Background

1.1. On 20 October, 1998 the Government agreed in principle to the establishment of a single regulatory authority for the financial services sector at the earliest date possible; and agreed to the immediate establishment of an Implementation Advisory Group to progress the necessary work.

Membership

1.2. The membership of the Group was as follows:

Chairman: Mr Michael McDowell, Senior Counsel

Other Members:

Mr Liam Barron, Deputy Director General and Secretary, Central Bank of Ireland,

Mr Tom Considine, Assistant Secretary, Department of Finance,

Mr John Corcoran, Assistant Secretary, Department of Enterprise, Trade & Employment,

Ms Carmel Foley, Director of Consumer Affairs,

Mr Roger Kenny, Second Legal Assistant, Office of the Attorney General,

Mr Dermot McCarthy, Assistant Secretary, Department of the Taoiseach,

Mr Joe Moran, Former Chief Executive, ESB,

Mr Maurice Tempany, Former President, Institute of Chartered Accountants in Ireland.

Secretary to the Group: Mr Jim O’Brien, Director, Department of Finance.

Terms of reference

1.3. The Implementation Group was set up to advise the Government on:

The role and functions of the single financial regulatory authority (e.g. prudential supervision, the maintenance of orderly markets, safeguarding of clients’ funds, consumer protection, the development and regulation of conduct of business rules), including consideration of the issues arising from combining the functions of monetary policy and prudential regulation.

The range of financial service providers to be overseen by the authority (e.g. banks, building societies, Post Office Savings Bank, insurance companies and brokers, investment intermediaries (including lawyers and accountants in as much as they handle clients’ funds), exchanges, credit unions, friendly societies, finance companies, moneylenders, etc.) also taking account of the development of electronic commerce which may involve new types of service providers.

The extent to which, if any, existing regulators (e.g., the Director of Consumer Affairs, Registrar of Friendly Societies, Central Bank and Department of Enterprise, Trade and Employment) would continue to have functions in relation to the regulation of the financial services sector and the extent to which any alteration to the status quo would impinge on the non-regulatory functions of the Central Bank.

The organisational structure for the authority, including the manner of its public accountability.

The funding, resourcing and staffing of the authority (and issues arising in a transition to a new structure, including staffing and industrial relations, and the extent to which the authority could be self-financing).

The legislative changes necessary for the establishment of the authority.

The time schedule (including, insofar as necessary, a phased implementation) for achieving the objective of a fully operational single financial regulator at the earliest date possible.

Work of the Group

The Group was originally due to report to the Tánaiste and Minister for Enterprise, Trade & Employment and the Minister for Finance before the end of February 1999. However, due to the complexity of the subject matter, the number of submissions received and the number of meetings with interested parties, the Government extended the report date for the Group. In the period since the Group was set up in November 1998, it held 22 meetings and received submissions from 64 interested parties, particularly in response to an advertisement placed in the main national daily newspapers in November, 1998, inviting submissions. In particular, the Group met with representatives of the staff currently employed in the area of financial services supervision. A copy of the advertisement is attached at Appendix IV and a list of the those who made submissions to the Group is attached at Appendix V.

The Group also met with a representative of the UK Treasury and with a representative of the UK Financial Services Authority. The Group took account of the Report of the Joint Oireachtas Committee on Finance and the Public Service on the regulation and supervision of financial institutions (July 1998). The situation in other countries was examined (see Appendix III) and the views of all the relevant interested parties who made submissions to the Group and those who met the Group were carefully considered. Account was also taken of the analysis undertaken by the Working Group on Banking and Consumer Issues established by the Minister for Finance in April l998 the remit of which was overtaken by the establishment of the Implementation Advisory Group.

The Group also noted that the terms of reference of the Moriarty Tribunal include a remit to make whatever broad recommendations the Tribunal considers necessary or expedient for enhancing the role and performance of the Central Bank as regulator of the banks and of the financial services sector generally. However, as the Tribunal had not reported before the conclusion of the Group’s work, the Group was not in a position to take account of any work which the Tribunal may have undertaken in relation to this matter.

