Sean Barrett (Independent) | Oireachtas source

I welcome Professor Honohan to the meeting. He stated he is helping to promote a better culture to help consumers have more confidence in financial services. As a member of the committee I must say we do not have much confidence in financial services. It is a landscape of bankrupt banks across the board.

Professor Honohan listed the new design features which are being put in place retrospectively, which include a best practice regulatory supervisory toolkit, effective and efficient decision-making procedures and top-notch risk assessment. However, it is a fact that his predecessors did not do this, which is why we walked into a currency which is so badly designed and which has raised unemployment from 4% to 14.8% and debt to 125% of GDP.

Professor Honohan's predecessors at the Central Bank stand indicted for sleepwalking into the single currency, unlike the Treasury in the UK which applied tests as to whether it was sensibly based. We found out at 42% of the total debt that it was a badly designed system. I know the Central Bank is improving its level of economic expertise but this has an element of the stable door being shut after the horse has bolted. People outside the Central Bank and the Department of Finance stated those consequences could have been predicted from all of the design faults of the single currency which we have now found and which we are trying to address. The Department of Finance and the Central Bank need the level of economic expertise we are retrospectively bringing there but it is a major flaw in how we got into this situation.

With regard to confidence in financial services, the PTSB announced a very large increase in lending. Did it ask the Central Bank about this? This is how it started before. Anglo Irish Bank was not supervised adequately by Professor Honohan's predecessors. If the PTSB goes on a large spending spree do we know whether other banks will cut back so it will be accommodated within a sensible level of lending in the Irish economy?

In response to Deputy Boyd Barrett, Professor Honohan referred to the compliant legal structure. A financial service which is increasingly getting outside people's ability to afford is health insurance. On 29 September 2011 the European Court of Justice stated the VHI continues to carry out its business without having received authorisation from the Financial Regulator, namely, the Central Bank. We have had the Minister for Health owning a health insurance company and regulating the sector, while the European Court of Justice has stated it is the task of the Central Bank and I support this view. A report published by the Commission last week stated the health sector in Ireland is a major source of inefficiencies in the public finances and in the lack of competitiveness.

Should we not be compliant with the European court's instructions and will the witness advise the Minister for Health on the matter? Professor Honohan is the financial regulator.

There is a report due on stockbrokers and there was malpractice in the area. People also lack confidence in pension fund financial services, and pension funds seem to operate by adding extra years and accumulating vast debts, which worries people. It seems strange that the area is regulated by the Department of Social Welfare and not the Central Bank. It is a financial service which has directors trading while insolvent, as there are €700 million or €800 million in debts in some pension funds. As we try to change the financial landscape, including health insurance, stocks, pension funds and accountancy, how can we get a respectable financial landscape?

Accountants have been known to move money between banks at 11.50 p.m. one day, with it recorded as being in the account all year, before moving it out again at 12.10 a.m. the following day. That reflects badly on Ireland's standing. I do not know who is supposed to regulate accountants but we are into our fifth year since such malpractice became evident and nobody has been charged or gone to jail because of them. Tidying our financial landscape requires a dynamism which has not been there in the past, although I know the witness is trying to introduce it. There has been much malpractice and Ireland does not present a very attractive financial landscape; one could say the financial landscape has contributed to mass unemployment and significant debt burden. Much more tidying is required in that field.

I will support Professor Honohan in anything he can do to bring this about. The financial sector caused this crisis in the Irish economy and it urgently requires tidying. I thank the Chairman and Professor Honohan.