Martin Mansergh (Fianna Fail)

I welcome the Minister and wish him a happy Bloomsday. Ulysses has references to a number of financial scandals, one of which Senator Ross might be aware. Joyce referred to the name Dubedat, and Dubedat was a stockbroker in the 1880s. He used clients' funds to build a large house in Killiney that was recently put on the market, albeit refurbished, for approximately €8 million. One day it collapsed so he headed for South Africa and acquired an exotic partner having deserted his wife. The House will be reassured to hear that when he came back he spent a few years in prison. The only reason it comes to my mind is that when I am in Dublin I live in the house in Killiney that was built for the deserted wife.

Disappearing with clients' funds is an extreme example of the dangers that have to be faced. A good regulatory system should stop practices that lead to that. There is still a certain amount of anecdotal evidence that the cash flow generated from clients' funds is used purely for private purposes. That is an extremely dangerous practice and we have seen far more recent examples of it since the 1880s.

There are two angles to this issue, one of which is domestic while the other centres on international financial services. As clients of banks, credit institutions and so on, we all have an interest in their regulation. Equally, the international financial services sector is very important to this economy. It employs approximately 16,000 people. The continued good regulation and operation of that sector is important, not only for the employment it provides, but also for the irreplaceable revenues that it generates for the Exchequer.

It has not been explicitly stated by the Minister of State in his speech to the House nor in the debate that took place in the other House that this legislation is a product of a consensus following a lengthy consultation process. The financial institutions and the various consumer interests are reasonably happy with it. Its genesis was in the McDowell report which took some time to put together and on which it took even more time to get a Government decision.

On the domestic front, we have unfortunately moved away from an age of innocence which existed 40 or 50 years ago, where people trusted the financial advice given to them and respected the bank as a figure of authority. As the country has become more prosperous, people are looking for places to put their savings. There is a variety of financial instruments including investment funds and pension funds. The ordinary person has some difficulty distinguishing between what is good and what is not. Confidence is not increased when instances occur of overcharging, loaded advice and the recommendation of duff funds, which depreciate a few years later and which will provide a miserable pension, notwithstanding the glowing terms in which they were sold. We have seen recent examples of favouritism with the placing of investments by insider privilege groups in institutions while the ordinary customer just gets the leavings. At worst it reminds me of the song of the master of the house in Les Miserables, who takes a little slice here, a little slice there and a little slice everywhere.

Products are peddled without the integrity one might expect. People feel that they are in a situation of caveat emptor rather than one where they can place trust in the advice given. It is a good thing that people ask questions and have become more critical. In the case of offshore accounts, we have seen instances where people were led up the garden path. I am not denying personal responsibility. However, some people who put their faith in the advice they were given found, when they were the victims, that the people who had advised them were nowhere to be seen.

The appointment of an ombudsman will help establish more trust in the system. If a dispute or complaint about a product is not resolved there will be a recourse to the ombudsman and if patterns of difficulty emerge the regulator can take consequential action. It is a good thing that the regulator will be advised by both consumers and industry and that accountability will be required. The point was made validly in the other House that when a new office is established the officer concerned should be accountable to the Oireachtas. It should not be within such an officer's discretion to refuse to appear at an Oireachtas committee.

I also welcome the fact that the regulator will have power to direct the refund of a charge incorrectly applied. We have seen instances of that in the very recent past. I also welcome the fact that it will be an offence for a financial institution to levy a charge, often without the knowledge of an account holder, which has not been notified to and authorised by the regulator.

The bureaux de change provision has particular significance in the Northern context but also in a wider international context. This is something which needs to be properly controlled.

The Minister of State evoked debates, which I well remember, about the collapse of PMPA and ICI. Fortunately, we have not had similar repetitions since but one can never be certain, either in good times or bad, that situations might not arise which would have to be dealt with.

Despite contrary recommendations, I agree with the decision that the Minister should retain the power for mergers and acquisitions of banks. That provision is of potential major public interest and it is important that the Minister retain this responsibility. Ministers need to be careful about divesting themselves of too many powers so that if some major crisis happens they are entirely powerless to affect or influence the situation.

May I correct an underlying assumption in what Senator John Phelan said? He said it was important that the panel contain the brightest and best rather than party political nominees. The implicit assumption of that is that a party political nominee must be the dimmest and worst.