The Central Bank’s banking regulator Fiona Muldoon has reiterated the need for a shift in culture in the Irish banking system if more stringent regulation is to be successfully implemented in the sector.
Speaking at a meeting of financial services executives in Dublin this morning, Ms Muldoon said there had been a “reluctance” to accept change among some of the financial institutions she has dealt with since taking up the position of regulator last year.
She said “most people at senior level” understand the need for more prudential supervision of the sector, “but like most things understanding it and actually executing it on the ground are two different things”.
Ms Muldoon’s comments sparked controversy at the Irish Banking Federation’s annual conference last month, when she said banks were behaving like teenagers by adopting a “wait and see” approach for dealing with mortgage arrears.
At today’s meeting she said she was “cautiously optimistic” that change could be implemented, but there was a “mutual responsibility” among the financial institutions, insurance companies and regulators.
There has been a raft of new legislation and regulation introduced in the immediate aftermath of the banking crisis, Ms Muldoon said, adding that the Central Bank had significantly more powers than it did previously.
“But it is useful to remember that we are in the middle of unfinished business,” she said.
Many in the industry “cried foul” and there had been a lot of complaints about over regulation at first, Ms Muldoon said, but “much of what has been introduced in Ireland is mere catch up”.
She said many of the “teething issues” with introducing the new regulations have now been sorted, and the majority of companies have worked “hard and well” to absorb the extra work that had to be done.
“The game-changer for all of that, [which] still remains to be seen, is what banking union will bring,” she said.
The proposed banking union in Europe is “going much slower than expected”, she said, adding that legislators were now aiming for its completion in 2014.
“We will be navigating ambiguity for some time to come,” she concluded.
