Review

The Central Bank Supervision and Enforcement Act 2013 sought to significantly improve and enhance the Central Bank’s powers of supervision over credit institution and financial service providers generally.

The Central Bank may require a regulated financial services provider or any related undertaking to it by notice, a report on any specified matter in relation to which it has the power to require the production of information documents of books under financial services legislation.

The Central Bank may appoint a reviewer with the requisite skills to prepare an objective report in the matters concerned.  The reviewer might be an actuary, auditor, accountant, lawyer, etc. with the relevant technical, technological or business skills.  The Bank may enter a contract with the reviewer in relation to his terms of appointment.  The costs of the report are to be borne by the institution being reviewed.

The reviewed institution or entity must give all assistance to the reviewer.  It must provide appropriate explanations as the reviewer considers appropriate.  It is an offence to provide false information subject on summary conviction to a Class A fine or 12 months or both or up to five years imprisonment on €250,000 fine.  It is an offence to obstruct or impede the reviewer.

High Court Enforcement

The Central Bank may apply for a High Court action to enforce non-compliance. The Bank has comprehensive powers to obtain information from regulated financial service providers, applicants and a range of persons whom they believe who are acting as such or have been acting as such, whether with or without authorisation.

The power extends to related entities including employers, officers and employees or agents of any such persons.  The Bank has the power to require information, records, and documents, accounts, forecasts, and plans.  They may be required to be attested as the Bank requires.

Authorised Officers

The Bank may appoint authorised officers with extensive powers.  They may enter premises as required.  A warrant is required to enter a dwelling house.  They may search, inspect, require persons to produce records, summon persons and require them to answer questions, give explanations of decisions, courses of action, systems or practices or provide any records under their control.  They may take copies and remove records.  They may secure records for later inspection.

Authorised officers may require persons to give answers and make a declaration of truth in relation to the answers.  They may require persons to provide a report on any matter on which the officer reasonably requires information.  They may require persons to state to the best of their knowledge where a record is located or from whom information may be acquired. Access may be required to electronic information.  Persons may be required to produce computer records. Failure to comply is an offence.

Information, documents and records etc.  may be required notwithstanding that their forced production might otherwise breach provisions of law or statute such as confidentiality etc. or a lien. Failure to comply is an offence.

Obstruction, impeding of an officer or failure without reasonable excuse to comply with a requirement or to give false or misleading information is an offence.  A person who fails or refuses to comply may be certified to the High Court in respect of the same and the High Court may make such orders as it sees fit on account of such failure.  Failure to comply is subject to the same sanctions as above.

There is provision for an application to the High Court to consider disclosure of ostensibly privileged legal information.  This may be based on the information not being privileged or relating to the commission of an offence under financial services legislation.  There is a duty to preserve the information pending a determination by the High Court.  The High Court may examine the information and consider its privilege and whether that privilege is lost by reason of a contravention of or constituting an offence.

Power to Require Disclosure

Where the Bank considers it necessary owing to the nature, scale or complexity of activities, it may require its auditor to conduct an examination for the purpose of providing a statement of the extent to which the institution has complied with its obligations under financial services legislation.  The auditor is obliged to comply within two months.

A person appointed to perform a preapproved control function in relation to a financial service provider must as soon as practicable disclose the Bank information in the above categories which he or she believes to be of material assistance to the Central Bank.  The disclosure is to be a protected disclosure.

Failure to disclose with a reasonable excuse includes that the disclosure might tend to incriminate the person or that it has been supplied by another person.  An anonymous disclosure is not protected. The disclosure is to be made to the Central Bank.  The disclosure must be made to the Bank, its employees, officers, or an authorised officer.

Protected Disclosures

The legislation reaffirms whistleblowing protection for persons making disclosures.  They are protected from dismissal, suspension, layoff, transfer, unfair treatment/coercion, harassment etc. The protected disclosures are those made in good faith to an appropriate person where the maker has reasonable grounds for believing the disclosure will show the commission of an offence under financial services legislation a prescribed contravention or possible contravention or the concealment of evidence.

The Bank may publish guidelines for providing practical assistance in the making of protected disclosures.

Persons who make protected disclosures are protected from civil liability provided that the disclosure is not known to be false or misleading or false or misleading information is not provided in relation to it.

The Bank may not disclose the identity of a person who has made the protected disclosure without his consent except for investigations, enquiries and other assessments under financial services legislation.

There is protection for employees on the above terms. It is an offence for an employer to penalise or victimise an employee in any way for making a protected disclosure.  A person who causes a detriment for another because of the disclosure is liable as if it was a civil wrong.  The detriment in this context includes intimidation, harassment, discrimination, disadvantage, threat or reprisal, injury, damage or loss.

Redress

Where the Central Bank is satisfied there have been widespread or regular defaults of a particular type by a regulated financial service provider and in consequence, customers have suffered or are suffering damage, it may direct the financial service provider to make appropriate redress for customers.  Default means overcharging, providing services unrequested, providing unsuitable services, providing inaccurate information material to a decision about a financial service, the failure of systems or prescribed contraventions.

The redress may be monetary or otherwise in nature.  The fact of making redress does not constitute an admission of legal liability. The direction may set out the periods applicable and incidental provisions to give effect to the scheme.

A failure by a regulated financial provider to comply with its obligations under financial services legislation is actionable by any customer of the provider who has suffered loss or damage as a result.

Power to make Directions

The Bank is given extensive powers to make directions to regulate financial service providers.  They may be made in the interests of the proper and effective regulation of financial service providers.  Where certain circumstances apply;

• the institution has or may become likely to be unable to meet its obligations to creditors or customers.
• If not maintaining or in a position to maintain adequate capital or other financial resources having regard to the volume and nature of its business
• it has failed or is failing to comply with conditions or requirements imposed by legislation.
• it is conducting business in a manner as to jeopardise or prejudice money, securities or investments held on behalf of customers or customers’ interests.

They may be grounds for revoking or not renewing its license.

The directions may include suspension in relation to any one or more of the following:

• provision of particular services,
• making of particular payments,
• acquisition and disposal of assets and liabilities,
• entering into transactions of a specified type,
• soliciting business of a specified type,
• carrying on business specified.

The direction may require assets and liabilities to be disposed of. It may require the raising of capital, modification of systems and controls, business practices and compliance with conditions.  The requirement may be made to notify third parties of the above actions.  Directions may be made to third parties such as account holders of the institution.

Directions and the High Court

The regulated service provider or undertaking to whom a direction is made may apply to the High Court to set it aside in 14 days.  Where the High Court is satisfied because of the nature and circumstances of the case, or otherwise in the interest of justice that it is desirable, then the whole or any part of the proceedings may be heard otherwise than in public.

A direction may provide that no proceedings are to be commenced and continued, no assets are to be attached or enforced against, except with prior approval of the High Court.

The Central Bank may apply to the High Court for orders enforcing the direction.  Persons who fail or refuse to take the required action may be made subject to such orders as the High Court deem fit.