The Government has agreed to changes in the system of financial regulation which were first signalled in the April Budget.
A new Central Bank of Ireland Commission will replace the current separate boards of the Central Bank and the Financial Regulator.
The new body will be chaired by the Governor of the Central Bank and will supervise individual financial institutions and the stability of the financial system in general. The Minister said current Governor John Hurley would stay on for another few months to enable a smooth transition to the new arrangements. His term of office was due to end in March.
The Minister said 'substantial' extra staff with the right skills and expertise would be appointed to ensure the new structure worked. He also said that the legislation on the new structures would aim to improve their accountability to the Oireachtas and to 'strengthen evaluation and quality assurance of regulatory performance'.
'Our approach mirrors arrangements proposed at EU level and will ensure a cohesive approach between critical elements of effective financial regulation,' Minister Lenihan said. He added that he was determined the changes would happen quickly, and had set up a high-level group to speed up their implementation.
The role of informing consumers, currently carried out by the Financial Regulator's consumer director, will be transferred to the National Consumer Agency, which is being merged with the Competition Authority.
The Commission will include two high-level posts: a head of financial supervision and a head of central banking. Sir Andrew Large, former Deputy Governor of the Bank of England, is advising on the recruitment process for the head of financial supervision.
The proposed reforms will not affect the current separate role of the Financial Services Ombudsman, who adjudicates on individual customer complaints about financial institutions.
Fine Gael finance spokesman Richard Bruton said the proposals were a 'red herring'. He said the Minister should be bringing in new faces and a fresh culture instead of 'tinkering with the institutional architecture'.
He said what the regulatory system urgently needed was fresh blood and new faces. 'Yet the regulator is hiring many of the accountancy and legal firms which got Ireland into this mess,' he said.
