The industry panel that advises the Irish Financial Services Regulatory Authority on its scrutiny of the finance sector has called for the creation of a new post of wholesale director to champion the "appropriate regulation" of the wholesale financial services industry.
Panel chairman James Deeney said in his first annual report that the scale of the sector justified the creation of such a post within the regulator's management structure. The post would complement the existing positions of consumer director and prudential director.
Members of the panel include senior management figures from some of the biggest industry players and representative bodies. "The international and wholesale financial services sector contributes in excess of €1 billion annually to the Irish Exchequer. If we get the regulatory regime wrong, this will rapidly erode," Mr Deeney said in his chairman's statement.
"The core role of the wholesale director would be to champion the appropriate regulation of the wholesale sector and to position risk monitoring at the centre of regulatory policy in an environment of increasingly complex financial instruments and transactions.
"Such a director would interact at an early stage with industry initiatives in product innovation and development, and, importantly, would be entirely consistent with the ambition of both Government and industry to grow the international wholesale sector."
Mr Deeney, formerly chief executive of HSBC Ireland, said there needed to be recognition of differing regulatory priorities between the domestic financial services sector and international organisations that operate in the market by choice.
"The regulatory regime is, by definition, one of the key factors in their decision to locate here. It is important to emphasise that the panel does not advocate 'soft regulation', but rather regulation that is highly informed, responsive and pragmatic."
He said balanced regulation in a principles-based competitive market could not create a "zero failure" regime. "This fundamental reality requires broad, industry-wide regulatory and political understanding. Ireland is recognised as a well-regulated jurisdiction, but if regulations are broken, the answer is neither necessarily nor invariably extra regulation."
He said over-regulation could "anaesthetise the delivery of financial service products" to the extent that consumer choice and competition would be reduced.
The panel surveyed all regulated organisations in the market early this year. The findings, to be published soon, will inform its discussions with the regulator on its 2007-2009 strategic plan.
