Written answers

Wednesday, 2 December 2009

Department of Finance

Financial Services Regulation

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Question 147: To ask the Minister for Finance further to Parliamentary Question Nos 195 and 198 of 3 February 2009, the status of the financial services advisory forum; if he has received the first report of the forum; the number of meetings which were held to date in 2009; and if he will make a statement on the matter. [44957/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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The Advisory Forum on Financial Legislation was formally launched in January 2008, with a mandate to assist with the preparation of a Bill to consolidate and, in so far as was possible within the timeframe envisaged, to modernise Irish financial services legislation.

The creation of a modern corpus of financial services legislation remains a clear objective. However, since my reply to the Deputy's question on this matter on 3 February 2009, the Government has decided to defer the reporting of the Advisory Forum. The decision was taken in light of the more pressing priority of preparing and implementing significant changes to institutional structures for financial regulation and to commit resources for this purpose, and of the high likelihood of changes in the regulation of financial services that could not be anticipated by the Forum. There have been no meetings of the Forum to-date in 2009.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Question 148: To ask the Minister for Finance his plans to publish legislation to put the principles of the combined code on corporate governance on a legislative basis for all banks, public companies and State-sponsored bodies as per the commitment in the revised programme for Government; and if he will make a statement on the matter. [44958/09]

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Question 161: To ask the Minister for Finance the nature of the timeline for the implementation of new statutory rules for the governance of major financial institutions as per the commitment in the revised programme for Government; and if he will make a statement on the matter. [44973/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 148 and 161 together.

The Combined Code on Corporate Governance is a non-statutory code published by the UK Financial Reporting Council, for Stock Exchange registered companies. It sets out standards of good practice in relation to issues such as board composition and development, remuneration, accountability and audit and relations with shareholders.

All companies, including banks, which are listed on the Irish Stock Exchange in Ireland, are required under the Stock Exchange Listing Rules to report on how they have applied the principles of the Combined Code or, where they have not applied the principles, to justify any instances of non-compliance in their annual reports.

As the current application of the Combined Code in Ireland is to companies listed on the Irish Stock Exchange, consideration of any statutory application of the Combined Code to such companies would have to have regard to existing obligations on such firms under the Companies Acts and is therefore a matter for the Tánaiste and Minister for Enterprise, Trade and Employment in the first instance.

The commitment in the revised Programme for Government to put the Combined Code on Corporate Governance on a legislative basis for all banks, public companies and State sponsored bodies will complement the revised and updated version of the Code of Practice for the Governance of State Bodies, which I published in June 2009.

The Code of Practice sets out the governance framework agreed by Government for the internal management, and the internal and external reporting relationships, of commercial and non-commercial State bodies. The provisions of the Code do not override existing statutory requirements and other obligations imposed by the Companies Acts. The updated Code reflects a range of changes since 2001 in legislation and administrative guidelines that have implications for the governance framework of State bodies; including revisions to the Ethics and Standards in Public Office legislation, guidelines on the pay of CEOs of commercial State bodies, and tax clearance procedures for public sector contracts.

The possible statutory application of the Combined Code on Corporate Governance to State sponsored bodies is under consideration in my Department. In this regard, it will be important to have regard to the current application of my Department's Code of Practice for the Governance of State Bodies as well as to existing statutory requirements applying to the governance of state sponsored bodies.

In relation to the application of the Combined Code to banks and other credit institutions, the Deputy will be aware of the related commitment in the Programme for Government to develop new statutory rules in relation to the governance of major financial institutions in the context of the planned reform of the regulatory structures for financial regulation. I expect to publish legislation to reform the institutional structures for financial regulation in Ireland early next year and its enactment and implementation will follow thereafter. In developing new statutory rules for the governance of major financial institutions, the Government will take cognisance not only of the Combined Code but also proposals in relation to the reform of governance of credit institutions that are being developed by the European Union and at the G20 level.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Question 149: To ask the Minister for Finance his plans to restructure the boards of the Central Bank and the Financial Regulator as per the commitment in the revised programme for Government; and if he will make a statement on the matter. [44959/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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I expect that a bill providing for the establishment of the Central Bank Commission will be published early in the new-year. The bill will propose the establishment of a single fully integrated regulatory institution, the Central Bank of Ireland, replacing the current two-pillar structure currently operating within the CBFSAI. The new structure will be responsible for both the supervision of individual firms and the stability of the financial system generally.

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