Consumer watchdog accuses Honohan of ignoring its work
The Financial Services Consumer Panel, the group supposed to monitor the performance of the Financial Regulator, has taken issue with the hard-hitting report on the financial crisis by Central Bank governor Patrick Honohan.
The panel said it was "very disappointed'' with some aspects of Dr Honohan's report and pointed out that he had not taken time to meet with the group, which is made up of legal figures, consumer advocates, academics and accountants.
The group said it had highlighted failings of the regulator over many years, but these were not referred to in the report.
"The consumer consultative panel is very disappointed that, in particular, the Honohan report did not refer to the work of the panel in highlighting many of the failings of the regulator in the past number of years,'' said a statement.
The group, which will shortly be disbanded under legislation reforming the Central Bank, defended its actions in the years leading up to the crisis and placed the blame squarely back on the Financial Regulator, which was led by Patrick Neary.
"Unfortunately, Irish consumers were let down by a regulator which was unwilling to take on board any contrary viewpoints that did exist during the time covered,'' the panel said.
The group met Max Watson and Klaus Regling, the authors of the second report on the financial crisis, but have had no contact with Dr Honohan.
The group also highlighted a fresh area of concern, the lack of minute-taking at senior levels in the Financial Regulator and among its board.
"If this is the situation that prevails, then this has to be a source of concern regarding the standard of governance,'' it said.
The group pointed out that it had highlighted the issue of overcharging for many years.
"Over the past five years the consumer panel has highlighted overcharging to the Financial Regulator and to the acting Financial Regulator. Page 56 of the report mentions the matter of overcharging, but we wish to record that this was regarded as a crusade by the panel, particularly in relation to the issue of overcharging by Irish Nationwide and more recently MBNA,'' it said.
"Whenever the issue was highlighted to the Financial Regulator, the panel was informed that 'we were wrong'. The Honohan report proves that the consumer panel was correct all along and that the response of the regulator was always to imply this was not a major regulatory enforcement oversight,'' it continued.
"We wish to make it clear that in all our budget discussions, the Financial Regulator never informed us that they were understaffed,'' it said.
Some observers have suggested that the reason regulation failed was because there was too much attention to "consumer'' issues, rather than complex risk issues relating to funding and credit. But this is rejected by the panel.
"The major problems in the wholesale and corporate market sectors should be not blamed on consumer-oriented regulation, even though this has a seductive appeal in some quarters,'' it said.