Brian Lenihan Jnr (Dublin West, Fianna Fail)

I will start working on a common purpose.

Deputy Burton commented on the position of consumers under the new system. I share the Deputy's concern that consumers were not always best served under the old arrangements and change is needed. The Bill makes a number of important changes to integrate the protection of consumers of financial services into the Central Bank's core functions and into its reporting responsibilities, including the requirement to set up an advisory group on consumer interests. I am open to further suggestions from Deputies on how we can ensure that financial regulation better protects consumers, especially those who are more vulnerable to mis-selling of unsuitable financial products.

The Deputy can take comfort from the Financial Regulator's statement before the joint committee that consumer protection remains a top priority in the new regulatory structure. In the coming year, the consumer protection code and minimum competency requirements are to be reviewed and the regulator's team is moving immediately to ensure that the backlog of overcharging cases is resolved more quickly.

Deputies also raised the need for a full investigation to provide a deeper understanding of the root causes of the systemic failure in our banking system. The Government has committed to the establishment of a statutory commission to report by the end of the year and, as Deputies will be aware, the two preliminary investigations are due to be completed before the end of this month. At the same time, other investigations by the Office of the Director of Corporate Enforcement and the Garda are underway; for obvious reasons, I do not propose to comment on these.

On the question of whether holders of influential offices in financial institutions are well qualified or indeed fit to occupy their positions, I re-emphasise what I said at the start of this debate. A key element of this Bill is the introduction of new powers for the bank to ensure the fitness and probity of nominees to key positions, including, where necessary, the holding of screening interviews with job candidates. Such is the importance of the new provisions that I decided to include them in the present Bill rather than waiting for the next Bill, which will deal with regulatory functions and powers and will take into account decisions that are awaited at European level.

Deputy Sherlock raised concerns about the implementation of changes arising from the amendment to section 35 of the Credit Union Act 1997 which is provided for in the Bill. The Deputy was in error in a number of his statements. The policy decisions with regard to the changes proposed are matters decided by Government. The Registrar of Credit Unions does not make policy. There have been extensive consultations on the section 35 proposals. The amendments contained in the Bill enable the registrar to impose requirements on credit unions with regard to their lending practices. These include making provision for bad and doubtful debt, having a certain level of liquidity, and controls and reporting requirements.

I have already assured the House that the Registrar of Credit Unions will adopt a balanced and proportionate approach to the application of the loan provisioning requirements which are proposed. In addition, transitional arrangements will be operated by the registrar, which will help ease the position for credit unions in the current financial year and the next financial year ending in September 2011. They will also allow time for credit unions to adjust to the new regime. There is a balance to be struck between meeting members' needs to reschedule loans and ensuring the stability of the credit union sector overall. It is in the interests of every credit union in the country that the stability of the sector is safeguarded. The proposals being brought forward in connection with the Bill will achieve this fundamental aim.

During the debate, conflicting claims were made about the pace of legislative reform.

Deputy Upton appeared to suggest we were moving too slowly but, on the other hand, Deputy Kehoe claimed we are moving a little too fast. In these circumstances, I suggest to the House that the Government must be getting the balance on this issue just about right.

The Central Bank recently announced a public consultation process on new corporate governance standards for banks and insurance companies. The paper sets out minimum requirements as to how banks and insurance companies should organise the governance of their institutions, including membership of the board of directors, the role of the chairman and the operation of various board committees. It is proposed that the requirements will apply to all credit institutions and insurers licensed or authorised by the regulator, including Irish licensed and authorised subsidiaries of international financial services groups. My Department will examine the question of additional powers for the bank to introduce corporate governance requirements. This will be done in the context of the second Bill on financial regulatory reform which, as I said in my opening speech, will be brought forward in the autumn.

The absence of a role for the Oireachtas in the appointment of members of the proposed Central Bank commission or other senior positions within the new institutions was raised during the debate. I ask Deputies to consider the proposition that the Executive, answerable for its actions to the Oireachtas and ultimately to the people, should retain the primary responsibility in this regard.

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