The chairman of the Financial Regulator, Jim Farrell, says the body has fundamentally and forever changed the way it regulates the banks.
Speaking at the publication of its 2008 annual report, Mr Farrell said it had a job to do to restore confidence in the regulator and in Irish banks.
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The past year has seen the Financial Regulator struggle to come to grips with the biggest financial crisis to hit the State. It also saw the departure of its former chief executive Patrick Neary, in the fall-out from the scandal over directors' loans at Anglo Irish Bank.
Current chairman Jim Farrell said the so-called 'principles-based' approach - where the regulator depended on the banks to tell it how they were coping - had gone. The regulator now has its personnel in place in all of the banks covered by the Government's guarantee scheme.
Mr Farrell said the 'breakdown in communication' at the watchdog over directors' loans at Anglo Irish Bank was something that should not have happened and would not be allowed to happen again.
Mr Farrell said the exceptional scale and speed of the decline in the economic environment made the task of regulation 'extremely difficult', and acknowledged that regulators worldwide had been 'behind the curve' in taking action.
Mr Farrell said banks now provided more detailed information to the regulator and their chief executives are expected to reform how banks are managed. He added that independent directors must play a more active role in questioning and challenging management decisions.
Under Government proposals to reform the regulatory system, a new Central Bank of Ireland Commission will replace the current separate boards of the Central Bank and the Financial Regulator. Acting chief executive of the Financial Regulator, Mary O'Dea, said consumer protection would be maintained in the new structure.
