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Central Bank (Amendment) Bill 2018

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Bills\Central Bank (Amendment) Bill 2018\Second Stage

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Central Bank (Amendment) Bill 2018

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Minister of State at the Department of Defence (Deputy Paul Kehoe)

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Paul Kehoe

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Snippet Contents:

I thank all of the Deputies opposite for their contributions on this Bill. I thank Deputy Pearse Doherty for tabling it for discussion. My colleague, the Minister of State, Deputy D'Arcy, was present for that discussion.
The Government supports the overall principle of the Bill but has reservations about its current drafting. I will summarise the issues with which the Government has immediate concerns, starting with the proposed criminal liability that the Bill seeks to impose and the legal difficulty that this presents in terms of the lack of clarity around the scope of the new offences. This does not appear to be in keeping with the principle of legal certainty in criminal matters and is a serious matter of concern to the Government.
Furthermore, the Bill's proposal to extend the application of the administrative sanctions procedure to all persons who are under some duty to furnish information to the Central Bank, co-operate in providing that information or procure the provision of that information may bring into scope any employee of a regulated financial service provider, including those not involved in management or decision making, and would have wide-reaching implications.
Other areas of concern lie in the technical amendments proposed by the Bill, but these can be considered during further Stages.
As the Minister of State laid out at the beginning of this debate, a range of legislation has been introduced over the past number of years to enhance the Central Bank's accountability and oversight mechanisms. The first of these changes was the Central Bank Reform Act 2010, which Deputies may recall. Following on from that, the Central Bank's powers under the administrative sanctions procedure to administer sanctions in response to regulatory breaches by regulated financial service providers and persons concerned in the management of such regulated firms were significantly enhanced by the Central Bank (Supervision and Enforcement) Act 2013. Under that Act, the Central Bank acquired extensive powers to make regulations, including relating to areas identified as weak points in the post-crisis analysis, such as risk management, consumer protection, audit processes and lending.
As the Minister for Finance has stated numerous times, the Government is willing to consider any request from the Central Bank for additional powers, particularly in the context of the Central Bank's tracker mortgage examination. To underpin this commitment, the Minister of State, Deputy D'Arcy, spoke of the engagement that is currently taking place between Department of Finance officials and the Central Bank to identify additional powers to increase the accountability of senior individuals within the banking system. This work takes account of the Central Bank's response to the Law Reform Commission's consultation on regulatory enforcement and corporate offences and will be in parallel with the Central Bank's drafting of the section 6A report requested by the Minister for Finance "on the current cultures and behaviours, and the associated risks, in the retail banks today, and the actions that may be taken to ensure that banks prioritise customer interests in the future". It is expected that the section 6A report will be furnished to the Minister in June 2018. The Government intends to use the outcomes of these work streams to introduce the statutory changes that are recommended.
A broader concern with the proposed amendments to Part IIIC of the Central Bank Act 1942 is that ill-considered extensions to the administrative sanctions procedure may lead to further legal challenges in respect of those procedures that are currently under way. Therefore, the Oireachtas must ensure detailed consideration of all of the provisions contained within the Bill to ensure they do not undermine the Central Bank's ongoing enforcement actions, particularly those relating to the tracker mortgage examination.
I am sure the Oireachtas will take account of Standing Orders that require the European Central Bank, ECB, to be consulted on legislative proposals that may impact on its competencies. Given that the ECB's single supervisory mechanism is responsible for enforcement actions for specific breaches of regulatory rules, I assume that consultation will occur with the ECB. I expect that the Government's forthcoming proposals will be broader and more effective in holding senior managers accountable for their actions and, importantly, inactions than the proposals set out in Deputy Pearse Doherty's Bill.