The Report contains a considerable amount of material detailing aspects of the financial services industry and the associated regulatory framework. This material has been prepared on the basis of submissions made to the Group and other material supplied. The Group has endeavoured to ensure that the material is as comprehensive and as accurate as possible and that it gives a fair representation of the existing situation. However, it wishes to stress that the Report should not be regarded as a legal interpretation of the relevant legislation.

Chapter 2

Current Role and Functions of Supervisors/Regulators of the Financial Services Sector

Overview

Ireland’s financial services sector is supervised and regulated under a legal framework that is, primarily, the responsibility of the Departments of Finance and Enterprise, Trade and Employment. The Minister for Environment and Local Government is responsible for legislation in relation to Building Societies. This legal framework is made up of both Acts of the Oireachtas and regulations made under statute on foot of EU legislation.

The bulk of supervision and regulation is carried out by the Central Bank of Ireland under legislation brought forward by the Minister for Finance. The National Treasury Management Agency (NTMA) is responsible to the Minister for Finance for the Government’s small savings schemes, which are sold through An Post while the Pensions Board supervises the operation of pension funds. The remainder of the regulatory activity is carried out on behalf of the Minister for Enterprise, Trade and Employment by sections of her Department, the Director of Consumer Affairs and the Registrar of Friendly Societies. Non-statutory Ombudsman’s schemes operate to resolve disputes between credit institutions and their clients and insurance companies and their clients.

Over recent years there has been a trend to concentrate the prudential regulation of financial institutions in the Central Bank. This has been a gradual development which began in 1989 when responsibility for the building societies was transferred to the Bank from the Registrar of Friendly Societies. Another trend that has emerged is the allocation of certain consumer functions in the financial services area to the Director of Consumer Affairs. An example of this is the Consumer Credit Act l995 which transferred responsibility in relation to bank charges to the Director from the Central Bank.

The Department of Finance

The Department of Finance is responsible for the development of the legal framework for most of the regulation of the Financial Services Sector carried out by the Central Bank of Ireland. The Department also represents Ireland in the development of EU legislation in the same area.

Apart from his role in providing the legal framework, the Minister for Finance has no general statutory function in relation to supervision. However, there are a small number of instances where the Minister has a role, for example the Minister for Finance is responsible for appointing persons to the panels from which committees could be set up to determine breaches of conditions and requirements imposed by the Central Bank under the Investment Intermediaries Act, 1995. Under the Investment Intermediaries Act, 1995, and the Stock Exchange Act, 1995, the Central Bank's function in relation to the proper and orderly regulation of firms and the protection of investors, is subject to such guidelines as may be issued by the Minister for Finance. Also, in circumstances where the Bank proposes to refuse or revoke approval of a payments system, an appeal may be made to the Minister. The Minister appoints the Members of the Central Bank Board with the exception of the Governor, who is appointed by the President on the advice of the Government. The Minister also appoints industry representatives to the Board of the Investor Compensation Company.

Post Office Savings Bank (POSB)

The POSB, which is administered by An Post, was set up under the Post Office Savings Bank Act, 1861 (confirmed by the Finance Act, 1940), and still operates under this basic legislation, as amended. The absence of any prudential risk in respect of the POSB is reflected in an exemption from prudential supervisory requirements under the relevant EU Directives.

The POSB is accountable to the Minister for Finance through the NTMA. The POSB Fund is managed by the NTMA and audited by the Comptroller and Auditor General (C&AG). An Post itself is commercially audited on behalf of the C&AG. On the consumer protection side, depositors who are in dispute with the POSB may take their case to the Registrar of Friendly Societies or, in relation to An Post’s management of it, to the Ombudsman.

The Prize Bond Scheme (PBS)

Since 1989, the contract for the administration of the PBS has been held by the Prize Bond Company, which is jointly owned by An Post and the Foreign Exchange Company of Ireland (FEXCO). In 1990 the powers of the Minister for Finance in connection with the PBS under the Finance (Miscellaneous Provisions) Act, 1956, as amended, were delegated to the NTMA under the National Treasury Management Agency Act, 1990. A restructured PBS was relaunched in March 1992. The NTMA issued Prize Bond Regulations in 1993 which govern the operation of the scheme.

The Prize Bond Company is commercially audited. The NTMA also reports annually to the Minister for Finance in connection with the Prize Bond Scheme, together with other National Savings Schemes. The moneys raised by the scheme are paid into the Exchequer and form part of the National Debt.

