Today the Irish Stock Exchange will introduce electronic share trading, eliminating the trading floor of the exchange and moving to a screen-based system. It is a welcome development, as electronic trading of shares should make it cheaper and easier for the public to buy and sell on the market. This is just the latest example of the pace of change in the financial services industry, with the range and complexity of services and products on offer to consumers expanding rapidly.
In such an environment, consumers are entitled to expect that those operating in the market will be subject to appropriate regulation and ensuring this is the case should be a political priority. The facts suggest otherwise. A year ago the Government received a report on financial regulation drawn up by a group under the chairmanship of Mr Michael McDowell SC, who was subsequently appointed Attorney General. A statement issued at the time said that the Government would "consider the report in the near future and a further announcement will be made at a later date." We are still waiting.
So why the delay? The report recommended that a new single financial regulator be established, effectively stripping the Central Bank of its main functions. The new regulator was to oversee the prudential regulation of the sector and to look after the interests of consumers. It is important, in the light of the subsequent delay, to note that not only the Central Bank representatives on the McDowell committee but also those from the Department of Finance did not concur with this recommendation.
We can only presume that the delay in making the decision has been that this disagreement in the committee has been reflected around the Cabinet table. There is believed to have been some support for a compromise proposal which would have created two separate regulatory pillars - one in charge of prudential regulation and the other in charge of consumer protection - in a reformed Central Bank.
Whatever the disagreements in Cabinet, the delay in making a decision is inexcusable. It should not be beyond the ability of the Government and its officials to come up with a system that meets a number of key aims. These are the protection of the consumer, the retention of the skills of the Central Bank in prudential regulation which safeguards the overall solvency of the system and the active regulation of the compliance of the financial sector with tax and other legislation.
What we need, put simply, is regulation on a par with best practice internationally. The Government must quickly announce how it intends to achieve this goal.
