A government-appointed advisory committee is to recommend that a new single financial regulator be funded from a levy on the financial services sector.

The funding proposal would mean a levy on banks, building societies, insurance companies and friendly societies. The revenue arising from the levies would have to cover all the costs of the new body, which could run into several million pounds.

The trade union representing staff at the Central Bank, MSF, which is opposed to a body independent of the Bank, yesterday criticised the funding proposal. It said the annual budget for the new body would run to at least £10 million (€12.7 million) and if institutions had to pay for this they would pass it on to customers.

The advisory group, chaired by the former Progressive Democrats TD Mr Michael McDowell SC, held another meeting yesterday and is close to finalising its report for the Government. It has come down in favour of a new "green-field" operation independent of the Central Bank.

While the majority of the committee are in favour of this, officials from the Department of Finance and the Central Bank are not and are expected to include their reservations in the final report.

MSF said a new regulator must come within the ambit of the Central Bank as a "green-field" operator would be too dependent on funding from the financial services sector. While MSF has expressed its opposition to an independent agency, the Association of Higher Civil Servants has supported the idea.