Feargal Quinn (Independent)

The approach has clearly paid off, and it continues to pay off today. That is why we must remember those days and the activities and need to get things done rather than putting them on the long finger. It is for that reason that I welcome the Bill, the Minister of State and the work that his officials have put into what is before us today. Financial services are a fast-evolving industry, with new products being created all the time. To stay competitive, we must ensure that our legislation keeps abreast of that innovation.

However, there is another aspect that we must not forget, namely, the need to regulate all those new activities effectively. In general, I am against too much regulation, especially regulation with which it is difficult and expensive for law-abiding businesses to comply. That is a challenge, since we heard Senator Coghlan touch on some aspects of the legislation introduced last year. I know the Minister listened very carefully during the passage of that legislation and accepted some amendments, although not as many as some of us might have liked.

I recently agreed to become chairman of a new IBEC-sponsored committee called "Sensible Rules". That group has the purpose of encouraging the Government, which has welcomed us, to carry out in a sensible manner the regulatory reform that we need so badly. The better regulation introduced in Britain, with a report issued last year in Ireland, has exactly the right kinds of steps, so the concept, ideas and commitment are there. We hope to pursue that and encourage the Government in that area. That is why I was interested to read a speech by the chief executive of the financial regulator, IFSRA, at a conference in Dublin last week which I am sure many Senators, along with the Minister of State and his officials, will have read. In that speech, he expressed a preference for what he called "principles-based regulation" as opposed to "rules-based regulation". It was very interesting to hear it described in that way. Like most people, I favour that approach, and I am sure the Minister of State will too.

An example the chief executive gave of the difference between the two was how capital gains are treated for taxation purposes in Canada and Hong Kong. In Canada, they have a long list of rules that accountants spend vast amounts of energy seeking to get around using technicalities. In Hong Kong, on the other hand, they have no rules at all. They simply state the general principle that revenue should not be transferred from income to capital gains or vice versa simply to avoid paying tax. It seems that the Hong Kong approach is far better in bringing about compliance. As I say, I support that approach, and I believe that in general the State does too. I support IFSRA in taking that line.

However, I also wish to sound a note of caution. I am all for light, principles-based regulation to keep this country competitive and attract people to come and set up businesses here. However, ultimately, we must judge regulations not by how light or heavy they are, but by how effective they are in getting the results we desire. In my view, the desired results are focused overwhelmingly on protecting the customer. We have a problem of mindsets. Traditionally, the Central Bank, which is the forerunner and parent of IFSRA, has seen its regulatory role not as protecting the customer but as protecting the fabric of our financial system, and that is understandable. It protects the banks against themselves rather than protecting the customers against the banks.

I hope I have explained that well enough. We are assured that that is now all in the past. However, mindsets tend to linger long after we think we have killed them off. My point is that, in the international financial services field, everything depends on reputation, and the competitive position of the country could be irretrievably damaged if the idea ever became current that we were a haven where a blind or benevolent eye might be turned to activities that would promptly be cracked down on if they happened somewhere else.

In that respect, the current publicity about some suspect transactions in the reinsurance market, which is receiving significant coverage in America, is a major risk to Ireland's reputation. It seems the inappropriate behaviour now being investigated was masterminded from the IFSC and that certain executives banned from the Australian market by the authorities there continued to work in Ireland for months after that ban had been reported to IFSRA by the Australians. I do not wish to pursue the details of that case any further, since we should certainly not do that here. My point is simply to highlight the risk of our international reputation being compromised, seriously or fatally. Those who judge such matters will go by the results that we get rather than the principles we espouse. We can say what we plan to do and how we behave, but they will judge us on the basis of results.

What can we do about that situation? We can ensure that we promptly equip IFSRA with all the necessary resources to do its policing job thoroughly. We cannot expect it to vet every transaction, since that will not be possible. However, we can expect it to be knowledgeable enough to be fully aware of where difficulties are likely to arise and be quite alert to them. We should not spoil the ship for a ha'penny of tar.

I would like briefly to refer to the company law provisions in this Bill. I have no problem with the provisions themselves, which all seem eminently reasonable, as one might expect from suggestions that emanated mainly from the Company Law Review Group. However, I wish to repeat the point I made yesterday on the statute law revision Bill regarding the need to consolidate company law regularly. It is good that we keep changing company law to keep abreast of changing circumstances, although I do not agree with the added burden of compliance it often imposes on businesses.

Senator Coghlan has referred to one aspect of that issue. The first act in compliance is to find out what the law actually says. If we are to have compliance, what is stipulated by law must be easily accessible and something on which we can lay our hands. That is made more difficult and expensive if it is spread across many different Acts of the Oireachtas, all of which must be consulted if one is to get the full picture. That has happened in many different areas, and I suggest it is happening still.

We get around that difficulty by consolidating the law at regular intervals. In the case of tax law, we have made a policy of doing that every ten years, so one can at least find where one is at the end of that period. However, in the meantime, one must still search. It is accepted procedure that we consolidate those tax laws every ten years, but I would like the Minister to adopt a policy of doing the same with company law. However difficult it is for someone living in Ireland to keep up to date, it is much more difficult for a stranger coming here and trying to understand company law only to realise that we have not managed to consolidate it. I know the Minister's heart, along with those of his officials, is in the right place. We want to make Ireland an attractive place to do business, particularly in the financial services area. This is a step in the right direction, and I would like to see the Minister wholeheartedly get behind the idea of ensuring we consolidate it in future too.