Central Bank

In the wake of the financial crisis, the Central Bank Reform Act 2010 established the Central Bank of Ireland as a single regulator.  It is led by the Governor of the Central Bank.  The Irish Financial Services Regulatory Authority was dissolved and its functions were brought back under the umbrella of the Central Bank of Ireland.

Certain of its consumer functions were transferred to the National Consumer Agency established under the Consumer Protection Act 2007. These functions were later transferred to the Competition and Consumer Protection Commission.

The Central Bank and Financial Services Authority of Ireland was renamed the Central Bank of Ireland.  They are managed and their affairs are controlled by the Central Bank Commission.  The Commission is chaired by the Governor and includes the head of financial regulation, head of Central Banking, secretary general of the department of finance and six to  eight other appointees appointed by the Minister for Finance

The 2010 legislation transferred certain of the Consumer Director powers of the Financial Regulator to the National Consumer Agency, now transferred to  Competition and Consumer Protection Commission. The CCPC provides information to consumers in relation to financial services to promote financial education and capability.  Certain functions are vested in both the Central Bank and the CCPC concurrently.

Functions of Central Bank

The Central Bank is responsible for

• the overall stability of the financial system,
• regulation of financial services in the best interests of consumers
• the operation of the payment and settlement system,
• analysis and comment to support national economic policy,
• such other functions as may be assigned.

The Bank may do anything necessary or reasonably incidental to the performance of its function.  It participates in international monetary and financial services regulatory bodies.  It publishes and collects data on monetary matters.  It assists the Central Statistics Office in the compilation of financial and economic statistics.

Reformed and Enhanced Supervision

The Central Bank has established a new strategic approach to supervision, particulars of which published in June 2010.  This is intended to challenge and be more intrusive than the pre-existing scheme of regulation which emphasised principles of self-regulation to a greater extent.

In 2011, the Central Bank Supervision and Enforcement Act became law.  This provides more extensive protection for whistle-blowers and greater regulatory powers for the Bank.

The Bank has greater control over persons carrying out key positions within financial service providers. It may direct that a person should not be appointed or may require their removal or suspension.  It or the institution must be satisfied that the person is a fit and proper person to hold the role.

Control Functions

A so-called control function is one where the person is likely to exercise significant influence on the conduct of affairs of the provider. The regulatory scheme seeks to control, monitor and ensure compliance with their obligations.

Where a person is involved in a provision of advice or assistance to customers in the course of a financial service or deals with or has control over customer’s property, there is a control function.

Certain control functions are subject to pre-approval if the role has a significant influence on the conduct of the financial services provider. The following key roles (amongst others) are subject to prior approval, namely directors, chief executive or secretary and persons reporting directly to them.

Persons performing control functions must comply with fitness and probity standards set out in the codes. The Bank may require information regarding the proposed appointee.

Investigation of Control Function Holders

The head of financial regulation may investigate the conduct of persons carrying out control functions if there are reasons to suspect their fitness or probity.  This may arise where

• the person does not have the necessary experience qualifications or skills,
• does not comply with the applicable standards on the code on fitness and probity,
• has engaged in serious misconduct,
• has provided false and misleading statements to the regulators,
• has failed to provide information when required
• has failed to comply with notices
• is guilty of any money-laundering, fraud or dishonesty offences.

A notice may be served on officers or employees requiring them to appear to give evidence relating to a matter or to produce a document.  They may be required to answer questions and furnish documents.

A person who is being investigated may be suspended.  This may be done, if the head of financial regulation considers it necessary to prevent potential damage to the financial system and protect its user. The suspension notice gives notice and requires the person addressed to show cause within five days why the suspension should not be confirmed.  It must be confirmed or lapses after 20 days.  If it confirmed it may last for three months, subject to further extensions for three months.

Following an investigation, the head of financial regulation may if he forms the opinion that the person is not a fit and proper to perform the control function may issue a prohibition notice that prevents him from performing that role for the periods specified or indefinitely.  The person concerned must be given the opportunity to make representations in relation to the order as are necessary to do justice.

Financial Services Ombudsman Council

The Financial Services Ombudsman Council has a supervisory role in relation to the Financial Services Ombudsman’s office.  It prescribes guidelines under which the Ombudsman is to operate.  It determines fees and charges and appoints the ombudsman and deputy financial services ombudsman.  It keeps the operation of the bureau under review and advises the government.

The Council may make regulations as may be necessary to enable the Ombudsman to perform its function.  They may prescribe

• matters which the Ombudsman may take into account when investigating and deciding on a complaint a complaint
• prescribe procedures in relation to complaints
• specify circumstances in which a complaint may be dismissed without considering the merits.
• specify that copies of complaints are to be made available.

Enforcement.

The 2013 legislation gives the Central Bank increased enforcement powers.  There is a range of new and enhanced powers available to it.

There is provision for application by the Bank to the High Court to restrain a person from conduct involving a contravention of financial services legislation.  The court may make the appropriate order requiring enforcement of the duty.  The Bank may apply on a one-sided application in the first instance as is necessary.  The court may make an interim order as required.  Orders may be varied and discharged.

The order may prohibit the person from engaging in conduct and may prohibit recurrence of the conduct.  It may be exercised, whether or not the person appears to intend to repeat or continue the conduct, has previously engaged in the conduct of whether or not there is a danger or damage to another person if he so does so.  The application may be heard other than in public if the court determines that it is desirable in the circumstances or in the interests of justice.

The Bank may require publication of notices where a person is operating without the requisite financial services authorisation. It may provide for restitution orders.  It applies where sanctions have been imposed on persons under certain provisions.

The Bank  on the application to the High Court may apply for an order of restitution  on the basis that a  has been unjustly enriched or another person has suffered loss or adverse effect in consequence of a prescribed contravention of financial services legislation.  The person the subject to the application may be required to provide accounts and  information to establish the extent of the unjust enrichment, loss or adverse effect.

The High Court may order the person to pay such sum as appears just, having regard to the extent of unjust enrichment, loss, or adverse effect as the case may be and the extent to which the person was so enriched.  The monies are to be paid to such persons are distributed as the High Court directs.

Criminal Sanctions

The Bank is given enhanced powers in relation to prosecution. Notwithstanding the general six months period for prosecution of summary offenses, offenses may be prosecuted summarily within three years of commission or six months of re-entry into the State if the accused is outside the state or three years from the date the evidence justifying the proceedings comes to the attention of the relevant persons proving the offence.  The proceedings are to be commenced within five years.

There are provisions in relation to furnishing of documents to the jury to assist consideration of their verdict.  This includes transcripts of speeches of the Counsel, transcripts of evidence, transcripts of judges charges and other documents which in the opinion of the trial judge are desirable.

A person convicted of an offence under financial services legislation is required to pay the costs and expense unless there are special substantial reasons for not ordering.  The expense includes those for the investigatory and prosecution phase.