Mary Upton (Dublin South Central, Labour)
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Question 71: To ask the Tánaiste and Minister for Finance the areas of banking and finance operations that remain outside the remit of the financial services regulatory structure in view of the reports that the most recent specialist bank or financial house recording significant losses on structured investment vehicles of up to €70 million is outside the regulatory structure as are property companies taking investments from Irish investors or overseas property developments. [29601/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Ireland's system of financial regulation is based largely on a comprehensive and detailed EU template and conforms to international best-practice standards. The role of the Minister for Finance as regards financial regulation is to develop policy and bring forward proposals to the Oireachtas for the regulation of the financial services sector. Once that legislation has been enacted, the task of implementing and applying it on a day-to-day basis rests with the Financial Regulator, which is independent of the Minister in the exercise of its statutory functions.

The remit of the Financial Regulator is quite broad and covers a wide range of financial service activities. These are usually considered under three main categories; firstly, there are credit institutions — which comprise banks and building societies; secondly, there is securities activity; and thirdly, there is insurance, which also covers reinsurance activities.

All in all the Financial Regulator supervises more than 10,000 financial service providers of varying size and nature, including banking, insurance, collective investment, asset management firms, as well as credit unions, exchanges, retail intermediaries etc.

Credit institutions are defined in accordance with EU Directives as any institution which accepts deposits or other repayable funds from the public and grants credit for its own account. Such institutions must be authorised and approved by the Financial Regulator.

There are, of course, certain institutions which do not accept deposits from the public but which make loans from their own resources and these do not require a licence from the Financial Regulator. In so far as such entities engage in retail lending to the public, the Deputy will be aware that, Section 19 of the Markets in Financial Instruments and Miscellaneous Provisions Act 2007 amended Part V of the Central Bank Act 1997 to provide for a system of authorisation and regulation of retail credit firms and home reversion providers. The primary purpose of this amendment was to extend to customers of these firms the benefit of the protections provided for in the Financial Regulator's Consumer Protection Code.

There are also non-deposit-taking lenders who do not engage in retail lending but who lend to commercial entities or sophisticated borrowers and these are not subject to supervision by the Financial Regulator under the relevant European Directives. Such companies that trade under Irish Company Law are subject to the general corporate governance requirements of that legislation.

As regards overseas property developments, the position is that my colleague, the Minister for Justice, Equality and Law Reform will bring forward the Property Services Regulatory Authority Bill in 2008. The Bill will provide for the licensing of all property services providers, including all those involved in the sale and letting of property wherever it is located.

Finally, the Ecofin Council, at its meeting on 9 October last, decided on a preliminary set of issues to be analysed and addressed following recent financial market developments. This review is to be undertaken by the Commission and the EU's Financial Services Committee on which Ireland is represented. The work carried out on this review and its conclusions will be important inputs to the process of ensuring that the EU regulatory system remains aligned with financial market developments.