The financial services industry has broadly welcomed the new financial regulator but Fine Gael finance spokesman, Mr Jim Mitchell, has warned this structure may change if his party gets into government.

The Central Bank of Ireland yesterday welcomed the Bill, which extends its supervisory activities to include the insurance sector. "The Bank looks forward to working with Mr Patterson and the interim board of the new regulatory authority in the establishment of these structures," a statement said.

Mr Jim Bardon, of the Irish Bankers' Federation, said the new structure could provide a "world-class" regulatory structure. Mr Bardon noted that a second Bill was also proposed and said the banks would be seeking an input into the consultative panels to be created. The second Bill may also establish a statutory financial services ombudsman as recommended in the McDowell report.

Reacting to the proposed legislation, Mr Mitchell described the new structure as an "awkward compromise" following a lengthy battle between the Department of Finance and the Department of Enterprise, Trade and Employment. "There was a need for a new Central Bank Act in any event. I have been very displeased with the Central Bank in the last few years, particularly its attitude to DIRT and the recent fraud at AIB. A shake-up of the Bank was overdue," he said.

Mr Mitchell said he would propose major amendments to the legislation, mainly to ensure a more streamlined organisation.

"There will be a change of government in a few weeks. This is the Minister for Finance's swansong. A new government will bring forward very substantial amendments," he said. The Labour Party said it was unable to offer any informed comment on the new legislation.

Irish Insurance Federation chief executive Mr Mike Kemp welcomed the long-awaited Bill. "There were no great surprises in this Bill and we would be more interested in the second one." He added that it was still unclear how the regulator's monetary function and consumer protection functions would be balanced.

The Irish League of Credit Unions said it hoped the new statutory Registrar of Credit Unions would be "supportive of the uniqueness and voluntary character of the credit unions."

The Irish Association of Investment Managers said the Bill was a very important step forward in strengthening the regulatory environment, the protection of consumers and in reinforcing the reputation of Ireland as a location for financial services.