I have now had some time to read this report. I agree with a lot of it - I disagree with some of it.
I agree with the following:
"The Financial Services Ombudsman should remain independent"
"The change [required]is as much about the willingness of the regulator to act as it is about any formal structures".
"There is a false dichotomy between principles-based regulation and rules-based regulation"
My personal view is that we do not need any new major regulations for financial services. We can have all the legislation in the World, but if the FR doesn't take action, then it will be of no use.
I disagree with the following:
"Financial Products should be pre-approved by the Financial Regulator in the same way in which drugs are pre-approved"
It takes years for drugs to get through the approval process. The cost of pre-approving financial products would be huge and would be borne by the consumer. In Ireland, products were not the problem.
The main problem was overlending to property developers. Pre-approval would not have prevented these products from being pushed out.
I am uneasy about the following:
"The current downturn was magnified by the Regulator's failure to control the property market bubble. We are unclear why the regulator did not move to dampen the bubble at an earlier stage"
This suggests that the property market bubble was the sole responsibilty of the Financial Regulator. But, more importantly, to the best of my knowledge, the Consumer Panel did not raise any concerns about house prices until I sent [broken link removed] to the Financial Regulator in March 2007.
The Financial Regulator presumably shared the same view as the vast majority of commentators that Ireland would have a soft landing. No financial regulator in the entire World forecasted the US sub-prime crisis and its devastating impact on the World's financial institutions which resulted in the current credit crunch.
In March 2007, I think that the Consumer Panel fairly summed up the views of most people:
The relatively high level of house prices has resulted in a very high level of borrowings by individuals. It also increases the risk of a fall in house prices.
We felt that there was a risk, but we were not calling it a bubble.