Home Knowledge Banking on Change: The Central Bank Reform Bill 2010

Banking on Change: The Central Bank Reform Bill 2010

June 2, 2010

The Minister for Finance recently published the Central Bank Reform Bill2010.  The Bill is the first stage of a three part legislative seriesto improve regulatory structure, enhance the regulatory powers andfunctions of the Central Bank, and consolidate existing legislation onthe regulation of financial services.  A second Bill, to be broughtbefore the Oireachtas (Irish Parliament) in the autumn will enhance thepowers and functions of the restructured Central Bank in relation to theprudential supervision of individual financial institutions, theconduct of business, including the protection of consumer interests, andthe overall stability of the financial system. A third bill willconsolidate the existing statutory arrangements for the Central Bank andfinancial regulation in Ireland.

The emphasis of the Bill is onstreamlining.  Proposals include:

  • One Central Bank – dissolution of the Irish Financial Services Regulatory Authority (IFSRA) to create a single, integrated Central Bank of Ireland with a unitary board: the “Central Bank Commission” chaired by the governor of Central Bank;
  • Abolishment of the Post of Consumer Director and its Statutory Advisory Panels – the role of providing consumer information will transfer to the National Consumer Agency. However, the Central Bank will be given the power to set up advisory panels, including panels on consumer issues. The Registrar of Credit Unions, the Financial Services Ombudsman and the Irish Financial Services Appeals Tribunal will remain;
  • Fit for the job – the Central Bank will be given new powers to ensure fitness and probity for persons in key positions in a financial services entity;
  • Enhanced accountability to Oireachtas – a committee of the Oireachtas will be established to consider an annual “Regulatory Performance Statement” from Central Bank to increase accountability in respect of regulatory obligations;
  • Removal of responsibility for promotion – the Central Bank will be freed from its statutory responsibility to promote the development of the financial services industry within Ireland; and
  • Greater flexibility for credit unions to reschedule loan arrears subject to appropriate liquidity, provisioning and accounting transparency.

The government is required to consult the European Central Bank on itsproposal and also envisages a consultation process with stakeholders.