Michael Ahern (Cork East, Fianna Fail)

In 1998, the Joint Committee on Finance and the Public Service published a report on the review of banking policy on foot of allegations relating to certain sectors of the commercial banking sector in Ireland about possible tax evasion in overseas or offshore bank accounts and about undisclosed overcharging or loading of customers. Another report was published that year by the committee chaired by Michael McDowell that recommended a division of responsibilities between the Central Bank and the regulatory authority. It reached the same conclusion as the joint committee.

In 2002, legislation was introduced to establish the Financial Regulator on 1 May 2003, following a Government decision to set up the Central Bank of Ireland as a central bank and financial services authority. The structure combined two distinct components, the Central Bank and the Financial Regulator, each with its own set of responsibilities and governance structure. The responsibilities of the Central Bank included surveillance of the strengths and vulnerabilities of the overall economy and the financial system.

We listened in the past number of years at the Joint Committee on Finance and the Public Service as officials from the Central Bank told us everything was rosy in the garden and if anything went wrong with the world banking system, we were fine. A number of the reports from the former Governor of the Central Bank, Mr. John Hurley, carried warnings in the forwards but, overall, the impression given to the world was that our system could withstand any problems likely to arise. We have seen the result when those problems did arise. The Central Bank had not done its job as effectively as it should have.

The other side of the coin is the Financial Regulator. The regulator's remit included, and includes still, the monitoring of the financial soundness of individual institutions in addition to wide-ranging consumer protection powers. The question we must ask is if it did its job effectively and efficiently. It is clear it did not. We need merely look at the situation all the banks and financial institutions in the country are in today and what the Government has had to do to clear up the mess.

The volcanic events in financial institutions over recent years have resulted in a review of the Central Bank and IFSRA's functions. The Bill before us was signalled by the Minister for Finance in his budget speech on 7 April 2009 when he stated that the role of the Central Bank of Ireland will be reformed to place it at the centre of financial supervision and financial stability oversight, providing for full integration and co-ordination of the prudential supervision and stability of the individual institutions with that of the financial system as a whole. The Central Bank of Ireland will in future be headed by a commission chaired by the Governor.

The problems that arose in the old situation brought about these decisions. The Minister outlined that the Bill is the first of a three stage legislation programme that will create a new and fully integrated structure for financial regulation, enhance the powers and functions of the Central Bank and consolidate existing legislation. In these troubled times, the Government must ensure the maintenance of the stability of the financial system, the effective and efficient supervision of the financial institutions and market and the safeguarding of the interests of consumers and investors.

At present, due to current and past actions, appointments in the financial institutions and the banks have been met with a degree of cynicism, rage and anger in the public arena. This has led to a lack of confidence in the banks and a lack of trust in them that they can provide services for the public that are vital to get our economy functioning again.

Events in the past couple of days related to pension provision has not helped one bit in getting us moving in the right direction. I join colleagues on all sides of the House in calling on those involved to look at the situation again to see if they can undo the undermining of confidence that has been caused by those actions.

I welcome the provision of new powers to be exercised by the Central Bank in order to ensure the fitness and probity of nominees to key positions within the financial service providers, and of key officeholders within those providers. This initiative will help to restore confidence in the management of the institutions, both at home and in international markets.

I also welcome the provision regarding the laying of annual statements on regulatory performance before the Houses of the Oireachtas and especially that these will be subject to regular international peer review. I believe it is important, in a small nation such as ours, that there should be outside independent individual bodies reviewing our systems every now again to ensure everything is kept above board. It is a fact of life that ours is a small country. People come from the same colleges and backgrounds and there may be a certain amount of questionability about certain decisions, not because of anything found but because people know each other and take the word of those they know instead of looking at an issue in the cold light of day and making decisions on the facts and figures before them. I also welcome the fact that the relevant Oireachtas committee will be able to call the Governor of the Central Bank and the heads of functions before it to examine them on performance statements.

Another section of the Bill about which there have been queries concerns the transfer of functions and responsibilities for consumer information and education from the Financial Regulator to the National Consumer Agency. In my view that is where they should be in any case and I welcome the decision. A Deputy stated that decisions had been taken to date which have met with international approval from the IMF, the Financial Times, The Wall Street Journal, The Economist and Moody's credit agency. All these decisions have been successful for our country and to have them acclaimed by such bodies is vitally important for our ability to get funds from abroad. For a person on the Opposition - or anybody - to say, in effect, that it is only a joke that these people support what we are doing in this country does not do service to the growth and renewal of our economy.

A comment was made about auditors to the effect that they are merely leased by their own organisations. In 2003, when I was Minister for Trade and Commerce, there was legislation to bring into being the Irish Auditing and Accounting Supervisory Authority, IAASA. This is an independent outside body which is looking at the activities of accountancy firms in respect of the current problems that arise in all our institutions. It will take a fair course of action against any auditing body which can be shown not to have done its job.

This Bill is a start in terms of getting our regulatory system back to main stream and, with support from all sides of the House, it should ensure that in years to come we will have a regulatory system that will work and be true, fair and effective.

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