Dublin’s role as centre of international finance may be under threat

DUBLIN’S burgeoning reputation as an international financial centre could be seriously compromised if the new Irish Financial Services Regulatory Authority (IFSRA) fails, according to a study launched yesterday.

And ordinary investors could pay dearly too, saysJonathan Westrup, author of Financial Services Regulation in Ireland: The Accountability Dimension.

Mr Westrup believes there are significant doubts about the operational independence of the new financial regulator the IFSRAand much scope for confusion about lines of responsibility and accountability according to the study published by the Policy Institute at Trinity College Dublin.

Mr Westrup argues: "The political system's experience with regulators has not been wholly satisfactory and the cost of regulatory mistakes in financial services could be very high. The Oireachtas committee system struggles to carry out its oversight function of regulatory agencies and significant reform is required if it is to succeed in this role in the case of the Irish Financial Services Regulatory AuthorityMr Westrup said the failure of the IFSRA could cost the country dearly on two main fronts: Dublin's reputation as a financial centre; and, the security of money invested by ordinary punters.

The paper stresses that the basis for an accountability structure for the IFSRA should include explicit objectives and a process of performance evaluation, and questions whether these conditions have been met in relation to the existing Irish utility regulators.

Mr Westrup said the Government's decision to set up the IFSRA as part of a new regulatory and monetary authority, the Central Bank of Ireland and Financial Services Authority (CBIFSA), rather than as a stand-alone body as recommended by the Implementation Advisory Group, has important implications for the accountability structure of the new regulator.

Mr Westrup says the final outcome is unusual, if not unique, but he welcomes plans to raise public financial awareness and the establishment of consumer and practitioner panels.