Other Small Savings Schemes

There are three separate small savings schemes operated by An Post in addition to the POSB and Prize Bonds. They are Savings Certificates, Savings Bonds, and National Instalment Savings.

The functions of the Minister for Finance in relation to these schemes under the Finance Act, 1940, and the Finance Act, 1970, have been delegated to the NTMA under the National Treasury Management Agency Act, 1990, and these products are sold by An Post on behalf of the NTMA. However, any proposed changes in the terms of any of these schemes does require the approval of the Minister. The monies raised by the schemes are paid into the Exchequer and form part of the National Debt.

The question of prudential supervision does not arise as the schemes are fully State guaranteed. Complaints in relation to these products are handled by An Post and the NTMA. Complaints with regard to An Post’s marketing and administration of the schemes may also be made to the Ombudsman.

An Post is accountable to the Minister for Finance through the NTMA for its activities in relation to these schemes. An Post’s activities in relation to the small savings schemes are commercially audited on behalf of the C&AG. Exchequer receipts from these schemes are audited by the C&AG.

The Department of Environment and Local Government

2.1. The Department of the Environment and Local Government is responsible for the overall legislative framework for building societies, which are regulated, from a prudential point of view, by the Central Bank under the Building Societies Act, 1989. The Department maintains a general overview of the mortgage market in the context of its general responsibility in relation to housing policy. This includes obtaining regular returns from lending institutions on mortgage lending and house prices, and liaising on an ongoing basis with the Central Bank and the lending agencies.

The Central Bank of Ireland

2.2. The non-executive Directors of the governing Board of the Central Bank of Ireland are appointed by the Minister for Finance. Responsibility for the Bank's non-ESCB related functions, including its regulatory role, is vested by law in the Board. The Governor of the Bank, who is Chairman of the Board of the Bank, is appointed by the President, on the advice of the Government, for a fixed term of seven years. The Board, by Regulation, has appointed the Governor to the position of Chief Executive of the Bank. Present legislation provides that the Board comprise the Governor and up to nine Directors, no more than two of whom may be Service Directors. Service Directors serve their term of office at the Minister’s discretion whereas the other Directors serve fixed terms of five years. The only current Service Director is the Secretary General of the Department of Finance. The current Board has a mix of experience and expertise covering a range of business, legal, and academic disciplines.

2.3. Monetary policy for the members of the Economic and Monetary Union, including Ireland, is determined by the European Central Bank (ECB) in accordance with the terms of the Maastricht Treaty. As Ireland’s representative in the European System of Central Banks, the Central Bank implements this policy in Ireland on behalf of the ECB. Sole authority and responsibility for the performance and exercise of the Bank’s ESCB-related functions under the Maastricht Treaty is vested, by law, in the Governor. The Governor keeps the Board informed of developments in this area and may discuss with it the discharge of his functions under the Treaty.

Scope of Central Bank’s Regulatory Functions

2.4. Apart from its monetary policy functions, the Bank is statutorily responsible for the direct supervision of most financial institutions in Ireland (with the main exception of insurance undertakings) including banks, building societies, ACC, ICC, and TSB. In addition, the Bank authorises and supervises collective investment schemes, stock brokers, investment intermediaries (including portfolio managers, securities houses, investment advisers, etc.), restricted activity investment product intermediaries, certain companies established in the IFSC, and Bureaux de Change. The Bank is also responsible for the approval and the ongoing supervision of stock exchanges and their members and the regulation of payments systems. Entities other than credit institutions and stock exchanges for which the Bank is responsible are hereinafter referred to as investment firms (this term covers investment intermediaries and stock brokers). In exercising its supervisory/regulatory functions, the Bank is not carrying out a function set out in the Treaty and is not subject to its restrictions. Whereas the Board is independent of the ECB in the discharge of these functions, it is accountable to the Oireachtas. All functions, with the exception of ESCB related functions, are retained by the Board, which has the discretion to delegate certain of its functions to the Governor or to any officer of the Bank.

