The failure of the Government to push through reforms of the Central Bank, designed in particular to protect the interests of consumers, reflects a serious dereliction of duty. Very powerful interests are involved, both in terms of administrative and financial power. But that is all the more reason why action should have been taken. As things stand, root and branch reform of the Central Bank, as suggested by the McDowell report, has been resisted. And a special regulatory authority, designed to protect consumers against the excesses of profit-focussed financial institutions, has yet to be established.
Talk of reform has been going on for years. But the need for action became a matter of public concern when the McCracken tribunal and the DIRT inquiry exposed specific shortcomings in the way the Central Bank conducted its business. Eighteen months ago, attempts to transfer financial regulatory functions to a stand-alone agency were successfully resisted by the Department of Finance and the Central Bank, supported by their Minister, Mr McCreevy. And the Progressive Democrats reluctantly agreed to less sweeping reforms of Central Bank structures.
The compromise was announced with much fanfare, last February. A joint statement from the Tβnaiste Ms Harney, and Mr McCreevy promoted a twin-tower approach. Within a reformed Central Bank, a new, independent authority was to be responsible for the regulation of the banking and insurance sectors with particular responsibility for consumer protection. A chief executive and a director of consumer affairs were to be appointed. An interim board was to be established immediately.
Ten months later, nothing has happened. The legislation is still being drafted. In the meantime, the banks and various financial institutions continue to operate under old, inadequate controls.
The big loser in all of this is the consumer. A succession of official reports have argued that greater protection should be provided for banking and insurance customers in their dealings with powerful institutions. The case is particularly pressing in relation to the treatment of small businesses by banks, where statistics to measure the extent of possible abuse are not even available. The withdrawal of services to ordinary customers, the introduction of new charges and the closure of bank branches are also issues that should be carefully regulated in the context of Government largesse and the reduction of corporation tax.