Ceisteanna — Questions (Resumed).

Financial Services Sector.

Caoimhghín Ó Caoláin


4 Deputy Caoimhghín Ó Caoláin asked the Taoiseach the nature of his co-ordinating role in the development of the international financial services industry here; the way changes in the international financial sector has impacted on same; and if he will make a statement on the matter. [31184/09]

Enda Kenny


5 Deputy Enda Kenny asked the Taoiseach his role in co-ordinating the international financial services sector; and if he will make a statement on the matter. [35603/09]

Eamon Gilmore


6 Deputy Eamon Gilmore asked the Taoiseach his role in development and monitoring of the financial services sector; and if he will make a statement on the matter. [37270/09]

I propose to take Questions Nos. 4 to 6, inclusive, together.

My Department has supported the international financial services industry in Ireland since the establishment of the IFSC in 1987. It does so through the mechanism of the clearing house group, the working groups in the areas of banking and treasury, funds, insurance, pensions and a task force on asset management. These dedicated working groups and the task force report to the clearing house group on a regular basis.

The clearing house group is chaired by the secretary general of my Department and its membership includes senior public and industry representatives. Industry members of the groups include representatives of industry associations and of prominent figures from the international financial services industry.

There are also representatives from my Department, the Department of Finance, the Department of Enterprise, Trade and Employment, the Financial Regulator, IDA Ireland, Enterprise Ireland, the Revenue Commissioners and the Stock Exchange. The clearing house group identifies and considers issues of major concern to the long-term development of the international financial services industry in Ireland. These issues include the strategic development of new business areas and opportunities, the progress of relevant legislation and responsibility for overseeing and reporting to the Government on any initiatives undertaken in this area.

Last February, my Department consulted industry at a facilitated workshop with the intention of considering the major issues of concern to them in the current environment and to identify lines of action and initiatives to chart the way forward for the industry. The recommendations and proposals put forward at this workshop are being worked through by various Departments and agencies. The work is guided by the 2006 strategy document "Building on Success".

Three years ago next week, the then Taoiseach, Deputy Bertie Ahern, launched "Building on Success", which was a new strategy for the future development of the financial services industry. That was followed by a progress report in July 2008. The development of the financial services industry is a critical part of Ireland's economic success, our reputation and our standing. As the Taoiseach pointed out, the Government's clearing house group, within his own Department, monitors commitments made in the strategy. As the situation has changed so dramatically in the past two years, can we expect another progress report on the financial services industry similar to the one in 2008?

At the launch of the "Building on Success" document in 2007, the then Taoiseach referred to the establishment of what is known as the centre for financial services skills before mid-2007. What is the current status of that centre?

It is located in Kennedy's pub in north Dublin.

Is it? It was made clear at the time that it would require no capital funding and that it had the support of financial and academic experts. So what is the status of the centre for financial services skills and where is it located? Who heads up this operation?

Paddy the plasterer.

I thank Deputy Quinn. The current Taoiseach established the financial legislation advisory forum in May 2007 when he was Minister for Finance. Its remit was to consolidate and modernise legislation governing financial regulation. The forum's primary objective is to provide expert advice and support. The Bill was to have been published within two years of the establishment of the forum. What is the status of that Bill? Where is it? Why has the Government Whip not yet got his hands on it? When can we expect to see it on the list of legislation to be brought before this House?

The financial regulation legislation is being incorporated in the context of the Central Bank reforms that will take place. The need to review fundamentally our whole financial regulatory structure arose in the aftermath of the financial crisis, which began to emerge in autumn 2008 and came to a very serious turn this autumn. It is important to recognise — and I am sure the Deputy does — that the legislation concerning reform of the Central Bank is now a priority that is being attended to in the Department of Finance in the aftermath of the successful enactment of the NAMA legislation. This is another enormous body of work that has to be undertaken in the interim, at a time when other projects were being mentioned. I do not have the information regarding the group referred by the Deputy in the first part of his supplementary question but I can get it for him.

The clearing house group has another function in respect of the document published by the Government a year ago, Building Ireland's Smart Economy, which has implications for the long-term development of the international financial services industry. I understand that the clearing house group has met five times this year. Will the Taoiseach say what advances or decisions have been made in respect of Building Ireland's Smart Economy, the report on a framework for sustainable economic renewal, by the clearing house group, with particular reference to the long-term development of the International Financial Services Centre, as envisaged in the report?

