The dispatch of Tony Taylor to jail last week brings to an end one of the State's most notorious fraud cases. Taylor's departure from Ireland in August 1996 with some £1.7 million of his clients' money unaccounted for was among the first of the financial scandals that rocked the Republic in the latter half of the 1990s.
It took the Garda Bureau of Fraud Investigation more than five years to bring Taylor to justice. It was a long time, but the delay is understandable. Not only did the Garda first have to prepare a prosecutable case against Taylor - never easy when fraud is alleged - they then had to find the fugitive broker. Once he was located hiding out in Eastbourne he then had to be extradited. Only when he was returned to the State early last year could the normal court process begin.
What is not so easy to understand is why, in the five years since it was first mooted in the aftermath of the Taylor scandal, the Government has failed to establish a comprehensive system for policing the financial services industry based around a single regulator.
The Tβnaiste was an enthusiastic champion of reform in this area when she took office in mid 1997. By that stage the mother of all Irish financial scandals, the Ansbacher accounts, had been unearthed by the McCracken tribunal investigating former Taoiseach Mr Charles Haughey. Hot on Ansbacher's heels came the National Irish Bank scandals and the DIRT revelations. These issues - none of which have been put to bed yet - exposed gaping holes in the way the financial services industry was regulated.
One of the most alarming revelations was that the Central Bank - the primary regulator with strong powers to examine banks - was only allowed concern itself with their financial health. Issues such as tax compliance and consumer protection were not within its bailiwick and it could not readily pass information on such matters to other authorities.
The Tβnaiste asked Mr Michael McDowell SC - who subsequently became Attorney General - to look at the issue. Not surprisingly Mr McDowell reported back that it was a good idea to reform the current system which clearly was not working. Ms Harney endorsed the recommendation that a new body be established, completely independent of the Central Bank which had come in for significant criticism in the wake of the various scandals.
The Department of Finance was somewhat less enthusiastic. It made two points. The first was that only the Central Bank - as the Irish arm of the European Central Bank - could regulate the monetary system. The second was that separating the regulation of the monetary system from the policing of financial institutions was unworkable.
A two-year stand-off then ensued between the Tβnaiste and the Minister for Finance, Mr McCreevy. It was only broken in February this year. The Central Bank is to be renamed the Central Bank of Ireland and Financial Services Authority. It is to have two pillars, one dealing with monetary policy and the other with regulatory matters.
The reporting arrangements between the pillars are exceedingly complex in order to achieve a certain amount of accountability to the Minister for Finance in regulatory matters, while preserving independence in monetary policy. The Irish Monetary Authority will deal with monetary policy as the Irish arm of the ECB. Its chairman will also be the chairman of the CBIFSA. The Irish Financial Services Regulatory Authority will have its own chairman who will have considerable independence and a reporting line to the Minister for Finance.
The deal was clearly a fudge, but it held out the prospect, finally, of comprehensive and effective regulation. Much was made of the decision to give the new body a strong consumer protection ethos. The functions of the Director of Consumer Affairs as regards the financial services industry are to be incorporated into the new body. A powerful new position of Consumer Protection Director was to be created and an interim appointment made before the summer along with an interim chief executive of the IFSRA.
The executives were meant to play an important role in the fine tuning of the legislation establishing the new body as it made its way through the Oireachtas. They would also start the mammoth task of integrating several hundred Central Bank prudential staff with those transferring from the Department of Enterprise and Employment. Additional staff were to be hired, bringing the full complement of the new body to 400. The plan was for the new structure to be up and running by the start of next year.
Summer has gone and 2002 is only three months away. Legislation establishing the bodies is still being drafted by the parliamentary draftman. The Department of Finance says it still plans to enact it by the end of the year but no date has been set for it to start its passage through the Oireachtas. No reason is given for the delay. The Bill is on what is called the A list, which means the Government is "committed" to publishing it before the end of this parliamentary session and enacting it during the next session. Meanwhile, the posts of interim chief executive and Consumer Protection Director remain unfilled.
The Tβnaiste's enthusiasm for the project seems to have evaporated, despite protestations to the contrary from her officials. It's all good news for any potential Tony Taylors out there.
