16 April 2002

Irish Financial Services Regulatory Authority

The Minister for Finance, Mr. Charlie McCreevy,T.D., welcomes the publication today of the Central Bank and Financial Services Authority of Ireland Bill 2002.He also wishes to announce the appointment of an Interim Board to manage the transition to the new regulatory arrangements

The Chairman of the Interim Board will be Mr. Brian Patterson. Mr. Patterson is former Chief Executive Officer of Wedgwood, a division of Waterford Wedgwood Plc. and a former Director General of the Irish Management Institute. The other members of the Interim Board will be:

•         Mr. Alan Ashe, former Managing Director, Standard Life Assurance Co.
•         Mr. Friedhelm Danz, Company Chairman.
•         Mr. Gerard Danaher, Senior Counsel.
•         Mr. John Dunne, former Director General of the Irish Business and Employers Confederation( IBEC).
•         Mr. Jim Farrell, Director of Funding and Debt Management, National Treasury Management Agency.
•         Ms. Deirdre Purcell, Journalist; member of the Council of the Credit Institutions’ Ombudsman.
•         Mr. Dermot Quigley, former Chairman of the Revenue Commissioners. 

The Bill is a major piece of legislation.The main purpose of the Bill is to provide for the coordination of the ESCB-related functions of the Central Bank and the functions of a single regulatory authority for financial services to be carried out within the overall structure of the‘Central Bank and Financial Services Authority of Ireland’ chaired by the Governor, as signaled by the Minister and the Tánaiste on 20 February 2001

The structure provided for in this Bill differs slightly from the structure originally envisaged by the Government.In particular, the Bill now provides for a monetary committee, rather than a separate monetary authority within the Board of the Central Bank and Financial Services Authority of Ireland.

Irish Financial Services Regulatory Authority (IFSRA)

This Bill will: -

• establish a new entity – the Irish FinancialServices Regulatory Authority – to manage the supervision of financial institutions in Ireland: this entity will operate within the Central Bank of Ireland’s legal structure, but will have its own Chief Executive, Chairperson and Board with independent functions.(The title of the Central Bank of Ireland will change to reflect the new structure – it will become the Central Bank and Financial Services Authority of Ireland).The Chief Executive, Chairperson and some board members of IFSRA will also be represented on the Central Bank and Financial Services Authority of Ireland Board;
• bring together into a single location the supervision of the major sectors of the financial services industry:in particular, supervision of insurance undertakings will now be carried out by the same institution as the supervision of banks and the funds industry;
• place added emphasis within the supervisory structure on the consumer interest: a new position of Consumer Director will be established. The Consumer Director will take on the current powers of the Director of Consumer Affairs in relation to financial institutions.The Consumer Director will also be a full member of the Board of IFSRA, and will monitor the provision of financial services to consumers.This will put consumer issues at the heart of financial services regulation.For the first time in Ireland the two functions of prudential regulation and consumer protection come together as a service to the public;
• allow for the continuation of Ireland as an attractive and soundly regulated location for the financial services industry;
• allow for the increasingly complex and interrelated sectors of the financial services industry to be regulated in Ireland on a coordinated and integrated basis;
• allow for the continued close coordination of financial services regulation and overall monetary and financial stability policies, in the public interest;
• ensure theongoing interchange of ideas and personnel between operational, monetary and regulatory functions within the Central Bank and Financial Services Authority of Ireland
• establish a position of Registrar of Credit Unions within the overall structure.The Registrar of Credit Unions will act as the principal regulator of the credit union system (a role currently held by the Registrar of Friendly Societies) subject as appropriate to guidelines from the IFSRA Board. 

Interim Board

It is intended that the Interim Board will become the Board of IFSRA on its establishment. The appointment of the Interim Board will allow important work towards ensuring a smooth transition to the new arrangements to take place as soon as possible.The role of the Interim Board will include the selection of a Chief Executive for IFSRA and assisting the Ministers concerned, the Central Bank and the Chief Executive- designate in preparing for the establishment of IFSRA.

Consultation with the European Central Bank (ECB)

Under European law, the Government is required to consult the European Central Bank on legislation of this type.The ECB is therefore being consulted formally in accordance with the relevant provisions

Additional Bill

The Minister also wishes to announce that it is intended to prepare and publish another Bill in the second half of the year. This second Bill will implement other recommendations contained in the McDowell Report, such as the establishment of a statutory financial services ombudsman and of consultative panels of the financial services industry and of consumers.It will also address issues arising from the recommendations of the Report of the Review Group on Auditing and provisions for the revision of Section 16 of the Central Bank Act, 1989, dealing with confidentiality of Central Bank information.

The Minister for Finance, Mr. Charlie McCreevy, T.D. said, “I am delighted to be in a position to publish this very important Bill.I believe that Ireland should provide a flexible and responsive regulatory system to the financial sector, and that this Bill can deliver the appropriate structure for that.I also believe that it is in the interests of both the customers of financial institutions and the financial institutions themselves that consumer issues be brought into the heart of financial regulation, and this Bill will also achieve that end.I would like to extend my congratulations to Mr. Brian Patterson and the new Interim Board.They have some very important work to do in preparing for the establishment of IFSRA, and I wish them well.”

Welcoming the publication of the Bill, the Tánaiste and Minister for Enterprise, Trade and Employment, Ms. Mary Harney, T.D. said,"The establishment of the Irish Financial Services Regulatory Authority will represent the most far reaching reform in financial service regulation in this country.; It will demonstrate nationally and internationally this Government's commitment to ensuring that Ireland has the highest standard of financial regulation and consumer protection. This Government wants the new regulator to be responsive to the needs of both industry and the consumer.I am confident we are giving it the independence to achieve this".

ENDS

Click here for PDF version of the Bill

Click here for PDF version of the Act