MSF, the union representing the bulk of the regulatory staff at the Central Bank, has said it will lobby strongly against any attempt to set up a Single Financial Regulator which is separate from the bank.

Mr Jerry Shanahan, deputy national secretary with MSF, said his union would lobby at political level against the establishment of a "greenfield" single financial regulator. He also said "any proposal will have to be discussed with us". An advisory committee due to report shortly on the issue is understood to have decided to recommend the creation of such an institution. The committee is divided on the issue but a majority has come down in favour of the greenfield solution.

Mr Shanahan said he was very concerned that the views of the Central Bank and the Department of Finance, the two bodies with the most experience in the area of financial regulation, would appear to have been overruled on the advisory committee. "This thing seems to be driven by the Department of Enterprise, Trade and Employment," he said.

The Department of Enterprise, Trade and Employment has responsibility for the regulation of the insurance industry. Referring to two scandals involving brokers, he said: "Taylor and Sinnott came under the Department of Enterprise and Employment, not the Central Bank. The people who have been least competent in regulating their area of responsibility are becoming the figures of authority, as such," he said.

MSF made a submission to the advisory group in which it argued strongly in favour of making the Central Bank the single financial regulatory authority. "The prospect of establishing a new single regulatory authority for Ireland does not bear up to close scrutiny."

"In its deliberations on the task which has been set for it we are confident that the group will be influenced neither by the noisy and seldom cogent arguments about the role of regulatory authorities in the AIB and NIB affairs, nor by those whose motives may be to weaken the regulatory regime currently operated in Ireland," the union said in its submission.

The union said the basic grade of regulator in the Central Bank is populated almost exclusively by graduate/professional staff. "It is a fact that there is only one pool of staff in the country possessing the necessary skills, and that therefore our members will probably continue, regardless of the nature of any SRA that might be created, to perform the tasks they currently do."

If a new greenfield institution is decided on, it should not be assumed that all regulatory staff would wish to move to it. "Some would no doubt prefer to remain in the Central Bank while others may decide that if they are to move at all they may as well move to the more lucrative private sector." The submission said that a side effect of the burgeoning regulatory environment was that generous remuneration was available in the private sector for the right candidates "and people with Central Bank regulatory experience have been leaving in increasing numbers to pursue these opportunities".

Mr Shanahan said the recently created Financial Services Authority in the UK is reportedly suffering from morale problems and significant movement of staff to the private sector.