2.5. The Bank undertakes its supervisory/regulatory remit principally under provisions of the Central Bank Acts, 1971 to 1998, the Building Societies Act, 1989, the Trustee Savings Bank Act, 1989, the Investment Intermediaries Act, 1995, the Stock Exchange Act, 1995, the ACC Bank Act, 1992, the ICC Bank Act, 1992, legislation governing the operation of collective investment schemes (including Directives 85/611/EEC and 88/220/EEC implemented by S.I. No. 78 of 1989), and various provisions implementing EU supervisory directives. The anti-money laundering provisions of the Criminal Justice Act, 1994, include provisions that give the Bank a role in counteracting the laundering of the proceeds of drug trafficking and other criminal activity. All officers of the Bank are bound by specific domestic legislative provisions on confidentiality that derive, in the first instance, from EU law. The relevant EU Directives apply provisions on confidentiality to all supervisors of financial entities in the Community in respect of their functions under EU law.

2.6. As lead regulator for financial groups headquartered in Ireland, the Bank has ultimate supervisory authority for all of a group’s financial activities. In the case of the main Irish banks, for example, this would include their stockbroking, funds management and life assurance operations.

2.7. At the end of 1998, the Bank was responsible for the supervision of some 877 institutions. Of that number, 742 were supervised under the Investment Intermediaries Act, 1995, of which 175 were IFSC companies. The number of banks supervised was 77. In addition, a total of 1,500 funds (including sub-funds) were authorised under collective investment scheme legislation and the Bank supervised five professional bodies, three exchanges and their member firms.

2.8. The Bank’s relationship with the entities it supervises could be described within the framework of a three stage process:

- initial authorisation/licensing;

- on-site supervision; and

- off-site supervision.

2.9. The authorisation/licensing process is particularly important since this is where the regulatory relationship begins. Consequently, at the authorisation/licensing stage the Bank places strong emphasis on integrity, standing, financial soundness and proven experience. Off-site supervision includes analysis of financial returns submitted and dealing with issues as they arise and regular review meetings with senior management. On-site supervision includes carrying out inspections with a view to testing compliance with requirements generally and where specific problems arise.

Credit Institutions

2.10. In the case of credit institutions, the Central Bank has set down non-statutory criteria and standards in its Licensing and Supervision Requirements and Standards for Credit Institutions. The Bank also has power to impose formal statutory conditions on authorisation.

Investment Firms

2.11. In the case of investment firms, the legislation sets out the basic conditions that must be satisfied before an authorisation can be granted. Investment firms are subject to requirements which fall into the following categories: general and reporting requirements, financial requirements, requirements in relation to the safe keeping of client assets, advertising requirements, conduct of business requirements, and guidelines in relation to anti-money laundering. The application of these requirements is tailored to take account of the nature of the activities carried on by the authorised firm. For example, a less stringent regime is applied to certain firms whose activities are deemed to be low risk. These so-called Restricted Activity Investment Product Intermediaries are restricted by the legislation in the type of services they can provide and in relation to the institutions on whose behalf they may act. They typically act as transmitters of orders for investment products to larger investment firms from which they hold specific letters of appointment. In addition, they may not hold client money so that in their dealings with clients they do not become a debtor to those clients.

Exchanges

2.12. The Bank is responsible for the regulation of the Irish Stock Exchange and two branches of US futures exchanges, FINEX Europe and the New York Cotton Exchange. Approval and ongoing supervision of exchanges includes initial rule approval (and subsequent amendments), approval of board appointments, inspections, and trading floor surveillance.

Collective Investment Schemes

2.13. The Bank authorises and supervises a range of collective investment schemes which are subject to detailed requirements set out in a series of notices issued by the Bank. The requirements cover, inter alia, investment and borrowing restrictions and disclosure of information to investors. In authorising schemes, the Bank places emphasis on the quality of the promoter - including expertise, integrity, adequacy of financial resources, regulatory history, and standing.

2.14. Once the promoter is approved, the Bank reviews and approves the appointment of parties to the scheme, e.g. investment advisers, management/administration companies, and trustees. A detailed review is undertaken of all material documentation of the scheme, e.g., memorandum and articles of association; trust deed or partnership agreement; and management, administration and custodian agreements.

2.15. Non-Irish authorised collective investment schemes wishing to market their units in Ireland can only do so in the context of compliance with detailed requirements also laid down in the notices.

