The Comptroller and Auditor General has called for an independent review of the inspection process for financial institutions carried out by the Financial Regulator.
The Financial Regulator's office was established to monitor the financial services sector.
In a report published this morning, Comptroller and Auditor General John Purcell examines the efficiency and value for money of the Regulator's office. Overall, he says that the office is meeting its targets.
But he calls for an independent review of the adequacy of inspection visits to individual institutions, follow-up from those visits, and the resources devoted to these activities.
The Comptroller urges the introduction of clearly defined risk categories for individual areas of financial services, so that the appropriate level of supervision required for each institution can be implemented in line with the risk involved.
He points out that there is scope to improve the efficiency of the reporting of financial information from institutions.
A 2005 analysis of 80 case files revealed that of all the different kind of financial services companies, only banks and building societies were fully compliant with providing necessary information to the regulator.
The regulator also has a role in consumer protection. The CAG said that in late 2006, there were gaps in the information provided to consumers, and that information could be hard to find.
But he points out that many of those faults have since been remedied. Again, he stresses the importance of rating the risk attached to financial institutions and intensifying supervision accordingly. He also called for an independent assessment of the consumer protection inspection processes.
The Financial Regulator's office cost €46m to run last year. Almost 50% of the cost was recovered from levies on financial services providers. But Mr Purcell criticised the fact that levies were calculated at a very late stage, and that institutions often could not predict how much they would have to pay.
He urged that calculation of the levy should be merged with the calculation of the Regulator's budget so that more timely levy notices could be issued to financial institutions.
The Financial Regulator welcomed the report, saying that overall the results were favourable. The regulator stressed that much progress has already been made to address any shortcomings highlighted by the Comptroller and Auditor General.