On 21st Jan last (2nd report), the chairman of the Financial Regulator, Jim Farrell, appeared before the Oireachtas Finance Committee to answer questions on the banking crisis. Here’s what he had to say about the Anglo Irish Bank debacle.
“The action that was taken was in the context of the environment of the time…The Financial Regulator has relied on appropriate management and controls in firms ethical behaviour and true and fair reporting by firms and their auditors as well as on site inspections by supervision actions by the regulator. It is clear that in the case of Anglo Irish Bank this did not happen. We are committed to putting in place measures to try and ensure nothing of this sort can happen again including if necessary requesting government to introduce new legislation.”
This is a standard reflex response employed by politicians and bureaucrats in defence of light touch regulation that has allowed financial institutions to rob countless millions from customers and the State.
As I write, the ‘environment of the time’ that Farrell speaks of is still with us and his promise to introduce new measures to rein in the vermin that infest the Irish financial sector is, at best, dishonest. It is an absolute certainty that no effective action will be taken to deal with these people.
The following day, On Morning Ireland (3rd report, 2nd item) , Jack Fitzpatrick of the Professional Insurance Brokers Association responded to Farrell’s comments.
“We represent almost a thousand member firms in every county in Ireland. Regulation seems to be for the small guy, the regulator already has the power to fine any individual up to €500,000 and any company up to €5 million so the legislation is there. Sanctions have been imposed on small and intermediary some have been put out of business. No sanctions have been applied to banks, nobody in the banks has been fined and we’ve had various things ranging from the NIB tax evasion, overcharging by banks to customers, all that happens is refunds, nobody resigned, nobody was fined.”
Fitzpatrick went on to say that there was no reason why current legislation cannot be used against former Anglo Irish chairman, Sean Fitzpatrick and that there was a far too cosy relationship between the regulator, the Central Bank and the banks.
These comments prompted Jim Farrell to ring Morning Ireland (3rd report, 3rd item) (He didn’t have the courage to go live on air) to dispute Fitzpatrick’s claims that the regulator enjoyed a cosy relationship with the banks. Mr. Farrell said the authority did not have powers to impose fines when the overcharging emerged but it later recovered €167 million on behalf of customers.
This dishonest statement is proof positive that the Financial Regulator has not changed its spots, that it remains a staunch defender of a ruthless and, for the most part, corrupt financial sector.
Farrell’s claim is dishonest because the Financial Regulator has had the power to impose fines since 1st August 2004 under the Central Bank and Financial Services Authority of Ireland Act, 2004.
Since that time there have been numerous instances of overcharging but not a single institution or official has been fined. The effective policy of the regulator towards errant banks still remains – just pay back the monies robbed and carry on.