The Government has published a new Bill that will dissolve the Irish Financial Services Regulatory Authority and place most of the financial regulator’s functions inside a new Central Bank Commission.
The Bill “enhances accountability” relating to the performance of the Central Bank, while the new system of regulation will help maintain financial stability and safeguard the interests of both consumers and investors, according to the Department of Finance.
A key provision of the Bill removes the statutory responsibility on the Central Bank to promote the development of the financial services industry in the State.
The Department of Finance said this role was “inconsistent with the enhanced regulatory focus” of the new regime.
Under the new integrated regulatory structure, an Oireachtas committee will receive an annual regulatory performance statement. This new mechanism is designed to increase accountability in respect of the Central Bank’s regulatory obligations.
The Central Bank Commission, which was first proposed a year ago, will be chaired by the governor of the Central Bank, Patrick Honohan.
The Bill also gives legislative backing to the creation of two newly configured positions - a head of financial regulation and a head of central banking.
Matthew Elderfield was appointed as head of financial regulation late last year, while Tony Grimes is his counterpart on the prudential side. Both men will act as ex-officio members of the commission.
The Bill also transfers responsibility for consumer information and education to the National Consumer Agency and abolishes the post of consumer director within the financial regulator and its statutory advisory panels. The commission will have to answer to the Oireachtas on consumer issues.
Additionally, it will be obliged to establish a group to advise it on its consumer-related functions and powers. It will also have the authority to establish other advisory groups.
“The changes will enable increased co-operation and co-ordination between prudential supervision of individual institutions, conduct of business regulation and maintaining financial stability overall,” the Department of Finance said in a statement.
The bill gives the commission new powers to ensure the fitness and probity of people nominated to hold senior positions.
“This initiative will help restore confidence in the management of financial institutions both domestically and in international markets,” the Department said.
The Bill also contains measures that will allow credit union members take out longer term loans and reschedule existing loans.
Minister for Finance Brian Lenihan said the changes would allow members experiencing difficulties to make smaller repayments on their loans, which will be extended over a longer term.
At the moment credit unions are restricted from having more than 20 per cent of their loan portfolio outstanding for a period of more than five years, and only 10 per cent of their portfolios may be advanced over a period of more than 10 years.
Under the new measures, these limits will be increased to 20 per cent and 15 per cent respectively.
A consultation will take place on the Bill over the coming weeks.