May 26, 2009

Yesterday’s report by the Financial Services Consultative Consumer Panel draws a direct connection between the “significant amounts of money” lost by most consumers and “the inadequate functioning of the present financial regulatory structures”.While welcoming the Government’s commitment to reform the Central Bank, it says it is “concerned about where the consumer fits into the new framework”.The panel, which has the job of monitoring the performance of the Financial Regulator, has called for an overhaul of financial regulation both here and overseas.

“Changes must be affected at both national and European level and the change is as much about a transformation in the willingness of regulators to act as it is about any formal structures,” it notes.The report also criticises the “deficient” response of the regulator to threats to consumers, including the domestic property bubble.“We are unclear as to why the regulator did not move to dampen the bubble at an earlier stage, for instance by requiring banks to set aside more capital for riskier products,” the report said, highlighting products such as interest-only loans.