The Labour Party has given its backing to a new greenfield regulator for all financial services.

The Labour party's finance spokesman, Mr Derek McDowell, said the party's preferred option is to back the majority recommendation in the McDowell report.

The Minister for Finance and the Tanaiste are due to put proposals to Cabinet next month. Both their departments backed different option during the review process, with the Department of Enterprise Trade and Employment favouring a new greenfield operator.

Mr McDowell said he is not persuaded that the Central Bank can undergo the change of culture to deal with consumer interest.

Mr McDowell added that the so-called "twin pillars" where the consumer interest part of regulation would be nominally independent of the Central Bank would not work.

One of the benefits of a single regulator is that it would allow exchange of information, he said. "We have heard time and again of information which the Central Bank could not even disclose to the director of consumer affairs because of its prudential remit. The legal advice is that such an exchange would be possible with a single regulator but probably not with the twin pillars."