May 2010: Matthew Elderfield, Financial Regulator

Within two months of starting his new job, Elderfield made it clear that a new era of stricter financial regulation had arrived.

Because

New Financial Regulator Matthew Elderfield announced himself to the Irish economy earlier this month when he placed Quinn Insurance into permanent administration, enforcing new, stricter codes of practice on financial institutions.

Citing the “serious and persistent breaches” of solvency rules at Quinn Insurance – rules on how much insurers must hold to protect policyholders – Elderfield laid out his plan for tighter and more invasive regulation of financial institutions. The appointment of the administrators at Quinn is seen by the Regulator as the only way to ensure that the 1.3 million policyholders are safe, amid doubts regarding the solvency of the insurer.

Taking a stance

Elderfield took a stance on the banking practices undertaken in this country in a speech delivered to the Oireachtas earlier this month. On the issue of the banks’ business models he said: “Banks’ business models were, as we now know, fundamentally flawed, chasing unsustainable profits through risky property and development lending, profits which effectively subsidised aggressive campaigns for mortgage market share and unsustainably low interest rates.”

Outlining the new regulatory system, Elderfield stressed the importance of accountability, saying: “This approach needs to be underpinned by a credible threat of enforcement to ensure that firms and their management are much more accountable for their actions. Frankly, this is going to take some time to achieve.”

Interest rates for borrowers are set to increase, with Elderfield describing this as “an unfortunate but inevitable consequence of this new world”.

Experience

Matthew Elderfield was appointed to the position of the head of financial regulation in the restructured Central Bank in January 2010. In his current role, he will also combine the roles of head of financial regulation and consumer director.

Prior to taking up this role, he was chief executive of the Bermuda Monetary Authority (BMA) from 2007-2009. The Bermuda Monetary Authority is the integrated financial regulator for Bermuda’s financial markets, with responsibility for supervision of insurance and reinsurance, banking, funds, investment firms and trust companies. Elderfield represented the BMA on the Technical Committee of the International Association of Insurance Supervisors.

Prior to joining the BMA, he spent eight years at the UK Financial Services Authority (FSA) as a head of department in a variety of posts, responsible for exchange and clearing house supervision, for secondary markets and listing policy, and for banking supervision. In this latter role, he represented the FSA on the Basle Accord Implementation Group and chaired the FSA panel responsible for economic capital model review.

Before joining the FSA, Elderfield established the European operations of the International Swaps and Derivatives Association (ISDA) and held posts at the London Investment Banking Association, the British Bankers Association and a Washington DC-based consultancy firm, the Institute for Strategy Development.

History

Elderfield is the consultant editor of A Practitioner’s Guide to the Markets in Financial Instruments Directive and has contributed chapters on exchange, derivatives and capital adequacy regulation for a number of publications.

Elderfield graduated from Cambridge University in 1988 with a master’s degree in international relations, and earned a degree in foreign service, cum laude, from the School of Foreign Service, Georgetown University in 1987. He is a British citizen and is married.

Fresh start

• January 2010: appointed to the role of head of financial regulation at Ireland’s Central Bank.
• March 2010: appointed permanent administrators to Quinn insurance over solvency issues.