Banking ethics - Regulatory excuses just don’t wear

The chairman of the Irish Financial Services Regulatory Authority (IFSRA), Jim Farrell, testified yesterday before the Oireachtas Joint Committee on Finance and the Public Service that his office was too trusting in depending on the ethics of officials.

The problem was that the system was a principles-led supervision system aimed at protecting consumers. It depended on ethical behaviour and true and fair reporting by the board of directors and senior management. It is now clear, he said, that this did not happen in the case of Anglo Irish Bank.

With hindsight, Mr Farrell noted, things should have been done differently. Of course, IFSRA had not the foresight to realise what was likely to happen, and it failed to use the hindsight that was available. Either should have prompted a serious questioning of the bank behaviour.