In a hard-hitting analysis of the watchdog's performance, the consultative consumer panel accuses it of excessive caution, especially when dealing with controversial issues.

Chaired by consumers' rights campaigner Brendan Burgess, the panel's was set up by the Minister for Finance to keep an eye on the way the Regulator looks out for consumers' interests.

"The Regulator communicates with such caution that it gives the impression that, if it can find a reason not to act, this will be the preferred outcome, " the panel's report states. "It appears to seek complexity and obstacles rather than consumer-oriented solutions to current and emerging problems."

Despite sweeping reforms, the panel concluded that consumers still encounter too many obstacles when complaining about their treatment at the hand of financial institutions.

"The greater the difficulty a consumer experiences in negotiating hurdles in seeking redress, the greater the likelihood that a fair and just solution will not be found, " it states.

On a more positive note, the panel commended the Regulator for the hard line it has taken with credit unions, over lending decisions and the recovery of bad debts.