Unauthorised Investment Firms

2.16. It is an offence to act as an investment firm if the requirements of the Investment Intermediaries Act, 1995, are not complied with. Arising out of its responsibilities under the Act, the Bank has a role in the monitoring of the provision of investment business services by unauthorised firms. Where such a firm has an office in Ireland, the Bank may conduct an unannounced inspection with a view to protecting client assets and discontinuing the firm’s unauthorised operations. With regard to non-Irish companies marketing services into Ireland, the Bank places notices in the press warning the public that such a firm is not authorised. Since the granting of this power on 1 August 1998, warning notices relating to 19 such companies have been published.

Payment Systems

2.17. Part II of the Central Bank Act, 1997, provides for the regulation of the establishment and operation of payment systems in the State. Briefly, these provisions require all payment systems to be approved by the Bank. The Bank, in exercising this power, may impose conditions on approval, revoke approval, and issue directions to the relevant system or its members. In circumstances where the Bank proposes to refuse or revoke approval, an appeal may be made to the Minister for Finance.

Deposit Protection

2.18. In accordance with European law, the Bank operates a deposit protection scheme which provides a measure of protection for bank deposits. The scheme is administered by the Central Bank but funded by the banks themselves.

Investor Compensation

2.19. The Investor Compensation Act, 1998, provides a measure of protection for investors where an investment business firm is unable to return funds or securities which are legally due to the client.

2.20. An entity called The Investor Compensation Company Limited, which was specially established for the purpose by the Central Bank, has overall responsibility for providing investor compensation. The Bank is the supervisory authority and the Industry is responsible for funding compensation.

2.21. The Investor Compensation Company Limited is a company limited by guarantee. The Governor appoints the Chairman and Deputy Chairman of the Board of the Company. The Minister for Finance, with the consent of the Minister for Enterprise, Trade and Employment, nominates industry bodies to appoint board members that represent the financial services industry. The Minister for Enterprise, Trade and Employment, with the consent of the Minister for Finance, appoints an equal number of board members to represent the interests of consumers.

Accountants and Solicitors

2.22. Part VII of the Investment Intermediaries Act, 1995, provides that the Central Bank may grant approval, subject to conditions or otherwise, to a professional body to regulate the investment activities of its members as an approved professional body (e.g. the Institute of Chartered Accountants in Ireland, the Association of Chartered Certified Accountants, and the Institute of Certified Public Accountants).

2.23. Accountancy firms that are regulated by an approved professional body are not required to have an explicit authorisation from a supervisory authority to do investment business, provided such investment business arises in an incidental manner in the course of the provision of the services of an accountant. If the investment business services are not incidental, then the accountant would be committing an offence, unless authorised by the Bank under the Investment Intermediaries Act, 1995, or otherwise in compliance with that Act. The Bank is responsible for ensuring that a professional body that it approves is capable of regulating the incidental investment business of its members and to monitor and guide the activities of the approved professional body in this regard.

2.24. Solicitors with a valid practising certificate are excluded from the definition of investment business firm in the Investment Intermediaries Act, 1995, where any investment business services or investment advice that they provide are so provided in an incidental manner in the course of their professional activities. However, solicitors providing investment services, whether on an incidental or a non-incidental basis are subject to Part IV of the Investment Intermediaries Act, 1995. That Act provides that, in certain circumstances, solicitors may be brought within the scope of the Act by order of the Minister for Finance with the consent of the Minister for Justice. Where investment business services or investment advice are provided by a solicitor in a manner that is more than incidental, that solicitor must have full authorisation under Section 10 of the Investment Intermediaries Act or be otherwise compliant with the Act. To the extent that solicitors act as intermediaries for certain product producers, they must have a written appointment from the producer to whom certain obligations apply under Part IV of the Act.

Consumer Protection

2.25. Consumer protection in the regulatory structure is more developed in the area of investment services than in the area of banking supervision - a situation which largely reflects differences between investment firm and banking legislation at EU level.

2.26. The Central Bank has drawn up and imposed extensive conduct of business rules and advertising requirements for investment firms. It also maintains registers (including registers of investment firms, collective investment schemes and banks marketing into Ireland) to enable the consumer to determine which firms are authorised. In the case of both investment firms and banks, compensation schemes and deposit protection schemes (designed primarily for the protection of the small investor/depositor) are available in the event of a default by a regulated entity.

