept that. The Governor of the Central Bank clearly has an important role to play as Governor of the Central Bank, but it is equally important that there is a strong chief executive of any regulatory body that is established. However, since the decision of Government is awaited in this area, we must await the outcome of those discussions. Certainly it is important that the regulatory body is independent of the Central Bank as we know it and that it has its own board and management system.
What is the difference between that and the Office of the Director of Consumer Affairs? Would it not be more plausible to beef up that office and let the Central Bank get on with what it does best?
No. Many people who have examined this issue have come to the conclusion that the regulation of financial services should be done by a single body and that it is not satisfactory that, at present, the Department of Enterprise, Trade and Employment has regulatory functions concerning insurance and friendly societies and so on and that the Department of Finance, through the Minister for Finance and the Central Bank, has other regulatory functions in this area. Everyone believes that, to get the best expertise and the most efficient and effective regulation, that must be brought together. It must have a strong consumer focus separate from any functions the Director of Consumer Affairs might have concerning a broad range of issues. This is exclusively a consumer focus concerning financial services.
