The Central Bank and Financial Services Authority of Ireland Bill 2002 was recently published by the Irish minister for finance. The purpose of the Bill is to provide the legislative framework for the Central Bank and Financial Services Authority of Ireland. The Central Bank will supervise all banks, building societies, insurance companies, credit unions and other investment business firms.
The Bill proposes the creation of the Irish Financial Services Regulatory Authority (Ifsra). Ifsra will be responsible for managing the supervision of financial institutions in Ireland. It will operate within the legal structure of the Central Bank but will have its own chief executive, chairperson and board with independent functions. Ifsra will also be responsible for the interests of consumers and a new position of consumer director will be established. The consumer director will take on the powers of the director of consumer affairs in relation to financial institutions. Thus Isfra will carry out both the functions of prudential regulation and consumer protection.
The new framework also provides for the creation of a monetary committee within the Central Bank. The role of the monetary committee will be to carry out the administrative functions required by the role of the governor of the bank within the European System of Central Banks and to manage the external reserves.
The Irish financial markets have, in general, welcomed the concept of a single regulator for banks, building societies, insurance companies, credit unions and other investment business firms. However, the Bill has been criticized for seeking to integrate the roles of prudential regulation and consumer protection within the same institution because doing so may weaken Ireland's capacity to respond to a major systemic shock. Due to the change of government which is imminent in Ireland it is not clear whether the Bill will be enacted in its present form, whether it will be subject to a high level of amendment or whether it will be shelved due to the criticism it has received. Only time will tell.