Analysis: The CCPC’s call for more central bank powers reveals its own weakness

It’s not uncommon for regulators to push for an expanded mandate.

For example, the Public Office Standards Commission unsuccessfully sought powers to review TDs long before anyone knew how many houses Robert Troy owned.

However, it is unusual for one regulator to argue for the strengthening of another’s authority.

But that’s exactly what the Competition and Consumer Protection Commission (CCPC) did to the central bank on banking competition.

It’s a worthy goal. Eventually, Ulster Bank and KBC Bank Ireland exit, leaving just three full-service banks in the market – two of them majority-owned by the state.

In fact, this level of market concentration – not to mention property concentration – is exactly what the CCPC is designed to regulate.

However, when Bank of Ireland, Permanent TSB and AIB sought permission to acquire Bits from their departing competitors, the CCPC either waved the deals off or demanded minimal antitrust remedies.

Now that the CCPC has approved billions of dollars in asset transfers to domestic incumbents, it wants the central bank’s help. The resulting imbalances are said to leave consumers and businesses vulnerable to uncompetitive pricing and have no way to shop around.

This is a tacit admission by the CCPC that it is unable to do the work itself and that there is no effective regulation of competition in financial services.

But there’s no sign the central bank wants any of that. Hardly a month goes by without the Central Bank Commission hearing requests from regulators for more resources to do the jobs they already have: overseeing behavior, safeguarding financial stability, and approving new firms.

Not only does the bank not want any more work, but there are a myriad of foreseeable problems when a regulator is asked to put its thumb on the scales to encourage competition.

It’s better to be scrupulously neutral about commercial results to avoid regulatory capture. Ireland was on this path in the years of the Celtic Tiger. There was a lot of competition, but that didn’t help consumers in the end. Analysis: The CCPC’s call for more central bank powers reveals its own weakness

Fry Electronics Team

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