The Department of Enterprise, Trade and Employment

2.27. The Department of Enterprise, Trade and Employment has responsibility for regulating insurance companies and the legislation governing the regulation of insurance intermediaries. It is also responsible for legislation covering collective investment schemes. In addition, the Registrar of Friendly Societies and the Director of Consumer Affairs, who have a role in relation to consumer issues in the financial area, both operate under the auspices of the Department.

Insurance Supervision/Solvency

2.28. The role of the Department of Enterprise, Trade and Employment in this area is to protect insurance policyholders through supervision of the financial position of the 114 insurance companies with Head Offices in Ireland, including the business done by any branch of these companies in other EU Member States (supervision of the Irish branches of companies with Head Offices in other EU Member States is done by the supervisory authorities of these States). The Department also supervises the Irish branches of companies with Head Offices outside of the EU.

2.29. The Department also services relevant national, international, and EU meetings on insurance matters and prepares/reviews national legislation, as appropriate.

Insurance (Market Regulation)

2.30. In this context, the Department has three main roles. Firstly, the Department pursues measures to reduce the cost of insurance, particularly motor, employers’ liability and public liability insurance and seeks to ensure the availability of motor insurance, particularly for young drivers and disabled drivers. Secondly, it seeks to secure maximum transparency for members of the public in the marketing and sale of insurance products. Finally, the Department also exercises a reactive function in relation to allegations of malpractice made by members of the public against insurance providers. In summary, the role of the Department in this regard is directed at securing a competitive and transparent market for the supply of insurance products.

2.31. Although the Insurance Ombudsman service is operated as a private sector scheme by the insurance industry, the Department is increasingly involved in monitoring the operation of the scheme and liaising with the Ombudsman Council to ensure that the scheme is operated in the best interests of the consumer and that the Ombudsman is given full autonomy in discharging his/her terms of reference. The Ombudsman Council is the buffer between the Ombudsman and the Board of the Insurance Ombudsman Ireland Ltd.- the holding company for the scheme. The purpose of the Council, the majority of whose members must be independent of the insurance industry, is to provide a visible means of guaranteeing the Ombudsman’s independence. The Department also provides a service to handle insurance complaints and queries.

2.32. The Department is actively engaged in the Motor Insurance Advisory Board and it also services relevant national, international, and EU meetings on insurance matters and prepares and reviews national legislation, as appropriate. It is also responsible for policing the Minister’s powers, under Section 37 of the 1989 Insurance Act, to prescribe maximum rates of commission that insurers may pay to intermediaries.

Insurance Intermediaries

2.33. The Department of Enterprise, Trade and Employment has responsibility for legislation governing the regulation of insurance intermediaries. This is effected by way of industry self-regulation through the Irish Brokers Association (IBA) and the Insurance Intermediaries Compliance Board (IICB) under the Insurance Act, 1989.

2.34. The IICB acts for insurance undertakings in ensuring that existing and potential intermediaries for insurance undertakings comply with the appropriate legislation. The administrative tasks of ensuring an intermediary’s compliance with the Insurance Act is carried out by both IBA and IICB, who require each broker and agent to complete a compliance renewal form in October each year and carry out random spot checks on intermediaries.

2.35. Draft legislation is at an advanced stage for the allocation of responsibility for the regulation of insurance intermediaries to the Central Bank.

Consumer Protection Branch

2.36. The role of the Department of Enterprise, Trade and Employment in this area is to promote the interests of consumers through policy development and associated legislation, including certain aspects of the financial services area. The Department maintains the legislative framework for the Office of the Director of Consumer Affairs and works closely with that Office in developing policy. The Department also services EU and international consumer affairs fora and the transposition of EU directives into national legislation.

2.37. The main item of legislation administered by the Department in the financial services area is the Consumer Credit Act, 1995. The Department also administers the Consumer Information Act, 1978, which prohibits misleading advertising, including in the financial services area, and the European Communities (Misleading Advertising) Regulations, 1988, which gave effect to Council Directive 84/450/EEC on Misleading Advertising.

2.38. The Department administers the European Communities (Unfair Terms in Consumer Contracts) Regulations, 1995 (S.I. No. 27 of 1995), which prohibit the inclusion of unfair terms in consumer contracts, including financial service contracts. The Regulations, which gave effect to Council Directive 93/13/EEC on unfair terms in consumer contracts, apply to all consumer contracts concluded after 31 December, 1994.

