There appear to be serious grounds to re-examine the whole issue of self-regulation of the Irish insurance industry. The sector has long been self-regulated under the overall supervision of the Department of Enterprise, Trade and Employment. But a similar system in Britain in the 1980s was changed after mis-selling scandals followed hot on the heels of one another.

The Irish insurance industry has so far avoided this fate and its representative body, the Irish Insurance Federation, still argues that it would be too expensive.

Similar concerns were voiced in Britain but regulation there is now considered to be among the tightest in the world - and probably among the most effective. Indeed, one of Irish Life's defences in the current controversy is that it now operates in Ireland as if the British regulations were in place here.

In the mid-1980s the industry in Britain was overseen by a self-regulatory body LAUTRO which operated under contract to a government-appointed agency, the Securities and Investments Board.

However, the life assurance sector was beset by allegations of "churning", misrepresentation, inadequate training and commission-hungry salesmen selling inappropriate products.

At that time, more than 20 life companies including Irish Life were fined by LAUTRO. Some even had their sales forces suspended to undergo complete retraining.

Those fined included Norwich Union, Commercial Union Life, General Accident Life, Cannon (Lincoln) National, London and Manchester, GRE, Scottish Widows, Liberty Life, Colonial Mutual, InterLife, Prosperity Life, NM Financial Management, Canterbury Life, Laurentian Life, Legal & General, Aegon, Manlife, Premium Life, Cornhill, Ancient Order of Foresters, J Rothschild Assurance, Irish Life, Commercial Union Life, Homeowners, Ideal Benefit Society and London Life.

Irish Life was among the companies that faced the highest fine - £300,000. The penalty was imposed in December 1994.

At that time, Mr David Kingston, the then managing director, said the fine was not a criticism of Irish Life in particular as a lot of companies found themselves in the same position.

The problems uncovered under the system of self-regulation included a failure to deal with complaints in a satisfactory manner, failure to adhere to recruitment requirements, inadequate monitoring arrangements to assess the selling methods of company representatives and failure to keep proper records.

The British authorities reacted to increasing public outrage by setting up a powerful regulator under the aegis of the Securities and Investments Board, which has now become the Financial Services Authority.

By the year 2000, the legislation will have passed through parliament to make the entire system entirely independent and statute-based.

By contrast, in Ireland, self-regulation is still in operation although there has been widespread talk and rumour about mis-selling and "churning" in the industry as well as reports of "churning" from the Insurance Ombudsman. The Department of Enterprise, Trade and Employment is official regulator. However, the Department is not pro-active, according to the Insurance Industry Federation, and rarely does site visits or any spot checks.