Business Opinion: It is a shame to rain on the Tanaiste's parade, but one question that is not really answered in the Motor Insurance Advisory Board action plan published on Friday is why we have come to need such a plan in the first place.

Welcome as it undoubtedly is, the plan is a tacit admission that there is something profoundly dysfunctional about the interaction between the public, its government, the legal profession and the insurance industry. Why did none of the checks and balances that seem to operate in other economies not come into play here long before the cost of insurance became a national scandal?

One reason is the weakness of the consumer lobby in the Republic. In Greece the various consumer bodies can organise a consumer strike over the price hikes sneaked in under the cover of the introduction of the euro. In the Republic the Consumers' Association of Ireland can barely muster 8,000 members.

Instead of being a well resourced force to be reckoned with the CAI is in danger of becoming non-entity. If it was not for journalists' need to find someone to comment "on behalf of the consumer" when writing related stories, it would have almost no profile at all. Some might argue that its sole reason for existing at this stage is to convey D list celebrity status on its senior ranks.

If one thing sums up the dire straits that the CAI finds itself in it is the issue of who speaks for it on financial issues. The spokesman for the association is Eddie Hobbs, who is a vocal and frequent presence in the media. Mr Hobbs is also a professional financial adviser who makes his living advising individuals and companies about the very issues on which he is trying to set the agenda in his role as finance spokesman for the CAI.

The potential for conflicts of interest is obvious and the credibility of the CAI on these issues is essentially a function of Mr Hobbs's integrity. He has to tread a very delicate line and some people believe he occasionally ends up on the wrong side of it. Most recently a member of the association's council queried a reference by Mr Hobbs to his role as financial spokesman in a circular he sent to clients. In the circular Mr Hobbs recommended a number of products including one offered by an insurance company that he has carried out consultancy work for, albeit not on the product in question. The issue was considered by the executive committee of the association in June, and Mr Hobbs was given their unanimous support.

The difficulty faced by the the CAI is highlighted by the decision to keep faith with Mr Hobbs, even when confronted with the problem posed by his business interests. The reason presumably is that he projects the sort of crusading image that the association wants. Even though some might feel he has feet of clay, because of his experience he makes a very ineffectual organisation look good.

It could be argued that the CAI has no real choice. To hire someone with Mr Hobbs's knowledge of financial services and, critically, his media skills, would be prohibitively expensive for an organisation that has a turnover of around €830,000, the bulk of which comes from membership and subscriptions to its magazine, Consumer Choice.

The Government appears to be only too happy to allow the consumer lobby be hamstrung by financial problems. In recent years the Minister for Finance has made discretionary payments of €50,000 a year to the body. It is enough to stop the CAI from going out of business, but not enough to allow it regenerate itself.

The Government could argue that it is not appropriate for it to fund lobby groups. Nobody in their right mind would expect the Government to directly fund IBEC or the Irish Congress of Trade Unions.

It is also true that the Government operates the Office of the Director of Consumer Affairs. This, however, is something of a fig leaf, as the remit of the Director of Consumer Affairs is to uphold consumers' legal rights rather than lobby for the interest of consumers as whole.

That said, the the Government seems to be more than generous in its support of the Director of Consumer Affairs, who, last year returned some €1.6 million in surplus funds to the exchequer. (The director points out that €1.2 million of this was notification and licensing fees, mainly from financial institutions and intermediaries, which the office is obliged to pass on by law and does not form part of its funding. An additional €0.2m was expenditure incurred but not paid until 2002, and the final €0.2m was due to delays in filling posts). This money would go a long way towards rebuilding the Consumers' Association of Ireland as a credible body.

The rather more miserly approach adopted towards the CAI is surprising from an administration whose junior partners - the Progressive Democrats - are always banging on about the importance of competition to the economy. But from a Government point of view funding a consumer lobby group is just cutting a stick to beat yourself with.

A powerful and well-resourced consumer representative body would waste little time in targeting the various State-owned monopolies such as the ESB, Bord Gais and RTÉ. However, they are all big and bold enough to look after themselves.

The real problem for the Government would be the pressure it would find itself under to act on a whole range of consumer-related issues. The last thing any Government wants is a consumer lobby that can organise national strikes.

But, as the Government has now learnt from the insurance debacle, consumer problems will come back to bite them with or without the existence of a strong consumer representative organisation. Several other bodies sprung up to fill the void left by an emasculated CAI, including a powerful business lobby group, the Alliance for Insurance Reform. The turning point came when the failure to face up to the issue over the last 10 years let insurance costs reach a level where they have started to cost jobs and threaten economic growth.

The Tánaiste will now personally chair a committee of ministers charged with overseeing the implementation of the reforms. As she and her colleagues settle into this difficult task they might reflect that if there had been a credible, well funded and effective consumer lobby in Ireland they might not have to now spend so much of their time sorting out this mess.