O'Connell urges decision on single financial regulator

Uncertainty surrounding the future of the Central Bank is contributing to staff retention problems at the organisation, according to the governor, Mr Maurice O'Connell, who warned yesterday that a decision needed to be made soon on a single financial regulator.

At a seminar at the Institute of European Affairs in Dublin, Mr O'Connell said the bottom line was having the people capable of doing the job of financial regulation properly.

"The IFSC is at the cutting edge and we have a really serious problem in trying to recruit and retain experienced staff who can regulate that area," he said.

"This is partly to do with the Celtic Tiger but also the uncertainty surrounding the role of regulation. The key issue is to demonstrate we have the competence."

He added that he welcomed in principle the idea of a single regulatory authority but the debate was distracting attention from the need for more people.

The McDowell report into regulation was given to the Minister for Finance and the Tanaiste more than a year ago and published in June last year. That report recommended that a new greenfield regulator be set up which combined the roles of the Central Bank and a new beefed-up consumer regulator. However, there was minority opposition to this, with the Department of Finance favouring the Central Bank taking over consumer regulation.

A compromise has also been mooted where the two arms would be under the Central Bank umbrella but the consumer division would be almost fully independent. But the Minister for Finance, Mr McCreevy, and the Tanaiste, Ms Harney, have not yet agreed a position to be put to Cabinet.

Mr O'Connell said the G7 classified Ireland as an offshore location along with the Isle of Man and the Channel Islands. The authorities are currently lobbying for that to change and the correspondence involved points to the importance of regulation, Mr O'Connell said.

That was endorsed by other speakers who said Ireland needed a gold standard of prudential regulation.

The majority view is that the prudential role should be separated from consumer regulation but this was opposed by Ms Carmel Foley, the director of consumer affairs. She insisted that consumer and prudential regulation were on a continuum. It was far easier for a prudential regulator to get action and response than it was another agency.