Watchdog criticised as questions remain

THE Financial Regulator was strongly criticised last night as questions remained unanswered on why it did not take action earlier on loans to directors at Anglo Irish Bank.

It emerged yesterday that the regulatory authorities knew for a number of months about the transfer of money in Anglo Irish Bank which lead to the resignation of its chairman, Sean FitzPatrick, on Thursday night.

Mr FitzPatrick resigned over the temporary transfer of €87 million in loans between the bank and Irish Nationwide Building Society over an eight-year period.

The Office of the Financial Regulator yesterday refused to answer a number of questions including how long it knew about the loans and why it did not take any action.

A spokesperson said they could not make any comment because “the investigation is ongoing”.

Fine Gael’s finance spokesman, Richard Bruton, said: “The regulator must now provide a satisfactory explanation of his actions and approach in this matter.

“It seems this issue only came to a head recently, despite the regulator having known about the irregularities since earlier this year.

“The regulator must explain when he knew, how he knew and what action he took.

“Taxpayers have stepped up to the mark to guarantee the banks. So it is appalling to discover that there seems to be an inner circle who feel the normal rules do not apply to them.”

Green Party finance spokesman, Senator Dan Boyle, said public confidence in the banks will only be restored when “we have different people doing the regulation in the future”.

Sen Boyle criticised the “hands-off approach that has been applied in the past”.

Speaking on RTÉ radio, he said: “The first thing we need to do is put in more effective regulation. This is a practice that was going on in one financial institution for eight years and it begs so many questions about the culture of banking, if this exists in one institution or across the board.

“There will be many unwelcome answers over the next period as we try to deal with it.

“We’re in a situation now of a serious lack of public confidence because of the state of financial institutions and because of revelations of this type.

“I would be of a belief that not only should we be looking at all financial institutions and looking for a sea change in terms of how they are managed and who is managing them, I think a similar process has to happen in terms of the state regulation authorities.

“Part of it is to introduce new legislation to review what we have there at the moment and where necessary strengthen it. But I think part of the public confidence process is about having different people doing that regulation in the future.”

Independent Senator Shane Ross said yesterday: “What’s happened here is a complete and utter collapse of regulation in this country”

Professional Insurance Brokers Association chairman Jack FitzPatrick, said: “The regulatory authorities have known about these practices since early in the year. What have they done to protect unsuspecting investors from getting involved?”