THE Consumers Association of Ireland has called for the establishment of an independent financial consumer council, which would act as the regulator of both insurance and investment intermediaries.

The CAI has called the decision to split insurance and investment regulation "unworkable" and said that it will lead to reduced competition and consumer choice.

"The shadow cast by the most recent scandal has put investment regulation in sharp focus, yet historically most instances of fraud have involved insurance investment Negligence, bad advice and fraud do not respect the differences between the 1989 Insurance Act and the 1995 Investment Intermediaries Act," the CAI said.

The association added that the decision to have the Central Bank regulate investment intermediaries, while leaving the regulation of insurance, distribution with the Irish Insurance Federation and Irish Brokers Association, will create distortions disadvantageous to consumers.

The CAI says that this split in regulation will lead to a shift to more insurance investments being sold by intermediaries in preference to other investments such as cash deposits, ES schemes and tracker bonds and will also result in growth in "wrap around" life insurance products.