Micheál Martin (Cork South Central, Fianna Fail)
Link to this: Individually | In context

Question 57: To ask the Minister for Finance the involvement, if any, he has with the way banking regulation weaknesses are being addressed; and if he will make a statement on the matter. [9368/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

The reports from Professor Patrick Honohan, Messrs Regling and Watson and the Nyberg Commission identified that poor supervision, an overly-deferential attitude by regulators, poor assessment of risks and a lack of follow-through on enforcement, all played a part in the financial crisis and set out the problems that needed to be addressed in the banking regulation area. The Central Bank Reform Act 2010 provides for new powers to be exercised by the Bank to ensure the fitness and probity of nominees to key positions within financial service providers and of key office-holders within those providers. The new fitness and probity regime is being rolled out by the Central Bank through regulations that were published on 1 September 2011 and is being introduced on a phased basis. The Regulations were applied to Pre-Approval Controlled Functions from 1 December 2011 and will apply to persons appointed to Controlled Functions from 1 March 2012 (other than Pre-Approval Controlled Functions).

Following on from the Central Bank Reform Act, 2010, the Central Bank (Supervision and Enforcement) Bill 2011 was published in July 2011. The bill enhances the Central Bank's regulatory powers, drawing on the lessons of the recent past in Ireland and abroad, and strengthens the ability of the Central Bank to impose and supervise compliance with regulatory requirements and to undertake timely prudential interventions. The bill also provides the Central Bank with greater access to information and analysis and underpins the credible enforcement of Irish financial services legislation in line with international best practice. The Central Bank (Supervision and Enforcement) Bill 2011 is expected to commence committee stage in the Dáil shortly.

The Central Bank advises me that its regulatory activity has intensified with increases in staff numbers and skill levels. At the end of 2010 the Central Bank employed 1,226 which represents an increase of 17.4% on 2009 staffing levels. There has being a significant increase in on-site inspections and review meetings have gone from 606 in 2009 to 1,046 in 2010. The Central Bank has published an Enforcement Strategy for 2011-2012 setting out its strategic approach to enforcement for the benefit of consumers and the integrity of the Irish financial services sector. The Central Bank has also taken a number of measures under its "Banking Supervision – our new approach" to banking supervision which they introduced in June 2010 and updated in June 2011. During 2011 the Central Bank has re-organised its internal banking supervision structures. The Central Bank has invested heavily in training all supervisory staff. A panel of risk advisors with specialist and industry expertise has been in operation since September 2010.