THE QUALITY of staff in the new financial services regulatory regime will be “far more important” than the structure in which they operate, the Financial Services Consultative Industry Panel has advised.
In its annual report issued yesterday, the panel recommends that the regulatory staff be “rewarded appropriately” and given all the tools they need to do their job properly.
The panel, which is responsible for monitoring the performance of the financial regulator, also urges the Government to shy away from a “one size fits all” approach to regulation, highlighting the various sub-sectors within the industry.
The panel’s chairman, David Went, notes in its annual report that it is clear that “regulatory oversight of governance in Ireland was inadequate”.
The panel has previously criticised the Financial Regulator for failing to control the property bubble.
“The changes we need to make to create a sounder system for the future will be substantial and profound,” Mr Went writes in his chairman’s statement.
He notes that a high level of confidence in the financial system is “vitally important”.
In an addendum to the report, the panel observes that the Government’s recent announcement of a proposed merger of the Central Bank and the Financial Regulator was greeted “as if changing the structure meant the job was done”.
Instead, according to the panel, “what really matters is how the regulator goes about its regulatory business”.
It urges Minister for Finance Brian Lenihan to hold a “proper consultation” with industry on the issue and puts itself forward as a facilitator.
The group’s members include consumers of financial services and industry representatives, as well as members of the academic and media communities.
The panel set out a number of “critical characteristics” which it believes the new system should carry. High on this list of priorities is a level of knowledge among staff that is appropriate to the sector they are regulating.
“This can only be achieved if the regulator takes on experienced senior managers from the private sector – both on secondment and as permanent employees,” the panel notes.
It also recommends that responsibility be clearly assigned for achieving goals, such as financial stability and consumer protection, and calls for a strong legal basis for the new system.
The differing agendas within the market – consumer, prudential and securities market – must be recognised, according to the panel.
A rules-based system should be ruled out, it says.
It also urges accountability so that responsibility for particular matters is evident.
Responding to the report, independent brokers’ group Piba called for the introduction of a “balanced and fair” regulatory system that would have a focus on educating consumers.
