Brian Cowen (Laois-Offaly, Fianna Fail)

Those companies were subject to regulation. The problem arose from the particular model they were utilising at a time when the inter-bank markets became illliquid. In a situation such as Deputy Bruton cites, the fundamental business of a bank remains in operation, it continues to do business and can trade its way out of difficulties. It was the failure to have access to funds, based on the model they were using, rather than any fundamental reason that caused the recent problem. There was not a business failure. There was no question of people being left out of funds. Where there is such an aggressive model, a financial regulator — as in the recent case in the UK — needs to know exactly what the situation is and whether a problem could be overcome if one arose. The turbulence in financial markets which caused the recent problem was so swift and widespread that it caused an unforeseeable situation to develop. That is a separate issue. The prudential question does not arise in that respect.

This section gives the Financial Regulator the necessary power to enable him to deal with any situation which might arise, although not in operations which take deposits from the public. That is the general point being made. These provisions are drawn from the experience of the Investment Intermediaries Act 1995 etcetera. The Financial Regulator is being provided with the means by which he can deal with these matters. The fact that they come under the regulatory framework and must, therefore, come under the consumer protection code and have authorisations and registrations means the Financial Regulator can, in coming to his decisions, obtain the information he needs to satisfy himself that these are entities which should be authorised on the basis they have a reputable business model to pursue.

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