The Financial Regulator’s annual report, published last Tuesday, contains one very clear message that, depressingly, went completely unnoticed by the media.
That message is – Absolutely nothing has changed; the old regime is still in place; the old attitudes are still dominant; the interests of the people and the country will continue to take second place ahead of the interests of a ruthless and deeply corrupt financial sector.
Dodgy financial institutions will continue to enjoy full protection under a mountain of bureaucratic waffle and strict secrecy laws enthusiastically enforced by FR staff.
Jim Farrell is the public face of this disgraced and discredited Financial Regulatory regime. In an interview on RTE (5th report) he claimed that:
the way the country’s banks are now regulated is fundamentally and forever changed.
It is reasonable to assume from this statement that all is well at the Financial Regulator, that major reforms have been put in place which will protect consumers forever into the future and bring to account the corrupt vermin that have infested the Irish financial sector for decades.
In other words, it is reasonable to assume that Mr. Farrell has announced a virtual revolution in Irish regulatory methods and that from now on his organization will act in the interests of Ireland and its citizens rather than the interests of (dodgy) financial institutions.
The (revolutionary) measures announced by Mr. Farrell are as follows:
Extra staff with additional skills.
A more questioning and forensic approach to regulation.
Staff from the Financial Regulator are now on site in banks that are covered by the Government guarantee scheme. These people are full time and are monitoring the activities of banks.
The first two measures can be dismissed for the waffle that they are but the third measure is interesting.
My understanding of the presence of FR staff in the banks is that they are there in a temporary capacity as a result of the economic collapse and subsequent scandals.
I assumed, obviously wrongly, that once the crisis was over and banks were returned to private ownership that FR staff would also withdraw.
My understanding now, as a result of Mr. Farrell’s announcement, is that FR staff will become a permanent fixture on the staff not just of those banks under government guarantee but of all financial institutions to ensure that no such scandals could possibly recur.
To confirm this I contacted the Financial Regulator and spoke to the Senior Press Officer, Gill Forde.
Ms. Forde confirmed that it was official policy to have FR staff permanently on site in the covered institutions.
What about other financial institutions?
We are currently recruiting and enhancing our expertise in all of these areas and that’s the only detail I have for now.
My understanding from what Mr. Farrell said is that the banks covered by the Government guarantee are now going to have full time staff from the FR on a permanent basis.
Even when they’re returned to private ownership?
He said the approach has changed and he was referring to principles based supervision.
What I’m inquiring about is the entire financial sector. Is it the policy of the FR to put their staff in all banks on a permanent basis?
The FR as you will be aware, there’s new legislation being brought forward by the Government forming a Central Bank Commission and I don’t have any more information.
I’m just going on exactly what Mr. Farrell said – The country’s banks are now regulated fundamentally and forever changed and one of the measures he has taken is to put people on site full time in those banks covered by the government guarantee.
My question is – Is that a permanent policy, that FR staff will continue to monitor those banks forever and not just until the crisis is over?
I don’t have any information further than to say that that is our regulatory approach to supervising the banks.
So really what you’re saying is you don’t know.
I’m not saying that, I’m just saying that it’s a regulatory approach to supervising the banks.
Could you refer me to somebody who could answer the question?
That is our response.
I don’t understand your response; Mr. Farrell is saying that full time staff has been put on the banks
Exactly and that’s because the principles based approach no longer applies.
Are you saying that the placing of full time staff in the banks is a replacement for the principles based approach.
Yes, I am.
But it only applies to financial institutions under government guarantee and not to the entire financial sector?
The Regulator has been realigning with the new provisions and we are recruiting additional staff across the organization with the focus on risk, governance and enforcement
I tried to press the matter but Ms. Forde said she had to go and hung up.
Here’s my summary.
Mr. Farrell was being dishonest in suggesting that the temporary arrangement of placing FR staff in the banks was a major, industry wide and permanent reform.
(I say ‘temporary’ because nobody seriously believes that the banks would allow the Regulator to closely monitor their activities on a permanent basis)
In my opinion Mr. Farrell was just talking rubbish, just mouthing meaningless words to dishonestly convey the impression that substantial change had occurred that would, for the first time in Irish history, see genuine financial regulation.
Ms. Forde’s arrogant and dismissive reaction to my questions is exactly what I have come to expect from FR staff over the years. The attitude is still the same – Bureaucratic waffle, refusal to answer even the simplest questions and always the big stick of state secrecy laws.
Ms. Forde’s claim, for example, that the placement of FR staff in banks is a replacement for the principles based approach to regulating banks is, in my opinion, insulting waffle.
If such a major policy shift was in operation I wouldn’t be hearing it from a FR press officer, I wouldn’t even be hearing it from the chairman of the Financial Regulator on RTE News. I would be hearing it from a Government press conference chaired by the Minister for Finance as he announced to the world that Ireland had finally decided to take financial regulation seriously.
A much more disturbing aspect of this situation is the reaction or, more accurately, the non reaction of the media.
The publication of this year’s annual report by the Financial Regulator is arguably the most important event in Irish financial regulatory history.
It is the first annual report following the collapse of the economy which exposed the Financial Regulator as an incompetent toothless tiger unable or unwilling to reign in rogue elements in the banking sector.
This incompetence by the FR played a major role in the destruction of the economy and by extension is at least partly responsible for the massive financial and social damage to the people of Ireland.
Despite this, the media and in particular RTE effectively ignored the report and the fantasy (dishonest) claims made by Mr. Farrell.
This ignorance of what is really going on within the financial regulatory system and other so called regulatory agencies is a major contributing factor to the financial catastrophe now facing this country.
Financial Regulator (Press Office)