The Consumers' Association of Ireland has criticised Mr Ray MacSharry's lobbying on behalf of the Central Bank in the debate over the proposed Single Regulatory Authority. The former finance minister and European Commissioner wrote to the Minister for Finance, Mr McCreevy, on behalf of Mr Roy Donovan, a member of the Central Bank board and a Fianna Fail supporter.

The chief executive of the Consumers' Association, Mr Dermot Jewell, said the revelations about Mr MacSharry's role "discredits the notion that the Central Bank could ever act in the interest of consumers". The Bank has lobbied the Government to be allowed continue in its role as the ultimate regulator of the financial services industry, despite the recommendation of a review group that a new independent regulator be established.

The review group was set up following the failure of existing State bodies, including the Bank to prevent abuses of financial regulations by banks and other organisations.

The Consumers' Association said yesterday that the Central Bank was now actively trying to undermine the recommendations of the report, compiled by Mr Michael McDowell QC, who went on to become Attorney General.

"It is clear that there is a concerted and organised lobby," said the group, which added that it took the Bank's statement yesterday that it was unaware of Mr MacSharry's and Mr Donovan's activities "with a pinch of salt". The association said the debate on the Single Regulatory Authority was a test of "whether we are to have government by hidden quangos protecting their turf as they see it, or if we are to do the right thing".

To date, the Minister for Finance has supported the Central Bank's position while the Tanaiste Ms Harney has been pushing for the new regulator. No joint position has yet been agreed although the report of the McDowell review group was published over a year ago.

The Consumers' Association has called for a new body with an emphasis on consumer protection as well as prudential supervision, modelled on the Financial Service's Authority in Britain. It has also expressed concern that a number of Irish financial institutions have come out in support of the status quo.