Call for consumer protection to be at heart of financial reform

PROTECTING CONSUMERS must be a key part of the discussion on reforming the regulatory structure of financial institutions, Raymond O’Rourke, chairman of a consumer panel at the Financial Regulator, said yesterday.

He said consumers may be rightly annoyed at some of the past actions of financial institutions and unfortunately the discussion on reforming the regulatory structure was now focusing on business issues rather than on consumer protection.

“Consumers must remain at the centre of the ongoing debate on a new regulatory structure for financial services,” he said. “Ireland Inc is hurting but consumers should not pay on the double, as taxpayers and consumers, to pay for the failings of a principles-based regulatory system.”

Mr O’Rourke said there was a strong feeling among consumers that someone should pay for the crisis in financial institutions.

He pointed out that 168 people were sent to prison last year for not paying their television licences and contrasted this with the lack of prosecutions taken against certain banks for actions that had a major negative impact on the economy. He accepted that complex issues were involved but said he was worried at the lack of haste in prosecutions.

Mr O’Rourke was speaking as he launched the 2008 annual report of the Financial Services Consultative Consumer Panel.

He said the concept of the National Assets Management Authority (Nama) was supported by the panel, even though the circumstances surrounding its introduction were not ideal. “It’s not what you would wish for, but it’s the only way the toxic loans and the difficulties and obstructions in the banking system at the moment are going to be dealt with.”

He said the correct staff mix was essential in Nama. “They don’t need 50 high-flying lawyers. They need auctioneers, people with property experience, banking experience, people good at reading contracts.”

Mr O’Rourke also called for a Yes vote in the upcoming Lisbon Treaty. “If we want to be getting money from the European Central Bank, if we want to be getting Nama accepted under State aid rules, we have to have good relations with Brussels,” he said.

The consumer panel was set up in 2004 to monitor the Financial Regulator’s performance of its functions and provide comments and suggestions on the financial services industry. Mr O’Rourke said it was a cause of “great disappointment” that the panel was not active at the time of the banking crisis as it was awaiting its reappointment by Government.

“Therefore, it was not in a position to highlight the consumer’s voice before the Financial Regulator at a critical juncture,” he said.

“For example, a code of practice on arrears of mortgages was introduced without any input from the consumer panel, and mortgage arrears are now becoming a major consumer protection issue.”

Mr O’Rourke urged the new Central Bank of Ireland Commission be given a stronger role on competition policy.

“Only with such a role can consumers be assured that they won’t be paying increased unsubstantiated charges for banking services in a market place where there are likely to be less foreign players,” he said.