The Tanaiste, Mary Harney, has confirmed that the Government is now set to make a decision on the Single Regulatory Authority. Speaking at a reception to launch the South African IFSC company, Gensec Ireland, she indicated that she and the Minister for Finance were about to resolve their differences on the issue and that a decision was ‘imminent’.
Ms Harney said that despite perseptions of her ‘very great friendship’ with Mr McCreevy, she and he had disagreed over some matters, but now was the time to move. She indicated that while institutional matters were important, there would have to be changes in the way financial services were regulated. Speaking to a largely IFSC audience, she said that regulation should be ‘as low as possible, effective and appropriate.’
It is now 16 months since the McDowell report was published recommending the establishment of a ‘greenfield’ new regulator. The chances of the removal of the Central Bank from a new institutional arrangement for financial regulation are now thought to be low. A compromise structure such as the one briefly mentioned in the McDowell report is seen as the most likely.
Leading managers in the financial services industry have become increasingly less sanguine about the effect of no decision and their view has been communicated to the politicians involved. Ms Harney confirmed that there had been considerable number of representations made on the issue since the McDowell report was published.
A key issue in the decision on financial regulation is how the decision will deliver on the expectation of a new culture and approach to financial services regulation with an increased emphasis on consumer protection.
A key factor in the Government’s decision is the need to nominate the successor to the present Governor of the Central Bank, Maurice O’Connell, who is due to retire at the end of April next year. Appointing Mr O’Connell’s successor in the absence of clarity on the structure of the single regulator would be very difficult.
It is also an open question whether the head of regulation will be the person who, as Governor of the Central Bank, is a member of the Governing Council of the European Central Bank. The McDowell report envisaged at least one new senior appointee, within the regulatory authority, with a consumer protection mandate.
At issue is whether the precedent of appointing a senior personage from the Department of Finance will be followed. In recent months, the appointments of the Head of the Competition Authority and the Director of Corporate Enforcement have been by advertised competition. Both these positions were under Mary Harney’s Department of Enterprise, Trade and Employment and it may be that that newer precedent will be followed.
Industry sources say any new appointee, whether as Governor or not, will be crucial. They say he or she should be highly-regarded for his or her regulatory experience, ideally would have some private sector and international experience, should bring a developmental approach, and should be capable of instilling confidence among regulatory staff while projecting a strong ‘new broom’ and consumer protection image. Sources acknowledge that few people would meet the bill, but believe that a wide ‘and imaginative’ search could yield the right candidate. |
