‘Banks can expect more robust regulation’

BANKS and financial institutions can expect to see a far more robust and expensive regulatory environment in the years ahead, the governor of the Central Bank Patrick Honohan warned last night.

Speaking at the Financial Services Ireland annual dinner in Dublin Mr Honohan said in recent years, the term “principles-based regulation” seems to have become a code for deferring to the preferences of the regulated entities. “That will certainly not characterise future regulation. Instead you may expect to see challenging and assertive supervisors taking an independent and robust view of the risks of a firm, and insisting on mitigation. They will be backed by a credible threat of enforcement action,” he warned.

He is determined there will be a renewed emphasis on enforcement, even at the risk of the regulator incurring legal costs in unsuccessful actions. He said new structures and approaches will be adopted in what is rapidly becoming a unitary Central Banking organisation “without artificial and unnecessary” internal barriers.