Canadians among favourites to land Regulator top job

John Ihle, Emmet Oliver and Eamon Quinn

FINANCE MINISTER Brian Lenihan has decided to appoint a new financial regulator from outside the country, with headhunters appointed by the government recently contacting candidates from Canada, the country regarded as having the strongest financial regulation in the world.

The new director will serve under recently-appointed Central Bank governor Patrick Honohan and will oversee regulatory risk, markets and financial institutions.

Sources with direct knowledge of the headhunting process told the Sunday Tribune the assistant superintendent of Canada's financial regulator, Ted Price, was the most likely candidate. But Price said through a spokesman he had not been in contact with officials in Ireland or with London headhunting firm Spencer Stuart, which is conducting the search.

However, it is understood the Department of Finance has been interviewing candidates from Canada as well as other jurisdictions. Sources involved in the selection said the pool of applicants includes candidates who were approached by the government as well as some who responded to notices in the Financial Times.

Honohan will be starting his job as the new Central Bank Governor tomorrow with three of the four senior Irish regulatory jobs either filled or at an advanced stage of being hired even before he gets his feet under the table at the Dame Street offices.

The government has made no secret of its intention to adopt Canadian financial regulatory practices and structures. The remodeled Central Bank, which brings regulation and financial stability back together under one roof, is understood to be influenced by the Canadian set-up.

September 27, 2009

Comments

#1 Peter Oakes commented, on September 27, 2009 at 10:26 p.m.:

I was very glad to hear Patrick Honohan being named as our new head of the Central Bank of Ireland and the new Central Bank of Ireland Commission assuming the government sticks to that name. Professor Honohan was my tip for the role of the Governor of the CBI although his name was also mentioned for the role of the Director Financial Supervision (DFS) at the CBIC (i.e. the new role effectively left open by the early retirement of Patrick Neary as CEO of the Financial Regulator).

So where does this leave us in guessing who might be appointed to this open role? Brian Cowen stated last week (Thur 17/09/2009) that the new DFS will be announced shortly. Even should the government find a suitable candidate will (a) the person want the role and (b) if the answer to (a) is yes, will the structure of the appointment and the money on offer be sufficient?

(a) Possible Contenders:
Turning to point (a) my personal favourite, Philip Thorpe, is not in the race. Like Ted Price from the Canadian OFSI mentioned in today's article (Sunday Tribune 27/09/2009), Mr Thorpe who runs the Qatar Financial Centre Regulatory Authority is a dab hand at establishing new regulators. Apparently he has not been contacted by the Irish government. This speaks more of the search than the individual. I first met Philip when I joined IMRO (in 1997) the precursor to the UK FSA. Thorpe was the CEO of IMRO and probably the most effective UK regulator of the bunch that formed the FSA. When we moved over to the FSA, Thorpe took on the role of managing director. He moved over to Dubai and set up its FSA before heading over to Qatar to establishes its regulator. Just last week he snapped up Michael Ryan from Dublin (formerly Bank of America) to be his deputy. From Canada, other regulators in the running should be Gary Walker, Mark White or the head of the Canadian regulator, Julie Dickson.

Any Irish names?
Some Irish names which should be considered are:
*Willie Slattery (State Street Ireland) but the fact he is a former regulator and Irish based might work against him for the wrong reasons.
*John Fingleton, head of the UK Office of Fair Trading and former head of Irish Competition Authority. Given the fact that John Fingleton has be outside of Ireland during the current debacle puts him in a strong position. He should be actively considered as he has proven himself an effective regulator taken on the banks in the UK well before the economic crises.
* Ann Fitzgerald, Chief Executive of the National Consumer Agency. Anne has her supporters and detractors, but the detractors usually focus upon attacking the NCA without appreciating its financial constraints.
* Wrong or right, it is highly likely that the role of DFS should not go to an internal candidate at the Financial Regulator.

END OF PART 1

#2 Peter Oakes commented, on September 27, 2009 at 10:27 p.m.:

PART 2

Other worthy non-Irish contenders include:
*Stephen Glynn currently director of enforcement at the Dubai FSA (and former Australian regulator),
*Paul Koster, Chief Executive of the Dubai Financial Services.
Authority (DFSA),
*In fact anyone at a director level at the DFSA or the Qatar Financial Centre Regulatory Authority would have the skills to do a sound job.
*Looking to Australia, why not one of its senior executives in the form of Greg Yanco (Regional Commissioner for NSW) or Greg Medcraft (Commissioner). Tony D’Aloisio the ASIC's current Chairman would make an excellent choice, but he is midway through a 4 year term. Noting that Anglo Irish took on an Australian to sort out the mess there or wind it up depending upon your viewpoint, another Australian might do nicely (disclosure: I am an Australian born Irish resident). So I will also mention APRA's Wayne Byers, Keith Chapman or Charles Littrell.
Campbell Fleming a Managing Director at JP Morgan who has worked at the Australian and UK Financial Regulator has an excellent mix of regulatory and senior financial services experience.
* I have ruled out current UK FSA Managing Directors on the basis that they are on a good financial wicket and so will be difficult to entice, plus there is always the guaranteed hostility in Ireland towards anything coming from the UK in this area.

I am sure that there are suitable candidates from Ireland other than the ones mentioned above but it is hard to see an Irish resident working in financial services here being appointed given the government's repeated assertions that focus should be made on overseas candidates. Perhaps the Sunday Tribune should run a book of odds and we the readers can put up suggestions and these can be ranked in terms of favourites?

END OF PART 2

#3 Peter Oakes commented, on September 27, 2009 at 10:28 p.m.:

PART 3

(b) Will the structure of the appointment and the money on offer be sufficient?
(i)Assuming an appointment is due to be announced shortly, shouldn't the appointment be confirmed by a committee of the Oireachtas?
(ii)There is also a problem with the term of the role. At 7 years it is far too long. It should be more than 3 but less than 5 years. Given that the role of the DFS is to turnaround a failing regulator, we do not need an appointment of longer than say 4 years. If the job is not done in 2 years, then the individual will have failed in the eyes of the public. The last two years should be set aside for him/her to consolidate the radical changes. He/she could then apply for re-appointment, or similar to a CEO in private industry, a new CEO should come in to grow the regulator. Different visions and strategies are needed at different point of any business's life cycle
(iii)Nothing is worse than being appointed by a government that loses an election early into the term of your appointment and then you are left being potentially viewed as an enemy by the incoming government.
(iv)The money – Patrick Neary was reportedly on euro €285,341. Of course there is (or was) a generous pension scheme attached to the salary. Assuming the new person gets the same salary as Neary (as it is difficult to imagine a pay rise given the debate over the public wage bill) a 4 year appointment will gross a 4 year salary of euro1,140,000. Although this might seem like a good wicket, it is difficult to see how it will be enough to secure a managing director from the UK FSA and indeed middle-east regulators. It probably is not enough for a decent private sector employee either. However perhaps we might find a quality candidate to do the job who holds a belief in doing the right thing. Yet the role also needs to build in a risk premium. And that is not evident in the amount above. Of course if the appointee performs well, he/she should probably leave after 4 years and take on the flurry of NED roles locally and internationally that will surely come the way of the person who delivers improvement to Ireland's failing corporate governance regime.

I have no inside information about the role and who it is likely to go to. My purpose in writing this note is to have a debate around the topic.

Peter Oakes
Managing Director
Compliance Ireland

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