Leadership

Financial Regulator now more ‘hands on’

21.07.2009
The Financial Regulator has “fundamentally changed” the way it regulates, having adopted a more “intrusive” approach, the chairman of the body Jim Farrell said today.

Speaking at the launch of the Financial Regulator’s annual report, Farrell (pictured) said that since September 2008 the regulator has “fundamentally changed the way we regulate, to take a more intensive and hands-on approach to the institutions benefiting from the State guarantee.

“Our supervisory staff are now located onsite and attend certain credit, treasury, audit, board and other meetings to monitor and assess the strength of corporate governance and management of risk," he said.

“Banks now provide more detailed information on key risks to the Financial Regulator, and chief executives are expected to reform how banks are managed.

“Boards of financial institutions must now completely overhaul their approach and probe, question and challenge management. In particular, non-executive directors must play a more active role and we are monitoring the effectiveness of bank boards in this regard,” Farrell said.

The activities of the Financial Regulator, which regulates some 14,897 firms nationwide, came under intense scrutiny following the onset of the global economic crisis and the revelations concerning questionable activities in certain Irish banks, such as the loans to directors scandal at Anglo Irish Bank. The fallout from that particular scandal saw the departure of the regulator’s chief executive Patrick Neary.

In June, the Minister for Finance, Brian Lenihan TD, announced the creation of a new financial watchdog the Central Bank of Ireland Commission, which will replace the two separate boards of the Central Bank and the Financial Regulator.

According to acting chief executive and consumer director of the Financial Regulator Mary O’Dea, the regulator has already begun the recruitment of new regulatory, banking and risk experts, the up-skilling of staff and the establishment of a new risk and enforcement division.

“We are working closely with the Central Bank to ensure that the transition to the new regulatory arrangements announced by Government is smooth and effective,” she said.

According to the regulator’s annual report, during 2008 the body completed 722 inspections and review meetings, examined nine administrative sanction settlements, analysed 36,000 financial returns and approved 1,600 prospectuses. The regulator also said it received over 43,000 contacts from consumers, and over 670,000 visits to www.itsyourmoney.ie.

View the Financial Regulator’s Annual Report in full.

Pictured: chairman of the Financial Regulator Jim Farrell