Regulation of financial services sector to be reformed

Legislation governing the regulation of the financial services industry is to be reformed, Minister for Finance Brian Cowen said yesterday.

The Government is to establish an advisory group, including industry and consumer representatives, to advise on the process of consolidating and modernising financial services regulation.

Proposals to shake up the legislation have their genesis in the McDowell Report on the establishment of a single regulator for financial services and are in line with the Government's White Paper, Regulating Better, the Department of Finance said.

The report recommended that once the regulatory structure for financial services was established, legislation governing the sector should be consolidated.

Changes in national legislation and the transposition of EU directives under the EU's Financial Services Action Plan have highlighted the need for streamlining the legislative framework, the department said. The reforms are also necessary to ensure a balance between the needs and interests of consumers and industry.

The proposals were welcomed by the financial services industry.

"This is a timely move as undoubtedly the law governing financial services has become more complex in recent years, particularly emanating from the EU," said Adrian Lambe, director of technical policy at the Institute of Chartered Accountants in Ireland.

The Irish Banking Federation (IBF) said it was committed to working closely with the Government to introduce the consolidated legislation. "This augurs well for the future development of this key sector," said IBF's chief executive, Pat Farrell.