Agency urged to monitor risky schemes

THE Financial Regulator was yesterday urged to clamp down on irresponsible companies selling “red-hot” investment schemes and high risk bonds to consumers.

The independent watchdog defended its actions protecting consumers’ personal finances but admitted it had no authority to ban risky investments products being sold to consumers.

TD Darragh O’Brien warned of high-risk bonds that had “burned consumers”. The Fianna Fáil deputy criticised the Financial Regulator’s inspection records which in some cases meant companies were only checked once every four years.

The watchdog’s chief executive Patrick Neary said there were “very valid” concerns about risky products being offered to consumers.

The role of the Financial Regulator though was to authorise firms and not the products they sold, Mr Neary told the Oireachtas Public Accounts Committee.

Fine Gael’s Padraic McCormack raised concerns about consumers being offered cash incentives and holidays from companies wanting to take over their mortgages.

The committee heard the risk with such incentives were often only evident once a contract was scrutinised. In previous cases, such offers had seen firms take ownership of part of a home for ever.

Firms are being warned about offering financial products to elderly people and the suitability of such incentives, the committee heard.

Mr Neary also rebuffed claims by Labour’s Tommy Broughan that his office was considered inept at confronting abuse of the markets or financial scandals.

“I hope we’re not regarded as the laughing stock,” said Mr Neary.

Mr Broughan accused the regulator of ignoring investigations like the Fyffes/DCC insider dealing scandal and more recent concerns about the handling of mortgages and funds by solicitors.

Mr Neary said the Financial Regulator was formed after the Fyffes/DCC case emerged and regulation of solicitors was outside its remit.