New regulations to be introduced by the Government will make it possible to prosecute people who deliberately mis-sell insurance policies to consumers, an Oireachtas joint committee has been told.

Mr John Corcoran, an assistant-secretary of the Department of Enterprise, Trade and Employment, told the Oireachtas Joint Committee on Enterprise and Small Business that new regulations should help eliminate the practice of "churning".

The regulations, which will be made under the Sale of Goods and Supply of Services Act, will give the Director of Consumer Affairs the power to refer cases of mis-selling to the Director of Public Prosecutions.

The regulations will mean commission payments, deductions and the surrender value of life assurance policies are disclosed in an understandable form to the consumer, said Mr Corcoran, who is head of the Department's insurance and company law section.

Mr Corcoran said the first knowledge he had of "churning" allegations against Irish Life were "when I read about it in the papers". He told the committee he would have to check the Department's records to see how many complaints have been made over the years about "churning".

"Any complaints we would have got about churning we would have passed to the Insurance Ombudsman," he said.

He said the annual report of the Insurance Ombudsman did not contain many reports of "churning" and added the majority of complaints made are about motor insurance. He said one of the remaining problems in finalising the regulations is that insurance brokers are arguing that "their commission earnings represent their turnover from which all expenses must be paid and are not comparable to remuneration received by direct sales forces".

He said brokers have also told the Department that "separate knowledge of brokers' commission adds nothing to the ability of the consumer to make an informed choice once the full global charges are disclosed".

The Department is currently working with the Royal Society of Actuaries to resolve these arguments and producing guidance notes on how the regulations will operate, he added.

Mr Tommy Broughan, of the Labour Party, said the response was "very lethargic" and said a regulator for the whole financial services sector is needed.

"You are like an aquarium keeper, watching all the sharks eating up the smaller exhibits," he told Mr Corcoran.

On the subject of the Insurance Ombudsman, Mr Corcoran said it was his understanding that the office remains independent. While there had been some "aberrations in the past", he said the Minister for Science and Technology, Mr Noel Treacey, had contacted the board of the Insurance Ombudsman to make sure the position of the ombudsman was "further improved".