IF 2008 was the year in which the global financial system fell apart, bringing down such bulge bracket institutions as Lehman Brothers and Bear Stearns, 2009 was the year in which the regulators finally started to take a step back and assess what exactly went wrong, rather than simply fire-fighting to prevent further collapses.

While it may have been too little too late, the amount of time given to discussing and reporting the future of financial regulation over the past year must surely pave the way for more concrete action to be taken in 2010, although setting the regulatory agenda may be hindered by so many national governments now owning so much of their domestic banking sectors.

Early in the year, the G20 took on the task of putting some shape on global financial regulation, making a number of recommendations such as creating the Financial Stability Board from the former Financial Stability Forum, imposing regulation on credit rating agencies, restricting bankers’ remuneration, and bringing hedge funds into the regulatory fold.

At European level, the Larosière report into financial supervision, published in February, called for a new model of centralised regulation, which would keep supervision at a local level. While there was growing momentum for creation of a single regulator for Europe, with support from figures such as Lord Turner, chairman of UK watchdog the Financial Services Authority, the Larosière report in April stopped short of recommending the creation of such a position.

However, it did call for measures to increase co-operation across national regulators, including the establishment of a new European systemic risk council, composed of the heads of the national central banks and placed under the aegis of the European Central Bank, followed by a new European system of financial supervision, to maintain financial stability. The introduction of these measures is expected to start in 2010.

At home, the body with oversight for the financial services sector, the Financial Regulator, faced another challenging year, amid accusations that it was asleep on the job and failed to stop the reckless lending which got the Irish banking sector into so much trouble.

During the summer, Minister for Finance Brian Lenihan announced a new structure for financial regulation in Ireland, rowing back on the decision taken in 2003 to separate the Central Bank into two, which saw the creation of the Financial Regulator.

An integrated body, the Central Bank Commission, will have responsibility for both regulating the financial sector and maintaining stability in the financial system. Following Patrick Neary’s resignation at the start of the year, former Bermuda regulatory chief Matthew Elderfield will take up the new role of head of financial supervision in January. He is likely to be very busy implementing a raft of changes.

But, while monitoring the troublesome banking sector may be number one on his agenda, Elderfield may find it trickier ensuring that the needs of the consumer are being met.

The new Central Bank Commission will introduce a complicated structure for consumer protection, with the regulator’s consumer division being hived off from prudential supervision and merged with the National Consumer Agency and the Competition Authority. Moreover, the Central Bank will retain a consumer protection role. Whether this reconstitution better serves consumers’ needs remains to be seen.

In the US, the consumer is at the forefront of sweeping regulatory changes announced earlier this month. Said to present the greatest reform since the New Deal of the 1930s, the proposals include the establishment of an independent consumer financial protection agency, which would protect consumers against abuses such as unscrupulous mortgage deals and excessive credit card rates, as well as a financial services oversight council, to monitor the health of the overall financial system.

Next year will also see Ireland’s regulatory influence in Europe diminish, with Charlie McCreevy no longer in situ as Commissioner for Internal Market and Services. His replacement, Michel Barnier, who will take up the position in February, has already ruffled feathers in the City of London, largely due to his home country’s love of regulation, but the Frenchman has committed himself to following an unbiased European agenda.

On his “to-do” list in 2010 will be pushing the G20’s recommendations on financial regulation by implementing further regulations on bankers’ remuneration packages, amending accounting standards, and further increasing the capital levels banks are required to hold. This means Irish financial services firms are likely to find the regulatory burden will get much more onerous, not just domestically.

While more restrictive capital requirements will make it harder for Irish banks to recover and get lending again, new rules on hedge funds, under the Alternative Investment Fund Managers Directive, will have a wide-ranging impact on the Irish funds sector.

One thing which is sure is that after years of “principles-based, light-touch” regulation, a more restrictive rules-based philosophy is likely to guide regulation of the global financial services industry, at least in the short term.