The Cedar Lounge Revolution

Financial Regulator’s Consumer Consultative Panel strongly criticises Irish banks over interest rates. That’s okay though. The Consumer Consultative Panel will soon be history… September 23, 2010

One might think that ears would be burning in certain financial circles on foot of the following:

Irish consumers are being “mercilessly fleeced” through paying higher interest rates in order to rebuild the balance sheets of the banks, according to the Financial Regulator’s consumer panel.

And what of this?

Householders who do not have tracker mortgages are being treated as “second-class citizens”, forced to pick up a disproportionate share of bank rescue costs, says a report by the Government-appointed watchdog.


There’s also this:


It says the “unacceptable” pace of investigation into how the financial system in Ireland came close to collapse “leaves a lot to be desired”.


And last but not least, harsh words for the…er… Regulator:

There is a welcome for the extension of the deposit guarantee scheme to December, but concern is expressed about what will happen afterwards. The report accuses the regulator of passivity on the issue and of failing to properly understand its role in protecting the consumer.

An Irish regulator that doesn’t understand its role – never!

Still, those ears are probably cooling rapidly:

The panel, which is chaired by lawyer Raymond O’Rourke, is facing abolition under legislation currently before the Oireachtas, although a new group is to be set up to advise the Central Bank on consumer issues.

Hooray! Or as Private Eye likes to say, doubles all round.
………………….

Interesting composition of the CCP. It includes the ever excellent Kathleen Barrington of the Sunday Business Post, former Senator Prof Noel Mulcahy, Chairman for Financial Services Innovation Sean O’Sullivan and accountant John Maher and is chaired by Raymond O’Rourke.

And some of it’s other recommendations are pretty good too, even if they are positioned within the structures of the currently prevailing economic system (here’s an article by O’Rourke in the Irish Times).

The latest report looks at developments within the financial services sector in the past year. It welcomes many of the changes made over the year, including the appointment of a regulator from overseas and the setting up of investigations into the financial crisis.

However, the panel says it is still concerned about where the consumer fits into the new framework. With less competition in the banking market, the consumer could be subjected to a plethora of additional charges of “dubious legality”.

It says remuneration policies in the banks must not allow or encourage excessive risk-taking in the future. If financial institutions are to offer staff any bonuses, these should take the form of shares that cannot be sold for at least five years.