Ireland needs to provide "clarity" soon on what kind of regulation it wants for the financial-services industry or the sector could enter "shrinkage mode", two leading experts on banking regulation have said.
"It's time to give clarity, so that people can invest. They need confidence," said Paul O'Connor, head of wholesale banking and risk at the Irish Banking Federation (IBF). He said there were EU plans to set up a Europe-wide systemic risk council, but the exact implications for Ireland were still not clear.
O'Connor was speaking after a key briefing on banking regulation facilitated by PricewaterhouseCoopers (PWC) last week in Dublin.
Garvan O'Neill, a partner at PWC who specialises in insurance and financial services, said companies needed to know more about the "construct" of regulation that would evolve locally and from the EU.
He said despite recent criticisms, the new regulatory infrastructure would have to have additional resources, pay would have to rise at certain grade levels and many staff would need to be allowed take secondments in the private sector to broaden their experience.
O'Neill said one of the key elements of EU plans for financial regulation would be that authorities would now be able to influence "industry behaviour".
However, O'Connor said much of the discussions were happening behind closed doors and there was a lack of consultation with the IBF to date. He said this might change.
He said while greater regulation was clearly on the way, it might come at the worst possible time for the industry when banks were finding it hard to keep their lending at the kind of levels national governments were demanding. Both men said the financial-stability function within regulation, the part that governs overall risk, will become a key concern in EU countries, including Ireland.