THE BANKING industry report produced recently by the Governor of the Central Bank, Patrick Honohan, has been criticised by the Financial Services Consultative Consumer Panel, which has statutory responsibility for reviewing the performance of the Financial Regulator.
In a detailed statement issued on Saturday afternoon, the consumer panel said it was “very disappointed” that the Honohan report “did not refer to the work of the panel in highlighting many of the failings of the regulator in the past number of years”.
This statement followed a meeting last Monday of the panel to review the two separate banking inquiry reports, which were published earlier this month by Prof Honohan, and experts Klaus Regling and Max Watson.
According to the panel, which is chaired by Raymond O’Rourke and is set to be disbanded as part of a shake-up of financial regulation here, Mr Honohan did not meet with the panel when preparing his report.
The panel said they believed they had “adequately” completed their tasks to “protect consumers” and “highlight failings” in the performance of the Financial Regulator in recent years.
“Unfortunately, Irish consumers were let down by a regulator which was unwilling to take on board any contrary viewpoints that did exist during the time covered by these banking inquiry reports,” the panel added.
While the panel agrees with the broad thrust of the Honohan report, it highlighted its role with the regulator in a couple of important areas. The panel said that over the past five years it had highlighted overcharging to the Financial Regulator and to the acting regulator more recently.
“We wish to record that this was regarded as a crusade by the panel particularly in relation to the issue of overcharging by Irish Nationwide and more recently MBNA.
“Whenever the issue was highlighted to the Financial Regulator the panel was informed that ‘we were wrong’. The Honohan report proves that the Consumer Panel was correct all along.”
The panel has statutory responsibility to review the annual budget of the regulator and commented on the finding in the Honohan report that only a small number of staff were available for prudential supervision.
“We wish to make it clear that in all our budget discussions the Financial Regulator never informed us that they were under-staffed despite repeated pertinent questioning,” the panel said.
It also said its calls on the deposit guarantee scheme in the wake of the Northern Rock crisis in the UK – which happened before the Irish banking crisis blew up – fell on deaf ears at the Financial Regulator.
In all, the panel listed 16 comments in relation to the banking inquiry reports. It said sufficient information has been provided by the banking reports to prepare terms of reference for a future committee of investigation into the banking crisis.