THE DÁIL’S Public Accounts Committee has been told it has the legal power to carry out an investigation into the causes of the collapse in the financial markets – and has agreed to draw up the terms of reference for a public inquiry.

TDs were told this morning that it had received legal advice affirming its power to carry out investigations, in spite of the rejection of last month’s referendum copperfastening the right of committees to hold inquiries.

The committee, made up of 13 TDs with representatives from all political parties, has now agreed to draw up terms of reference for an inquiry – though it will still have its plans subjected to legal tests before it proceeds with hearings.

Committee chairman John McGuinness (FF) said the legal advice was very welcome, and would help to bring clarity to the events surrounding the banking crisis.

“We are at a very preliminary stage in dealing with this matter, and any inquiry will have to follow a strict and rigid framework and specific terms of reference.

So our next step is to draw up terms of reference and have them legally stress-tested and it is only at this stage that the PAC will be in a position to decide whether to proceed with an inquiry.

McGuinness said the committee intended to report on facts and detail the events that led to the market collapse, but would not examine policy and would not make findings of fact – a limitation which is enforced by the Supreme Court’s ruling in the Abbeylara case.

The committee’s aim is to bring “clarity to other reports and commentary on the banking crisis”, McGuinness said, and to “put the information on public record”.

It is unclear whether the separate Oireachtas committee on Inquiries and Petitions, which was formed in March and which was due to hold public inquiries if the referendum had been carried, will have any role in the PAC’s plans.