Kieran O'Donnell (Fine Gael) | Oireachtas source

I have a few brief questions. To follow up on the regulation of both the service agents in the country and the funds, from my perspective, the name "funds" is a bit of a misnomer for many of these funds. They borrow from funds in American and they then invest in the Irish market. They are not funds; they are basically loan sharks, which are 100% geared. They come into the Irish market. Some of them are funds, and some of them are based here and some of them are based abroad.

In the opening statement provided to the committee, the Governor made reference to:

foreign capital flows into the commercial property market that are the result of the global search for yield in the current low interest rate environment are vulnerable to a sudden stop or even a sharp reversal should there be an adverse shift in global financing conditions. In turn, this could generate disorderly property market price reversals.

I have two questions on that. I understand the type of regulation the Central Bank does of these service providers is effectively desktop based. I would have thought these service providers should be required to make returns to the Central Bank. It regulates them, therefore, I assume they deal with most of the restructuring. They should be making returns to the Central Bank like any other institution regarding what they are putting in place. I would have thought the Central Bank should have had people physically out conducting audits, as would happen with any other normal institution. I understand the Central Bank does not regard them as material in terms of their individual size relative to larger institutions when in fact they could be quite significant.

From my perspective, their current footprint is quite astounding. I am based in Limerick city and these funds are involved in most of the developments, ranging from housing estates, commercial developments to apartments, taking place there. Does the Governor have a concern about stability in terms of that property creep? We are talking about regulating these entities. I would have thought there is sufficient provision in terms of the powers the Central Bank has over the service providers to get that level of information, and to heavily regulate them in the same way that it regulates the other financial institutions or even more so because of the threat they may pose to the stability of property market.

Another issue I have found is that many of these funds are appointing receivers. They may have typically bought a fund from someone else, a bank or from the National Asset Management Agency, NAMA, and then they suddenly appoint a receiver. What powers does the Central Bank have over the receiver? Could a fund, which is in some way regulated through the service provider, suddenly appoint a receiver to call in the loans it has in order to sell a large amount of property, and by doing that, would they be bypassing any form of regulation?

There is a looseness in the regulation of such service providers that is within the power of the Central Bank to address in a more prudential-----