The clearing house group is a technical group of people from various Departments as well as the Revenue Commissioners and the Stock Exchange, which identifies whether there are operational issues arising that need to be addressed. It has met for that purpose on a number of occasions this year. It also provides an informal opportunity to determine whether other opportunities might be identified for the financial services sector in Ireland, including those arising in the green financial services sector, for example. The intention also is to see in what way we can assist in maintaining the levels of business, particularly regarding management of assets that have been grown over many years within the IFSC. This is a very competitive area and it is a question of keeping in touch with the industry in terms of identifying what trends and practices are taking place, to see whether we can stay with the competition while at the same time protecting reputational issues for the country.

On the question of the restoration of Ireland's reputation in terms of financial services and financial probity, what is the Taoiseach or the various committees doing to seek to restore the country's reputation in the context of the banking crash, and all the other events that have happened? Has the Taoiseach or his Government had any contact with the new EU Commissioner Barnier, who will be dealing with the whole issue of financial markets regulation? Does he foresee any further regulation of the IFSC, because international companies that locate there effectively want a gold-plated assurance scheme to the effect that regulation is of the highest level, particularly American companies reporting to their home jurisdictions?

Will the Deputy please put the question?

Did the Taoiseach see the recent remarks of Mr. David Went, chairman of the consultative industry panel, where he warned against excessive or intrusive regulation? Is the Taoiseach concerned that such a strong lobby exists, given that such a leading businessman is arguing, once again it seems, for light touch regulation to be at the core of the Irish approach?

It strikes me that this question is more appropriate for the Minister for Finance.

This is all about financial services regulation, as the Taoiseach knows. We discussed this on many occasions when he was Minister for Finance.

While I know Mr. Barnier, we have not as yet have had discussions with him. He has not as yet been appointed Commissioner. He has been nominated for the position and will not be in situ , probably, until February next year, when all the various hearings have been completed. I am sure he will be successful since he is a former Commissioner, as well as a former Minister for Agriculture in the French Government. Mr. Joaquin Almunia, who will continue in that role, has been a very competent person and Commissioner Charlie McCreevy, who was responsible for the Internal Market side of the equation, has done his job very well and capably. The issue of regulation in the aftermath of what has happened is not simply European in scope, but requires global synchronisation in order to have a broad regulatory framework under which everyone can operate. Obviously, financial services operate as a global market. It is anticipated that at the next European Council meeting on 10 and 11 December, there will be a discussion on financial services both generally and in respect of certain regulatory aspects of the financial service industry. While this will be dealt with in the first instance by ECOFIN, it also will be discussed by the Heads of State and Government at that Council meeting. I expect this to be the next occasion on which there will be a detailed discussion on this issue.

Certainly, the entire thrust has been to bring forward a regulatory regime which will be both more robust and ensure that financial services in Europe are competitive. In the past, it is clear the level of financial innovation was such that the regulatory regime did not keep pace with it and some of the unfortunate consequences that arise from that have become evident. While I do not know the context in which Mr. Went made his comments, it is important to find the balance between the need for adequate regulation that enables regulatory authorities to have the requisite information in sufficient time for them to do their job and the need to ensure the existence of a regulatory regime that is commensurate with the burdens that are being placed on other financial services industries in other countries and which is consistent with the need for a more prudential approach than was the case in the past, when the dangers of what has emerged subsequently had not been realised.

Can the Taoiseach tell Members what has been the level of job losses in the international financial services sector of late? Does he know what proportion of the approximately 420,000 people who are unemployed were laid off from this sector and whether there is a pattern of such services moving from Ireland and from the international financial services sector in particular? Is a strategy in place to retain and to create additional sustainable jobs in this sector?

While some jobs have been lost in this sector because of the overall environment, the IFSC has withstood the worst aspects of the financial crisis creditably well. Significant numbers of people are still employed there in well-remunerated jobs. At individual company level, Enterprise Ireland and IDA Ireland are supporting an increasing number of multinational and indigenous financial service companies to invest in dedicated research and development activities to develop the next generation of products and services that will meet the changing market requirements.

Norkom Technologies and Citi constitute two good examples of companies leading the way in this regard. I recently opened Citi's research, development, innovation and learning centre in the IFSC and the value and scale of the activity which is being carried out there is an example of the way forward for the industry. Increasing product, services and business model innovation is particularly important and is a real potential source of competitive advantage. Enterprise Ireland and the IDA would like to see more companies engage in such activities and can offer specific support for companies interested in investing in research and development. This is a challenging area and as was noted previously, a clearing house group meets and works closely with industry towards achieving the objectives in our smart economy framework, for example. This is an area for potential growth in the future despite the retrenchment that has been evident in recent times.