Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I have a lengthy speaking note which I will deliver for the Deputy.

Part 2 of the Bill provides a new power for the Central Bank to require financial service providers to commission and submit to it an independent and objective report. The Central Bank has significant information gathering powers which are being further enhanced under the Bill, given the central importance of information to the business of regulation. Part 2 creates a new way to collect information and insights on financial service providers. The new power is an additional tool for the Central Bank to supervise entities and not something which is intended or has the capacity to take the place of direct regulatory oversight such as authorised officer powers. The provision is modelled on the regime that has operated in the UK financial system in the past decade, with some modifications to ensure it is used in a balanced and proportionate way.

The proposed reports are not a substitute for direct supervision by the Central Bank and it is not intended that they would be used without regard to their necessity and the associated cost burden on firms. The reports may be used for a variety of purposes, including a review of controls over data security; controls to prevent money laundering; the adequacy of systems and controls, corporate governance, senior management, compliance and risk management arrangements; fair customer treatment; market abuse and capital adequacy. A key aspect of the provision is to ensure there is confidence in the analysis and its objectivity, which includes avoiding client bias. In examining the most suitable approach a number of models were considered, including having the Central Bank undertake its own analysis, getting the financial service provider to work with a reviewer of the Central Bank's choosing or providing for the financial service provider to nominate a reviewer, subject to Central Bank approval. The third approach was chosen and is reflected in the Bill for the reasons I will set out.

The Central Bank already has extensive powers to gather information, prepare analysis and produce its own reports directly. These powers are further enhanced through the information gathering and authorised officer powers provided for in the Bill.