Regulator wants better compliance among smaller financial firms

THE Financial Regulator has highlighted a need for stronger compliance among smaller players in the financial services sector.

Addressing the Galway Chamber of Commerce at an event in the Galway-Mayo Institute of Technology (GMIT) last night, Matthew Elderfield said his office is to provide a new electronic filing facility for what he labelled smaller, low-impact firms.

“About half of the retail intermediaries who are supposed to file returns with us do not do so. That is unacceptable. So, we are making it easier by providing an electronic filing facility,” he said. Mr Elderfield added the Regulator’s office will also begin to flex its powers to fine or revoke authorisation for those firms who continue to refuse to pay their levy, or who fail to file timely regulatory returns.

“These are the most basic things we expect a regulated firm to do to assure us that it is properly run. Those who refuse to pay their bills or file returns should not expect to continue to be allowed to provide financial advice and other financial services to Irish citizens,” Mr Elderfield said. He added non-compliance with basic requirements is not fair “to the hundreds of compliant firms in the sector.”

Mr Elderfield said: “We will give time to the sector to get more compliant in the next couple of years, but generally we’ll become less tolerant of poor compliance with basic requirements.

“These firms will not be getting the level of intense scrutiny as high-impact firms, so they need to meet their minimum regulatory obligations.”

In his speech Mr Elderfield outlined how the Central Bank will scrutinise financial services firms — from the main banks to the smallest intermediaries — to ensure they are following a controlled risk strategy and business model. For the larger banks, the Regulator will have dedicated supervision teams visit to oversee practice. “The key is that failure and problems may be inevitable, but we must decide how to deploy our resources to prevent problems occurring where they will hurt the most. Our goal is to minimise the risk of failure and to minimise disruption involving the big systematically important banks,” he added.