The Taylor affair has highlighted significant problems with the regulation of part of the financial services sector. The Government now says it will review regulation of insurance brokers and investment advisers but it has been clear for years that this is a problem area. And apart from the regulatory issues, the affair once again emphasises the Government's casual approach to the prosecution of fraud and white collar crime.
The collapse of the Taylor group serves as a painful reminder that insurance brokers and other investment advisers are not subject to the same active level of regulation as most of the rest of the financial services sector. While the Central Bank and the Department of Enterprise and Employment have responsibilities, the main burden of regulation falls on industry bodies such as the Irish Brokers Association (IBA) which are charged with the task of self regulation.
Traditionally, most parts of the financial services sector were largely self regulating. However statutory bodies and central banks of late have taken on much responsibility. This allows for an active scheme of regulation which, while not foolproof, at least exposes companies to regular examinations and puts checks in place.
However, insurance brokers and investment advisors are not the subject of active, ongoing regulation. This must change. The Government has to consider whether this can be achieved within the existing legislation or whether new legislation is required. But some way of subjecting these financial intermediaries to more rigorous policing has to be decided upon promptly. It may be the case that what has happened in the Taylor group could also occur in Northern Ireland or in Great Britain. What is indisputable however is that it is a good deal easier to get away with fraud in this State than in other jurisdictions.
It is now some years since the Director of Public Prosecutions, Mr Eamonn Barnes, went on the records to say that he believed it was impossible to secure convictions for fraud here under existing legal constraints. The DPP asked that the adversarial system be replaced, in the prosecution of fraud cases, by an inquisitorial system in which it would be possible to seize, examine and present all relevant financial records.
Senior officers of the Fraud Squad, over the intervening period, have told anyone who cared to listen of their despair at their virtual inability to investigate serious, professional fraud in the State. The Garda have not the powers they need and the standard of proof required in court falls little short of a signed admission of guilt by the accused. Not surprisingly, outside of the more pathetic offenders, that is seldom forthcoming.
This is one further manifestation of the State's failure to comprehend and to respond to crime in our society. There is no view of the totality of crime, rather is there an ad hoc response as crises arise. A Government which was seriously concerned to produce a coherent policy on criminal justice would not hesitate to set up a commission on crime. It would start by endeavouring to quantify the extent and scale of crime in this society. White collar crime, such as fraud, did not even figure in the Dail debate which followed the murder of Ms Veronica Guerin. We simply have no way of knowing the extent of the problem, or indeed of the extent to which seemingly legitimate business is recycling or laundering the ill gotten gains of subversives and ordinary criminals alike.