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Friday 30 September 2016

Regulator Roux flagged fears over Central Bank consumer protection

Published 20/07/2015 | 02:30

Financial Regulator Cyril Roux flagged concerns to Patrick Honohan as recently as October that consumer protection in the Central Bank was
Financial Regulator Cyril Roux flagged concerns to Patrick Honohan as recently as October that consumer protection in the Central Bank was "light touch" and "undermanned"

Financial Regulator Cyril Roux flagged concerns to Patrick Honohan as recently as October that consumer protection in the Central Bank was "light touch" and "undermanned".

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And he also separately claimed that Dame Steet's supervision of anti-money laundering activities was "woefully insufficient", according to documents released under Freedom of Information.

In an email last October, the financial regulator told Mr Honohan that a group tasked with advising Dame Street about consumer protection issues had sought a meeting with Mr Roux to share their concerns about the way the Central Bank delivers consumer protection, and the resources devoted to it.

Mr Roux told the Governor that the Consumer Advisory Group's concerns had called out the "light touch, undermanned approach to supervision that has been ours so far". Mr Roux went on to argue that this approach had "a) failed the Irish citizens so spectacularly on the prudential banking side not long ago, b) has grown out of line with international norms, and c) would be spread to a point of irrelevance should we continue to reduce headcount when the lawmakers grow every other month the list of regulated entities they task the CBI to supervise".

The Consumer Advisory Group - a panel of outside experts appointed by Dame Street to advise it on consumer protection issues - was at the time chaired by Dr Anthony Walsh, who had been head of the Institute of Bankers, with current members including Niamh Moloney, who has served on the UK Financial Conduct Authority's advisory Financial Services Consumer Panel, and Michael Culloty of the Money Advice & Budgetary Service (Mabs).

In a follow-up letter to his meeting with Mr Roux, Dr Walsh said additional resources needed to be "urgently" dedicated to consumer protection activities amid rising regulatory burden.

"If the Consumer Protection Directorate had more resources, it could, in the opinion of CAG, be more proactive and effective," Dr Walsh said.

In his email to Mr Honohan, Mr Roux said the comments made in Mr Walsh's letter were more diplomatic than those made face-to-face in the meeting.

In a separate memo around the same time to Mr Honohan, Mr Roux blamed a lack of staff for the bank's apparent inability to properly supervise anti-money laundering activities.

"The current insufficient headcount in AMLD (Anti-money laundering division) is the reason for our woefully insufficient supervision of AML (anti-money laundering), which ... will be called out starkly in the upcoming FATF (Financial Action Task Force) should we stay on the same course," he wrote.

The Central Bank told the Irish Independent that since then, staffing levels for consumer protection had risen 10pc and by 27pc in the Anti-Money Laundering Division. "The Central Bank keeps the staffing requirements across the organisation under review and adjusts staffing levels in accordance with the work demands," a spokeswoman said.

A recent peer review of the Central Bank's consumer protection function by the Netherlands praised efforts of regulators, but said more must be done to ensure consumers are treated fairly by banks and financial firms.

Irish Independent

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