THE Government will move to amend the Central Bank Bill 1996 today, to allow the bank to act as regulator to investment intermediaries selling non insurance savings and investment products.
The amendment is to be adopted despite warnings by the Central Bank Governor, Mr Maurice O'Connell, and industry groups, that the new regulatory regime could prove unworkable".
An industry working party, comprising representatives of the banking, insurance, accountancy and law sectors, yesterday raised its concerns about possible flaws in the new arrangement with the Dail Select Committee on Enterprise and Economic Strategy.
Its chairwoman, Ms Ann Fitzgerald, told the committee that the Government's decision could prove unworkable unless further legislative provisions were also introduced to ensure that all intermediaries, and not just those selling non insurance products, were effectively regulated.
Additional provisions are necessary, given that some of the estimated 400 to 600 retail intermediaries to be regulated by the Central Bank are doing similar business for life insurance companies," said Ms Fitzgerald.
The committee, which has been investigating the collapse of the Taylor Group, was told that it was "impossible" to know at the moment how many intermediaries were selling both insurance and non insurance based products. Those that are involved in both activities will, under the new legislation, be regulated by two or more bodies.
Members of the industry working party, set up to advise on the Investment Intermediaries Act, believe that unless one regulator is able to monitor all business undertaken by the various intermediaries consumers and the financial services industry itself will not be adequately protected from fraud.
The working party, with the exception of the Irish Brokers' Association, has proposed that the Central Bank be the lead regulator for all investment intermediaries. It has also proposed that a statutorily based insurance regulator be established to supervise those selling insurance products.
