Seanad debates

Thursday, 27 June 2013

Central Bank (Supervision and Enforcement) Bill 2011: Committee Stage

 

3:00 pm

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael) | Oireachtas source

The effect of amendment No. 7 would be to include the following within the definitions of financial service provider and related undertaking: Auditors, accountants, pension fund trustees, building societies, debt collection agencies, moneylenders and other financial services as determined by the bank.

The remaining amendments in this group delete a number of references to the word “regulated” such that the relevant provisions of sections 3, 8, 21 and 48 would relate to the Senator’s broader definition of a financial service provider, which I just described, rather than those regulated financial service providers currently regulated by the Central Bank.

In general terms, the effect of this group of amendments would be to broaden the remit of the Central Bank into a number of new areas. I should first clarify that both building societies and moneylenders are already within the remit of the Central Bank and a Central Bank authorisation is required to operate as either of these. It is an offence to carry on business as a building society or moneylender without an authorisation from the Central Bank.

The Irish Auditing and Accounting Supervisory Authority, IAASA, was established under the Companies (Auditing and Accounting) Act 2003 and holds responsibility for the supervision of the auditing and accountancy professions in accordance with national and EU requirements. Given that these professions have a role beyond financial services and across the corporate sector, it is appropriate that they are regulated under company law. In general, these professions are not subject to regulation by the Central Bank for the provision of, for example, financial advice, provided that the advice is incidental to their main role as auditor or accountant.

However, the analysis of the financial crisis highlighted the role of auditors and the Bill includes a number of provisions to respond to failures identified, for example, in the Nyberg report and by the Comptroller and Auditor General. Part 4 now provides for a statutory auditor assurance regime as recommended by the Comptroller and Auditor General, and section 58 provides for a limitation of liability to support open and frank dialogue between auditors, accountants and the Central Bank, as recommended by the Nyberg report.

In terms of pension fund trustees, the Government recently established a group to examine the amalgamation of the regulatory functions of the Pensions Board with those of the Central Bank. The group’s report was published in April this year and, following careful consideration, it recommended against such amalgamation. As such, the regulation of pension issues rests with the Pensions Board, which is to be restructured and reformed in accordance with the group’s recommendations. In respect of trustees specifically, the current role of the Pensions Board is to provide guidance for trustees on their duties and responsibilities in relation to scheme administration and to issue codes of practice on specific aspects of trustees' duties.

As Minister for Finance, I have no responsibility for the regulation of debt collectors and debt collecting firms. Debt collection services apply across a significantly wider range of activities than the recovery of money for financial products, for example in the case of utilities, rents, other consumer debts and also debts between businesses. My colleague, the Minister for Justice and Equality, is responsible for the relevant legislation in respect of debt collection, which is the Non-Fatal Offences against the Person Act 1997. This applies to all debt collectors that operate across any or all sectors of the economy, including private individuals and debt collecting firms.

In the case of financial institutions which use debt collection firms, the Central Bank has imposed requirements that offer protection to consumers under its revised consumer protection code. The code obliges the regulated entities that it covers to ensure that any outsourced activity, such as debt collection, complies with the requirements of the code. This means that outsourced activity should uphold the principles in the code.

The Senator’s amendments also propose that the Central Bank would be able to determine what falls within the definition of financial service provider. Given the broad range of serious powers which are afforded to the Central Bank by the Oireachtas, it would not be appropriate to provide such a blanket ability for the Central Bank to determine the entities it regulates. Such decisions are properly the responsibility of the Oireachtas through setting the statutory remit of the Central Bank. On that basis I do not propose to accept the Senators amendments in this group.

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