The financial services industry watchdog has pledged to "name and shame" as well as fine financial institutions found to be acting unethically and has alluded to its powers to even remove a chief executive, if that was deemed necessary.
Launching the Irish Financial Services Regulatory Authority's (IFSRA's) three-year strategic plan yesterday, chief executive Mr Liam O'Reilly said there was a need for "ethical standards" and for people with "probity" and that it would be emphasising its principles to the senior management at Irish financial institutions.
IFSRA expects the boards and management of financial services companies to commit fully to a "culture of integrity, competence and best practice". Mr O'Reilly added that it expected this culture to flow throughout their organisations.
In 2004 its top priorities are to develop industry-wide codes of conduct, to make it easy for consumers to switch their bank accounts, and to conclude its study of the rate at which banks and building societies pass on interest rate changes.
The new codes of practice will set standards for sales staff and put mechanisms in place to monitor the level of competition. New legislation will bestow powers that will allow it to impose substantial financial penalties, and to name and shame those who do not comply.
A new reporting and document management system will be introduced for credit unions and a policy for systematic inspections will be established by registrar Mr Brendan Logue.
The IFSRA has proposed that the financial services industry would contribute €20 million towards its annual running costs this year. A consultation process is under way although Mr O'Reilly signalled that much of the discussion is likely to be centred on how the levy will be collected rather than the amount being demanded. He added that he will also listen to firms protesting about the proportion of the levy to be borne. Meanwhile, IFSRA also issued new research compiled by European Central Banks that has again confirmed that consumers who deposit funds at Irish financial institutions earn considerably less interest than those in EU states.
Data compiled in November 2003 showed that mortgage rates, both fixed and variable, were among the most competitive in Europe and remain lower than euro-area averages. There was a small decrease in the average rate of interest charged on overdrafts across the euro zone, including Ireland, but Irish consumers still pay a higher rate of interest than their European counterparts.
Overdrafts provided to the business sector also fell everywhere but Irish businesses were still charged more than one percentage point more than others across the euro zone.
