Richard Bruton (Dublin North Central, Fine Gael)

This view must be roundly rejected. We need transformative change in our banking system to give a sound platform for rebuilding our economy and we do not yet have that. We need power to hold people properly to account including by the Oireachtas. The Minister is still proposing to appoint the board of the Central Bank of Ireland in the same way as it was always appointed. We know that it became far too cosy. The relationships between the Department of Finance and the board of the Central Bank of Ireland and the regulatory system was too cosy, too comfortable and too close to the banking system. We do not see any proposal that would show we are now taking a completely different approach to this.

There still seems to be within the Department a belief, shared by the Minister that, as far as banking policy is concerned, they do not have to come forward with any evidence-based material as to why we need to implement the changes we are proposing. The Minister has done this in respect of many of the other elements of his banking solution. He has not tested the evidence and has not offered evidence to the House. As we debated last week, the onus is on the Minster and his officials to show that keeping the likes of Anglo Irish Bank and Irish Nationwide Building Society as going concerns is in the taxpayers' interest, even when the cost of doing so has escalated from €5 billion to probably €30 billion at this stage. The onus is on the Minister and his Department and advisers to lay that out for the House. Let us test it. Like doubting Thomas, let us put our fingers into the hole to see if we are satisfied.

The Minister comes to this debate with no evidence to suggest the architecture of the regulatory structure we had in place or the fact of twin boards was responsible. There is no evidence offered by the Department or in the Minister's speech as to why that was the case.

The one issue that was central on the last occasion was the debate as to whether consumer protection should be married with prudential oversight, and many on this side of the House argued that those two aspects should not be married. Professor Ray Kinsella, whom the Minister knows well, very cogently pointed out that they are completely different functions, work to different timescales, require different skills and have different purposes in mind. One is about protecting the consumer and the other is about protecting the prudential robustness of the bank. Yet, the Minister comes back with this legislation which keeps them married together. He is still locating consumer protection in the new Central Bank Commission and the only elements he is migrating are the education elements. He is still keeping married together the areas that were hotly debated in regard to the previous regime.

One would have to say that the evidence supports Professor Kinsella's forecast that when they are married together, both are poorly served, and it supports Professor Kinsella's view that prudential oversight was weakened by the consumer responsibility, which the Minister insists will still stay with the banking commission whereas, as we now see, consumer protection is being completely dumped. There is virtually no talk in this whole banking debate about how we will protect consumers who were sold bum mortgages and who are over-extended. That debate is for another day. Some 18 months into the debate, the Minister has some commission working on it and we have not yet seen the timeframe for its work.

This legislation is poorly constructed because we do not have the results of an inquiry or investigation in order that we would have a firm grip of what it is we want to deliver in the new regime and new culture that will occupy banking, and the new oversight that this will involve. The Minister needs to think further on this issue.

I looked back at the Second Stage debate in 2002. I tabled a reasoned amendment, which stated that:

"Dáil Éireann declines to give the Central Bank and Financial Services Authority of Ireland Bill, 2002, a Second Reading for at least three months until

(a) a full assessment of best practice in regulatory supervision has been undertaken, which takes into account the lessons of recent regulatory failures (including the lessons of Enron and Allfirst) [which were current at that time]; and

(b) a full assessment of best practice in providing consumer protection in relation to financial services has been undertaken;

and the proposed merger of consumer protection and prudential regulation into a single Regulatory Agency can be viewed against best practice requirements identified by those assessments.".

Those reasoned amendments for the last Bill were proved right and I tabled virtually the same amendments to this Bill. We have not carried out the assessment of best practice and we are still insisting, without any evidence from the Department of Finance, that consumer protection should remain married to prudential regulation, and that one can serve both those purposes adequately in the way the Minister sets out.

I regret to say this legislation is half-baked and ought to be withdrawn. Nonetheless, there are some elements of it which I would consider worth supporting, such as the new power for the regulator in regard to the fitness and probity of individuals occupying positions in the bank. Such a power would be useful to introduce immediately. However, I do not believe we should lumber the bedding down of the architecture for the Central Bank system because we want to make one piece of new power available to the regulator.

Equally, I welcome the Minster's proposals for the credit unions. That aspect has been pinching many credit unions who can help people in the present crisis and I welcome the Minister's suggestion that this would be relaxed. However, we have to divorce the emergency powers, if they are such, that the Minister wants to introduce to deal with the immediate and pressing task of regulation and managing credit unions from the bedding down in a permanent way of architecture that has not been stress-tested in the heat of a genuine investigation of what went wrong and an attempt to make people accountable. If this system fails to make people accountable, we will have to revisit this whole debate again. If we cannot enforce sanctions under the present legislation, we should not be bedding down something that assumes we have got that right.

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