in the european and international bodies, including the three european supervisory authorities and finconet, to influence the future shape of consumer protection. our methods let me explain our working methods. as an integrated organisation, we work to deliver consumer protection through a continuum of functions ranging from financial stability, through authorisation, prudential regulation, supervision and inspections to enforcement and redress. as i said earlier, ensuring that the financial system is stable and the firms that operate within it are financially safe and sound is a basic level of protection for consumers. a recent example is 3 / 9 bis central bankers'speeches the introduction of the macro - prudential mortgage lending rules aimed at reducing the risk of overheating in the housing market and reducing the risk of consumers over - borrowing. in our role of authorising financial services firms to operate in the irish market, we act as a gatekeeper to protect consumers. we are rigorous and challenging in our application of the requirements and standards so that the firms we authorise can be expected to meet the best interests of consumers. our criteria include : the fitness and probity of individual directors and senior management ; the adequacy of firm capital ; the adequacy of internal controls and risk management systems ; and the level of resources and expertise of staff. we can and do refuse applications from financial services providers and we can and do withdraw or revoke authorisations. we can investigate individuals performing specific functions where we suspect an individual ’ s fitness and probity. we can issue a suspension notice and / or a prohibition notice potentially prohibiting the individual from performing all such functions indefinitely. as prudential regulator, we have regular supervisory engagement with firms. during this engagement, we may identify an issue or process that is not necessarily consistent with the best interests of consumers. in such cases, we can seek additional information, request the firm to perform a task, cease a practice or modify a process. in the first instance, we may require the firm to mitigate the risk but we can also use our regulatory powers to issue a direction to the firm. we use the probability risk and impact system ( prism ) as our framework for the supervision of regulated firms. we developed this risk - based framework so that we could prioritise our work and target our finite resources on the highest level risks. it allows supervisors to judge the risks a firm poses to the economy and the consumer and mitigate those risks we consider unacceptable. to identify high - level risk

patrick honohan : examining the irish banking system introductory statement by mr patrick honohan, governor of the central bank & financial services authority of ireland, to the joint oireachtas committee on finance and the public service, dublin, 2 march 2010. * * * as you know, i have been asked by the minister for finance to prepare one of the two reports proposed by the government as the first stage of an investigation into the banking system. i have been informed that the context for these reports is that “ the government considers it essential to thoroughly examine the conduct of the banking sector in recent years in order to arrive at a fuller understanding of the root causes of the systemic failures that led to the need for extraordinary support from the state to the domestic banking system. ” this seems to me to be a good basis for proceeding. the two - stage approach to the investigation speaks of “ preliminary reports ” which will provide a basis for the government and the oireachtas to prepare the terms of reference for the second stage, which will involve the establishment of a statutory commission of investigation. the report which i am preparing is on “ the respective functions of the central bank and financial regulator ”, and it is to have regard in particular to their work “ in assessing and responding to risks to the stability of individual institutions as well as to the banking system as a whole ”. the report is described as “ preliminary ”, and of course is being prepared against a tight deadline, yet i believe it will be possible for me to establish a fairly clear and comprehensive understanding of the matters in question. i am hopeful that satisfactory conclusions can be reached on many issues, leaving only a relatively limited number of open questions of significance requiring further investigation. in parallel with my report, mr klaus regling and mr max watson, who appeared before this committee last week, are looking ( among other things ) at the performance of the banks and banking system generally. evidently, the full picture requires that dimension also : after all, it is to the directors of banks that we look in the first instance for safe and sound operation of their firms ; official prudential regulation can best be seen as a backstop designed to restrain the behaviour of imprudence or recklessness. clearly in this case neither the first line defence nor the backstop worked. the issues that i have been asked to examine include the performance of the respective functions of the central bank and the financial regulator over the period from the establishment of the financial regulator to the