“Clear standards of conduct, accountability, and robust enforcement mechanisms are essential to fostering trust in the financial services sector” - Director General Derville Rowland

• Targeted enforcement actions will continue to underpin the Central Bank’s supervisory approach to ensure the financial system operates in the best interests of consumers and the wider economy
• 144 enforcement actions concluded, €166.5 million of fines imposed, and 26 individuals disqualified from senior roles in firms
• Objective of the Individual Accountability Framework will be to drive uplift in governance across the board

The Central Bank of Ireland will continue to evolve its enforcement strategy and deploy the appropriate enforcement mechanisms to address serious breaches of regulatory requirements and misconduct by firms or individuals, Director General Derville Rowland has said today (13 October 2021).

Delivering the keynote speech at the A&L Goodbody Corporate Crime and Regulation Summit, Ms Rowland reflected on the Central Bank’s work over the last decade to develop and enhance its enforcement capabilities, and how the Central Bank plans to build on that work going forward.

“We know the vast majority of firms share our desire for a trusted and trustworthy sector that consumers and investors can rely upon for the services they need. Accordingly, our enforcement toolkit is deployed with precision. There will, however, always be bad actors and serious regulatory breaches. Where we need to exercise our enforcement powers, we aim to do so effectively, to ensure that the financial system operates in the best interests of consumers and the wider economy.”

Over the last decade, the Central Bank has developed the legal frameworks for the Administrative Sanctions and Fitness & Probity Regimes while also progressing large complex investigations. In 2013, the Central Bank sought, received and swiftly implemented enhanced information-gathering and fining powers. The Central Bank has also bolstered its skill sets, leveraging artificial intelligence and data analytics to advance investigations, and prioritised cooperation with the Garda Siochana and other agencies across the national enforcement landscape to ensure that wrongdoing is addressed in the most effective way. Ms Rowland said: “As at the end of September 2021, we have concluded 144 enforcement actions, imposing fines amounting to over €166.5 million. We have disqualified 26 individuals from senior roles in firms. These figures speak beyond the credible threat of enforcement to the effective use of enforcement powers to address serious wrongdoing.”

Looking forward, Ms Rowland said the Central Bank expected more cases to be determined by way of Inquiry - the key statutory mechanism in the Administrative Sanctions Procedure by which the Central Bank, through one or more appointed impartial decision makers, can assess suspected breaches, make relevant determinations and impose sanctions. The Central Bank has successfully defended legal challenges to the Inquiry process and the Courts have recognised the value and necessity of the Inquiry and Administrative Sanctions Procedure.

“If a case goes to Inquiry, it indicates that an individual or firm has not made the admissions or agreed the sanctions that the Central Bank considers necessary to form the basis of settlement. Inquiries can therefore take more time, and are not without cost. But they are, as the High Court has accepted, a critical component of an effective regulatory enforcement system. And as a public body, we are always conscious of the need to deliver effective enforcement outcomes in a cost-effective way. More generally, and based on our experience of the Inquiry process to date, we proposed a number of enhancements to streamline the Inquiry process, which have been included in the General Scheme for the Central Bank (Individual Accountability Framework) Bill.”

The proposals in the Individual Accountability Framework seek to incentivise positive behaviours and promote improved governance and culture within firms while strengthening the Central Bank’s enforcement toolkit, particularly with respect to individuals, to allow the Central Bank to more effectively hold to account those that fall below the expected standards.

Ms Rowland said: “The Bill must now make its way through the necessary legislative phases before the public consultation process. When implemented, the initial focus will be on embedding the Framework into our processes and watching to ensure firms embed it into theirs. As such, and rightly so, our task will be a supervisory one to begin with, not an enforcement one.

“Of course, we won’t hesitate to take enforcement actions where warranted. But this is where firms taking real ownership of the Framework will make a major difference. If firms do the work to embed the Framework properly - if they embrace its spirit rather than doing the least amount possible to comply - it should ideally result in fewer serious issues in the sector, meaning fewer enforcement actions, not more of them.

“The objective of the Framework therefore is long-term, not short-term - to drive a permanent uplift in governance standards. The end-result would be a more trusted financial services sector, which is in everybody’s interest.”

Notes to Editor

Further information on Enforcement is available on the Central Bank’s website and in our Explainer: What enforcement powers does the Central Bank have?

Further information on the Administrative Sanction Procedure is available on the Central Bank’s website.

The Central Bank’s statement (27 July 2021) welcoming publication of the General Scheme of the Central Bank (Individual Accountability Framework) Bill 2021 by the Department of Finance is available on our website.