Elderfield lays down the law on regulation
Published 06/05/2011 | 05:00
THE country's finance houses were given a stark warning yesterday -- Big Brother is watching you.
Financial regulator Matthew Elderfield said that he didn't expect financial firms to enjoy the close attention arising from a new risk assessment programme to be introduced later this year, but all would be expected to co-operate.
The PRISM framework (Probability Risk and Impact SysteM) will rank the country's 14,100 financial services firms according to the likely impact on the economy and consumers if things go wrong.
The firms will be categorised as either 'high impact', 'medium high impact', 'medium low impact' or 'low impact'. Dedicated supervision teams will be established to ensure the Central Bank has a good knowledge of their strategy and business model.
"We will expect firms to co-operate with this level of supervision, though we don't expect them to particularly enjoy it. We will make judgements on their leadership and the judgement shown by that leadership, which will, at times, be uncomfortable for them," Mr Elderfield warned.
The regulator told an audience at Galway-Mayo Institute of Technology last night that, in terms of outcomes, his office would be seeking to ensure that the firms always had sufficient capital to cover the risks they were taking as well as having responsible individuals at the helm.
"Any alarming spike in a particular risk type, a particular sector or a particular firm will prompt early and intense supervision with a view to mitigating the issue before it acquires crisis proportions," Mr Elderfield added.