'Intrusive' regulation would damage IFSC, warns Went

THE CHAIRMAN of a consultative industry panel which advises the Minister for Finance on financial regulation has warned that “very intrusive regulation” of the wider Irish financial services sector would damage the IFSC.

David Went, chairman of the industry consultation panel at the regulator, said that a “one-size-fits-all” approach to regulation would not work and that a rules-based regime was “not a panacea”.

Speaking at the ACOI annual conference, Mr Went said that regulating all financial services with the rules to be applied to domestic and foreign retail banks “would be a disaster” for the IFSC, which has to compete on a global basis.

Hiring the right people was “key” to the success of financial regulation, said Mr Went, who is also chairman of The Irish Times Ltd and a former chief executive of Irish Life Permanent.

Structural failings contributed to the overall failure of the regulatory system, he said, but the structural failings were “more in the nature of air cover for human failings within the regulator”.

“It fills me with absolute horror some of the things I have seen that have emerged,” he said.

The proposed regulatory reforms where the Financial Regulator and Central Bank were to be re-merged made “absolute sense”, he said.

However, it was crucial that the right staff were hired, that they were paid well, empowered and provided with good IT.

Mr Went said that it was “bewildering” and “ridiculous” that 10 years after the inspectors’ report into National Irish Bank the legal process to disqualify the directors of the bank was still ongoing.

Parliamentary oversight of regulation was more of “lynch mob process” in Ireland, he said, and it needed to follow the British model where it was “more forensic and less emotive”.

EBS chief executive Fergus Murphy said the chief risk officer should report to the chief executive of a financial institution and be present at board meetings.

Revenue Commissioners chairwoman Josephine Feehily said tax compliance should be “on the radar” for boards of companies.

She said that the Revenue had received almost 75,000 suspicious transaction reports on tax evasion and smuggling since 2003, 70 per cent of which were submitted electronically, and it had recovered €37 million from 300 cases.

The Revenue was about to sign a new tax treaty with Hong Kong and has just agreed a treaty with Singapore, said Ms Feehily.