The Central Bank has welcomed the decision to locate a new single regulatory authority within a restructured Central Bank.

The new Central Bank of Ireland and Financial Services Authority Board will be chaired by a governor and will ensure co-ordination between the two new authorities and provide centralised services.

The structure will encompass a single regulatory authority for the financial services sector, the Irish Financial Services Regulatory Authority (IFSRA), and the Irish Monetary Authority.

A spokesman for the Central Bank said it had always expected a restructuring and was not surprised by this. He said the Bank would continue to carry out the same functions as before but would be divided up differently internally.

The Central Bank has always said there were gaps and overlaps in the regulatory arena that needed to be eliminated, the spokesman said. He also reiterated that the Bank favoured a single regulatory authority.

The spokesman said carrying out more functions under the same roof would not be a problem.

The Irish Bankers' Federation (IBF) also welcomed the Government's decision to set up a structure for financial services regulation. The IBF believes the proposed structure is complicated but could meet the following key objectives:

to provide world-class regulation to the financial services sector;

to ensure that consumer protection and prudential supervision are effectively co-ordinated within the new regulatory regime;

to retain the existing expertise within the current regulatory bodies; and

to provide a one-stop shop for the regulation of all financial services.

The Institute of Chartered Accountants in Ireland also welcomed the decision to proceed with the establishment of a new regulatory framework.

Its chief executive, Mr Brian Walsh, said that, while the delay in reaching a decision on the issue was regrettable, the new structure should be put in place quickly. He said giving consumers a greater voice should be a priority, as well as streamlining regulation in the sector. The Irish Association of Investment Managers said the Government's decision ended a long period of uncertainty.

Its chief executive, Mr Martin Nolan, said the new structure would enable the establishment of a vibrant financial services regulatory body that would provide a much-enhanced regulatory environment.

"This should build on the positive aspects of the existing system while enabling the creation of a new approach emphasising consumer protection and awareness," he said.

The Financial Services Industry Association director, Mr Torlach Denihan, said the industry had sought a decision from the Government since the McDowell Committee reported mid-1999. "Delay is in nobody's interest," he said. The Irish Insurance Federation welcomed the new structure, saying the current system, which divides regulatory responsibility, was not sustainable.

The federation's chief executive, Mr Michael Kemp, said more work needed to be done on costing the IFSRA and on how costs would be shared between the financial services sector, regulated firms and the public purse.

"All compliance costs imposed on the financial services industry are ultimately borne by the consumer," he said.