Financial regulator rejects criticism on independence

Criticism of the new Irish Financial Services Regulatory Authority (IFSRA) has been strongly rebutted by its chairman, Mr Brian Patterson, who has pledged that it will be a friend of the public interest.

This week the Minister for Justice, Mr McDowell, appeared to lend his weight to the criticism by launching a research paper attacking the accountability of the new authority, which will be part of the Central Bank.

Addressing the Financial Services Ireland annual dinner last night, Mr Patterson said the authority would have full responsibility for prudential and consumer protection regulation. "Of course, financial stability issues can arise which require broader coordination, but when it comes to financial services regulation, the buck stops with the IFSRA - not with the Central Bank or even the European Central Bank".

The chairman pledged that the authority would intensify consumer protection and help to restore the confidence of customers in their dealings with financial institutions. "Consumer protection had been the poor relation in the financial services industry for too long. For whatever reason, the public believe that in the financial services industry there is abuse of market dominance and that the sector makes some of its profits by unfair practices at the expense of consumers."

He said this view had forced a political response and its mandate from the Government was to ensure that consumers were getting a fair deal.

"Consumers must be able to understand what they are buying, what they are paying and what the options are. Furthermore, there must be real options - whether it comes from Irish or foreign institutions, consumers need to have alternatives."

Mr Patterson, who is also chairman of The Irish Times Ltd, acknowledged the work carried out by the Office of the Director of Consumer Affairs and the Central Bank but said the Government had signalled that it wanted consumer protection work intensified.

He said those who argued that the authority's new consumer director would have no powers simply had not read the draft legislation. "The consumer director will have strong powers and will use them. The consumer director, for the first time, will measure and report on what is actually going on. Those who operate on the margins of the industry will be regulated and sharp practices will not be tolerated."

Mr Patterson also rejected suggestions that consumer protection should be separated from other types of financial services regulation. "We have tried that and the Government has now decided that we need to take a new approach."

He acknowledged the huge challenge facing the new authority in rebuilding consumer confidence. "We know it is our job and we will be held accountable for it. The idea that the regulator is either the friend of the retail consumer or the friend of the wholesale industry is a false choice. IFSRA will be a friend of the public interest."