Regulator admits it was slow to act

THE Financial Regulator has conceded it should have taken “earlier and stronger” action to curb Ireland’s explosive credit growth.

Acting chief executive Mary O’Dea defended measures taken to protect personal lending and borrowing since the regulator was set up in 2003, but admitted more could have been done to calm lending.

“With the benefit of hindsight, we can say that we should have done things differently and could have taken earlier and stronger action to dampen credit growth,” Ms O’Dea said at a conference on personal debt.

She added that, with the onslaught of cheap credit and the opening up of markets to competition, it was “questionable whether the Financial Regulator alone could have materially prevented the growth of the property bubble.”

She also warned financial institutions that the heads of banks now needed to ask themselves “serious questions” about their governance and other practices.

Speaking at the Law Reform Commission’s annual conference, Ms O’Dea said it was “extraordinary” the Irish Banking Federation had criticised the regulator for failing to take stronger action before on personal debt. One of its initial functions had been to address bad sales practices in banks, she insisted.

It was up to banks to lead the way in rebuilding confidence in the financial system, the regulator chief added: “Boards and management of these institutions, who are now heavily supported by taxpayers, must ask serious questions of themselves regarding how they conduct their business under such headings as governance, risk management, capital allocation, compensation incentives and long-term strategic direction of their businesses.”