Calls for swift action to make IFSC more attractive to potential investors

A FLIGHT of funds and jobs from the International Financial Services Centre (IFSC) is likely unless the Government acts to make it more attractive to investors, it was claimed last night.

Denis Casey, the chairman of Financial Services Ireland, warned there is a "real and imminent danger" that significant parts of the international asset financing and leasing sector, and the corporate treasury sector, will flee the IFSC unless steps are taken soon to protect the industry.

"The events of the last 10 days in Donegal are a timely reminder of the intense global competition for jobs; we must be alert to the ever-present risks to the international financial sector that has been the jewel in the crown of the Irish economy in recent years," he said.

"It is essential that, as we go forward, the costs of regulation and the requirements of the regulator are reasonable and proportionate to the benefits expected to accrue.

"Over-regulation will damage the financial sector and the economy, will discourage inward investment and the consequences of over-regulation will ultimately be borne by the consumer through higher prices or reduced competition.

"In that context, we would particularly urge the Financial Regulator to ensure that regulatory changes are subject to a robust cost benefit assessment before being introduced," he said.

Mr Casey said that despite much unfair critical comment in the media, the financial sector continues to deliver for the Irish economy in terms of the tax take and employment. He said that when errors do occur, the industry will seek to fix them as quickly as it possibly can.

"It is disappointing that there is so little public acknowledgement of the contribution the sector has made to national prosperity. A sense of balance and fairness in the analysis and reporting of the sector is not an unreasonable expectation."

The industry was also concerned that only one in two people had signed up for a pension, he said, and there was an urgent need to address the issue.

"The simplicity of the SSIA saving scheme, where Government contributions were paid directly into the saver's account, caught the public imagination.

"It is clear that direct government contributions are more highly valued and more easily understood by savers than the traditional pensions tax reliefs.

"There is an obvious opportunity to adopt this simpler model for PRSAs in order to encourage many SSIA savers to redirect their savings towards building a retirement fund.

"I urge the Government to be proactive and imaginative in this regard."