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Central Bank (Amendment) Bill 2018: Second Stage [Private Members] (Continued)

Wednesday, 14 February 2018

Dáil Éireann Debate
Vol. 965 No. 5

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(Speaker Continuing)

[Deputy Donnchadh Ó Laoghaire: Information on Donnchadh Ó Laoghaire Zoom on Donnchadh Ó Laoghaire] If anyone on the street was asked today, however, no one would say that it was victimless. The implications, be they in terms of banking or insurance, for the whole population have been significant. People have lost their homes, we have had to give the banks money over recent years and 33,000 people have had money stolen through the tracker mortgage scandal. We are all paying for the misconduct and failure of the bankers. We must ensure that those who are responsible for wrongdoing on such a scale are held criminally accountable and face the prospect of jail time and significant penalties. This Bill is a step towards that.

We also need to give the victims of banks and similar institutions the tools to take action in a civil manner. I commend the Multi-Party Actions Bill 2017 in that regard. I hope that the Government will also take action. We must ensure that there are real and accessible options for people to take civil actions against banks and financial institutions that have done wrong.

Deputy David Cullinane: Information on David Cullinane Zoom on David Cullinane On this special day, I join all of the Deputies who have already expressed their appreciation and love of Deputy Pearse Doherty for introducing this Bill. I wish to be associated with those remarks.

In 2015, the former chairman of the Irish Financial Services Regulatory Authority, IFSRA, Mr. Brian Patterson, gave evidence to the banking inquiry. His answers on accountability and oversight were something to behold. Mr. Patterson stated that the Central Bank operated under the principle of what he called "moral suasion" as the preferred way to keep checks on the banks. When he was asked to explain what was meant by "moral suasion", he said that it referred "to the eyebrows of the Governor", in that, "if you were having a conversation with the Governor and he raised his eyebrows" at you, it was the Governor's way of showing that he was displeased with the answer. Imagine if a raised eyebrow was enough for you, a Leas-Cheann Comhairle, to keep Deputies in check. Is it any wonder that the banks spent decades laughing at the regulators when the worst that would happen to them was the Governor of the Central Bank raising an eyebrow?

People are irked that banks and people in senior positions therein can blatantly lie. We had light touch regulation. We often hear the expression "regulators were asleep at the wheel," but they were not asleep. They knew exactly what was happening. They supported the free market as they saw it. Politicians were told at the height of the Celtic tiger that the banks should be left alone, there should be no State intervention, the market should be allowed to sort itself out and everything would be okay. This approach was supported at Government and regulatory levels. It was not that people were asleep at the wheel. They knew exactly what was happening and they let it happen.

This is a simple Bill that should not have needed an Opposition party to introduce it. Unfortunately, however, that was required because this Government has consistently proven that it has no answers to the issue of a lack of accountability and transparency. It does not care about the elites and those in the State who believe that they can do what they want and act, not in the interests of citizens, but in their own interests and the interests of profit. It takes parties like Sinn Féin to introduce Bills like this one. We appreciate the support that we have received from Deputies and the Government, although the Government is only supporting this because it does not have the brass neck not to support it. Nonetheless, we will take that support. We hope that the Bill does not just pass Second Stage, but goes right through and becomes law.

Minister of State at the Department of Defence (Deputy Paul Kehoe): Information on Paul Kehoe Zoom on Paul Kehoe 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.

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