Tuesday, 3 November 2009
Department of Finance
Financial Services Regulation
Question 165: To ask the Minister for Finance the progress made regarding reforms of the Central Bank and the Financial Regulator, including appointments to key positions; and if he will make a statement on the matter. [37693/09]
The Government has agreed a range of reforms of the financial regulatory structures. A new single fully integrated institution, the Central Bank of Ireland, will be established, replacing the current two pillar structure under the existing Central Bank and Financial Services Authority of Ireland. The new structure will be responsible for both the supervision of individual firms and the stability of the financial system generally, combining micro-prudential and macro-prudential supervision in the one institution to achieve the highest performance standards for the new organisation. The new Central Bank will be chaired by the Governor of the Central Bank. These reforms will underpin a much more effective and efficient financial services regulatory system that is aligned with best international practice.
Within the new regulatory structures, the consumer information and education role, currently carried out within the Consumer Directorate in the Financial Regulator will be re-assigned to the National Consumer Agency (NCA). Regulation for consumer protection, including the development and enforcement of codes of practice, remains within the new central bank structure as an integral part of conduct of business regulation.
With regard to the appointment to key positions, the Deputy will no doubt be aware that Professor Patrick Honohan was recently appointed as Governor of the Central Bank. Additionally, two top-level posts will be established within the new Central Bank of Ireland as ex-officio members of its Board. A Head of Financial Regulation will report to the Board on the regulatory and supervisory functions. A Head of Central Banking will report on the performance of central banking functions (other than those that relate to the independent role of the Governor under the EC Treaty and Eurosystem and ECB structure). The Deputy will be aware of the recent announcement that Mr Matthew Elderfield will take up the post of Head of Financial Regulation in the New Year.
A key supporting element of the reforms agreed by Government involves a significant expansion of regulatory capacity with substantial additional staff and skills to meet the objectives of the new structure. In the legislation to underpin the new structure I will seek to enhance the accountability of the new regulatory structure to the Oireachtas and to strengthen evaluation and quality assurance of regulatory performance. These measures will ensure Ireland is regulated to the best international standards.
A high level group, chaired by my Department and including representatives of the Central Bank and Financial Regulator, has been established to expedite the implementation of the Government's decision and undertake appropriate consultations. It is a priority to have the new regulatory framework in place quickly and I expect draft legislation to give effect to the Government's decision will be published early next year. Once published, it will be open to anyone to comment on the draft legislation including of course Committees of the Houses of the Oireachtas.
I have decided that it is necessary to make some immediate progress on the integration of the existing institutions and, as the Deputy is aware, introduced provisions through Committee Stage amendments to the NAMA Bill to enable a common membership of the Central Bank Board and the Regulatory Authority in the transition phase before the dissolution of the Regulatory Authority and the establishment of the new Central Bank of Ireland.