Regulator's comparative tables give pointer on good shopping

New powers will give consumer watchdog a chance to bare its teeth, writes Laura Slattery.

Finding the cheapest motor insurance quote could save consumers up to €5,110.

As this one little fact emerged from the Irish Financial Services Regulatory Authority's (IFSRA's) comparative survey on motor insurance this week, members of the public - or driving ones at least - will have sat up and taken notice of the financial regulator's existence.

Meanwhile, politicians again raced to condemn the insurance industry for profiteering at consumers' expense.

The release of the surveys on motor insurance and current account charges is the most visible sign so far that the consumer is, as the Tánaiste said at the time of the IFSRA's formal launch last May, "at the heart of financial regulation for the first time".

But the pace at which IFSRA's consumer voice is growing in pitch and power has been slower than had been expected by consumer lobby groups, which fear that the watchdog's barks and yelps haven't exactly been keeping the main players in the industry up at night. So far.

As the new single regulator, consumer information on financial services is part of IFSRA's mandate.

Its other job is to supervise the prudential stability of financial institutions.

Some analysts have argued that IFSRA's consumer role is vulnerable to compromise because it also looks after the bottom line of the financial sector.

Much of this suspicion has arisen because of IFSRA's origins under the auspices of the Central Bank.

The regulator, for its part, says that the solvency and safety of financial institutions provides fundamental protection to consumers, giving them confidence that their deposits and investments are safe and their insurance claims can be met.

As a result, consumer representatives have watched with interest as IFSRA dragged itself off the ground, increased its staff numbers - currently 90 people are employed in the consumer director's departments - and developed a user-friendly tone.

Next year, it will take a physical step away from the shadow of the Central Bank when the consumer directorate opens a public office in a nearby but separate city centre building.

The publication of the comparative tables is designed to give people a short-cut to the oldest trick in the guidebook to being a "good" consumer: shopping around.

While some consumers will shrug their shoulders and sigh that it is not always possible to devote hours to waiting on hold or walking from A to B trying to get the best deal, others will make it a habit to call IFSRA's consumer helpline - 1890 777 777 - or log on to its website to obtain up-to-date comparative tables.

The consumer director of IFSRA, Ms Mary O'Dea, believes the focus on shopping around will lead to a more efficient market, with firms competing more actively for the custom of increasingly savvy consumers.

IFSRA has certainly got "the A-factor" - the provision of information - under control, according to Mr Dermott Jewell, chief executive of the Consumers' Association of Ireland (CAI).

"It's the B-factor that has yet to take shape, and that is how strong and tenacious it will be on the industries it regulates, either banking or insurance," he said.

"Are they going to turn around to say 'stop it or else'? And it's the 'or else' that is very important. It is what consumers are waiting for."

Nevertheless, Mr Jewell describes the comparative tables as an excellent resource and "a move forward".

One development the CAI is eagerly awaiting is the formation of consultative panels, on which it will have a presence.

The panels will ensure that someone is there to ask "where do we go from here?" when surveys or reports on the sales tactics of financial institutions are released.

Mr Jewell says he had believed the consultative panels would already be up and running by this time. However, the Bill giving IFSRA powers to set them up was only published this week.

That Bill also provides for the appointment of a statutory financial services ombudsman to deal with consumer complaints and gives IFSRA power to impose sanctions directly on institutions for failure to comply with regulatory requirements.

The new powers will eventually give IFSRA the opportunity to bare its teeth on behalf of the consumer.

"We certainly won't hesitate to use them in appropriate circumstances," says Ms O'Dea.

In the meantime, IFSRA does have power to direct institutions to stop certain practices, while it has already issued warnings on the sales advice on tracker bonds and personal retirement savings accounts (PRSAs).

However, if fines, orders to cease and desist and naming and shaming become necessary on a regular basis, it means somebody will already have lost out, claims Ms O'Dea.

"Our first port of call is to be preventative."

IFSRA has to "work very carefully" on its relationship with industry, she adds.

For some, it is the over-flexing of IFSRA's bureaucratic muscles that is the trouble, not the strength or otherwise of its consumer role.

Earlier this week, Mr Willie Slattery, chairman of Financial Services Ireland, said over-regulation of financial services was damaging the competitiveness of the Irish economy.

Mr Liam O'Reilly, IFSRA chief executive, responded that it was not interested in putting companies out of business or driving them overseas and that a well-run industry should attract financial services companies to Ireland.

The list of IFSRA's plans for 2004 seems exhaustive.

Scheduled events include the launch of its strategic plan, the issuing of consultation papers on statutory codes of practice for financial institutions, the drawing-up of an action plan for financial education in second-level schools and the publication of booklets on Savings and Investments and Mortgages.

In addition, comparative costs tables will be published on credit cards, home insurance, overdrafts and mortgages, while a study on the timing of the passing on by lenders of European Central Bank interest rate cuts is also due early in the New Year.

"It's not watch this space. Everybody is already watching the space," says Mr Jewell at the Consumers' Association. "It's a question of what is going to happen next."