Dan Boyle (Cork South Central, Green Party)

Like previous speakers, I feel that we have not been given sufficient time to examine the Bill in detail. The original legislation was passed in 2001, some six months before dissolution of the 28th Dáil. That all too brief debate was also led by the Minister of State at the Department of Finance and responded to by spokespersons on behalf of Fine Gael and Labour. The degree of uncertainty that exists now also existed then, and there is probably a need for wider briefing on the part of the Department regarding the issues involved in this part of the financial services industry.

That said, the original legislation seems to have been enacted, and is probably now being amended, at the behest of certain financial institutions that have come to operate successfully in the international financial services sector. It seems to have been led in particular by German financial institutions seeking standard practices across Europe. This Bill appears to be a further development of that principle, seeking as it does standardisation with such countries as Australia and New Zealand.

As a concept, it deserves wider inspection. As I understand it, and as Deputy Burton has articulated, the Bill seems to give financial institutions the ability to borrow on the basis of lending in the mortgage market in particular. As we are now in an uncertain situation regarding the property market, I am unsure whether Irish mortgage-holders will be exposed or whether we are allowing international financial institutions operating from the IFSC to benefit from a standardisation of international practice.

In his opening contribution, the Minister of State highlighted that we are governed by the need to introduce certain changes owing to the EU capital requirements directive. On those grounds, not many in the House could oppose the Bill. I share Deputy Burton's concern at the number of changes being made to legislation only five and a half years old that seem to be of a very technical nature. For example, changing the word "compromise" to "include" suggests a slight flaw in the existing legislation not properly explained to us on this side of the House. In summing up, perhaps the Minister of State might explain those grounds.

The debate offers us some opportunity to comment on the state of financial services in this country. I notice that the Irish Banking Federation, representing practitioners who will have to operate under the legislation, has welcomed the Bill. On this side of the House, we will have to take that recommendation very seriously. However, we must also take cognisance of the international climate regarding hedge funds, the stock markets and the international property market in general. For instance, we should take into account the fact that last week's sneeze on the international stock markets was caused by a large number of people defaulting on property loans in the United States. With an economy strongly linked to the success of its US counterpart, that should cause Ireland concern. When discussing legislation of this nature, those concerns should be recorded.

The Financial Regulator has highlighted issues regarding 50 cases of market abuse currently being examined by his office. On the scale of things, that might not be too serious, since he has publicly stated his underlying suspicion that one in every four transactions on the London Stock Exchange is an example of insider trading. When world stock markets are in such a state of flux and we pass legislation relating to financial services, the House must take such matters into account. It is unfortunate that we have not had the opportunity of a longer lead-in time with more detailed examination of the Bill.

The Financial Regulator is now the watchdog for 10,000 financial institutions in Ireland, a fairly frightening figure. Everyone in the House will accept that the job is largely being done well by the body, but there are questions, given the large number of institutions being overseen. Are we getting the resources right? Deputy Bruton asked whether we were getting the balance right between appropriate legislation and regulation that might be stifling. We could have gone into that in greater detail in this debate.

The recent G7 meeting of Heads of Government, of which Ireland is a participant only through the President of the European Commission, recorded unhappiness regarding hedge funds. I do not know whether the Minister believes in international regulation of that market, and the Minister of State may not be able to respond on the growing international apprehension regarding the prevalence and insidiousness of many such funds. I believe that we are getting the balance right in Ireland, but there has been unfavourable comment in recent years to the extent that, without the appropriate level of transparency and regulation in its financial services, Ireland risks being considered akin to the Cayman Islands in international circles. We cannot allow such comments to go unchallenged.

The concept behind this Bill is the German one of Pfandbriefe. Perhaps Irish financial services are now subject to that degree of international scrutiny — ironically, by German political figures on the basis of Schadenfreude. Irish financial services have become more successful over the past three years, and we must present that in the best possible legislative light. If this Bill helps us do so, the Green Party is prepared to support it. However, caveats have been entered by other speakers regarding the need to deal with the legislation properly and have a longer lead-in time. On this occasion, the Government has not allowed us proper consideration.

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