Office of Director of Consumer Affairs

2.39. The mission statement of the Director of Consumer Affairs (DCA) is to advise, protect, and inform consumers by statutory and non-statutory means within the limitations imposed by resources.

2.40. The Director has considerable powers with regard to consumer relations with the financial services sector. The Director is also responsible for the implementation of the Consumer Information Act, 1978, and the Sale of Goods and Supply of Services Act, 1980, as well as 13 sets of regulations made to date under the Consumer Credit Act, 1995 and two further sets of regulations made under the Consumer Information Act, 1978 and the European Communities Act, 1972, which provides for the transposition of Community legislation into Irish law. The Director enforces the European Communities (Unfair Terms in Consumer Contracts) Regulations, 1995.

2.41. Every credit institution is obliged to notify the DCA of all new charges or increases in existing charges imposed by them in relation to the provision of a service to a customer.

2.42. Persons wishing to engage in the businesses of moneylending or pawnbroking must also apply for an appropriate license from the DCA. Persons wishing to engage in the businesses of being a mortgage or credit intermediary must hold the appropriate authorisation from the DCA.

Office of the Registrar of Friendly Societies

2.43. The Registrar of Friendly Societies has responsibility for the registration, general regulation and financial supervision of Credit Unions and the registration and general regulation of Friendly Societies, Industrial and Provident Societies (Co-ops), and Trade Unions. The Office of Registrar was established under the Friendly Societies Act, 1875, as amended. The Registrar carries out his functions under the Credit Union Act, 1997, the Friendly Societies Acts, 1896 to 1977, the Trade Union Acts, 1871 to 1990, and the Industrial and Provident Acts, 1893 to 1978. The Registrar also has powers under the Scientific Societies Act, 1843, the Post Office Savings Bank Acts, and the Prize Bonds scheme.

2.44. The Registrar carries out an ongoing programme of inspections of credit unions and handles complaints from members, officers, or staff of credit unions or from other interested parties about various matters relating to specific credit unions. All such complaints are investigated, either by inspection or direct dialogue with the credit union.

2.45. The Registrar’s functions in relation to friendly societies and industrial and provident societies are those of registration and general regulation.

The Pensions Board

Legislation Governing Pension Funds

2.46. It is a condition of approval by the Revenue Commissioners for private sector occupational pension schemes that the schemes be established under the status of an irrevocable trust. Management of a pension scheme’s assets by trustees is therefore subject to general trust law and, in particular, the Trustee (Authorised Investments) Act, l958. The trustees’ powers are contained in the governing trust deed and rules, which will usually outline trustees’ powers of investment. General trust law includes, inter alia, a requirement on trustees to invest the trust funds on the basis of the ‘prudent person’ rule. Under the Pensions Act, l990 (Section 59), trustees are required to "provide for the proper investment of the resources of the scheme in accordance with the rules of the scheme". The Pensions Act and its Regulations also contain limits on the extent to which self-investment and concentration of investment of scheme assets are allowable for Funding Standard purposes. Apart from such prudential restrictions, the Pensions Act and its Regulations do not prescribe how the assets of occupational pension funds should be invested (e.g. in terms of portfolio composition or investment vehicles etc.).

Operations of the Pensions Board

2.47. Under Section 10 of the Pensions Act, l990, the Pensions Board, which reports to the Minister for Social, Community, and Family Affairs, has the function, inter alia, of monitoring and supervising the operation of the Act in relation to occupational pension schemes. The Board’s regulatory approach includes relatively detailed statutory requirements. Whereas the duty of complying with the requirements of the Pensions Act rests primarily on the trustees of schemes, the Pensions Board monitors compliance, especially in regard to the Act’s provisions on the Preservation of Benefits, Funding Standard, Disclosure of Information, Trustees of Schemes, and Equal Treatment. The Board has issued codes of practice for trustees of pension schemes covering, inter alia, their responsibilities in relation to investment and custody of assets. However, it is almost universal practice for pension funds to have their assets managed by institutions that are primarily regulated elsewhere, e.g. by the Central Bank or by the Department of Enterprise, Trade, and Employment.

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