Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

Deputy Nolan said nothing has been done on white collar crime. I refute that. The Government has published a package of measures aimed at tackling white collar crime, co-ordinated by the Departments of Finance; Justice and Equality; and Business, Enterprise and Innovation. Many of these actions have either been completed or are under way, including the Criminal Justice (Corruption Offences) Bill. As everybody in this House knows, the Government is not in charge of the legislative process. If Fianna Fáil, Sinn Féin and the Independents are willing to work with the Government that legislation can be prioritised. It is a matter for everybody to agree.

I thank Deputy Doherty for bringing forward the Central Bank (Amendment) Bill 2018. The Government supports the overall principle of the Bill and as such it is not opposing it. However, as currently drafted, it raises a number of serious concerns. The Government is undertaking detailed analysis of how best to enhance the regulatory and enforcement powers of the Central Bank. Last year, the Minister, Deputy Donohoe, and I asked Department officials to work with the Central Bank to identify additional powers to increase the accountability of senior individuals within the banking system. This work is ongoing and it will take full account of the Central Bank's response to the Law Reform Commission's consultation on regulatory enforcement and corporate offences and the section 6A report requested by the Minister from the Central Bank 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. I expect the proposals flowing from these detailed reports to be broader than those proposed in this Private Member's Bill. This more holistic approach will be effective in holding senior managers accountable for their actions, and inactions, than will the targeted proposals in this Bill. The Law Reform Commission and Central Bank reports are expected to be completed in the second quarter of this year and I expect the Department of Finance will then be in a position to bring forward legislative proposals in the second half of this year.

Since the publication of this Bill, my Department has engaged with a range of stakeholders, including the Central Bank, the Department of Justice and Equality and the Attorney General's office to review its proposed amendments and to focus on a number of key areas. One of the main concerns raised is in regard to the new criminal liability which the Bill seeks to impose. This presents a legal difficulty as there is a lack of clarity around the scope of the new offences which does not appear to be in keeping with the principle of legal certainty in criminal matters. In regard to the civil sanctions regime, the 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, to co-operate in providing that information or to 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 this has wide-reaching implications. The administrative sanctions procedure is constitutionally justified and proportionate because it applies only to a limited number of persons who are employed in regulated financial service providers. It does not apply to the public at large and it is required to protect wider public concerns of financial stability. Any expansion of the scope of persons to which the procedure applies needs to be considered carefully to ensure that it remains within the scope of what is constitutionally permissible. These are just a couple of reasons why the legal drafting of the Bill requires amendment. The Bill also requires further consideration in regard to the proposed extension of sanctions that are already covered by existing statute. It is important that the House is reassured that the Central Bank already has significant powers to sanction regulated financial service providers and their senior managers for the provision of false or misleading information. Therefore, I suggest that the pre-legislative scrutiny of this Bill should examine what are the specific gaps in the Central Bank’s powers to sanction senior managers. In addition, pre-legislative scrutiny should also consider whether it is constitutional, legal, or good policy making to extend the administrative sanctions regime beyond those involved in the management of regulated financial service providers.

Given the significant amendments proposed in regard to those that could be subject to the administrative sanctions procedure contained in Part IIIC of the Central Bank Act, it is important to set out its key features and its importance as a regulatory tool to the Central Bank. The administrative sanctions procedure has proven to be a robust regulatory tool, as evidenced by the conclusion of 112 cases with over €60 million in fines imposed under its provisions. The procedure allows the Central Bank to investigate if it suspects that a regulated firm has committed a breach of the financial services legislation, or if it suspects that a person concerned in the management of a regulated firm has participated in the commission of the breach. If the Central Bank has reasonable grounds to suspect that a breach has occurred, it may refer the matter to a specialised body, the inquiry, or it can settle the case and sanctions may be imposed through either process.

This Bill raises other specific technical issues, including in relation to the scope and meaning of the new sections 33ANG and 33BG. At first sight it appears that the proposed amendment to the Criminal Justice Act 2011 could potentially have a significant impact on the rights of an individual in the case of a relatively minor offence. Furthermore, I am concerned that the proposed amendment of Part IIIC of the Central Bank Act 1942 to extend the administrative sanctions procedure at this time may lead to further legal challenges in relation to administrative sanctions procedures currently under way. I urge real caution in this regard, as I am sure that Deputy Doherty does not want to propose legislative changes that could lead to legal uncertainty in the Central Bank's powers to undertake enforcement actions. This is particularly important given the Central Bank has publically stated that it intends to take enforcement actions in response to the tracker mortgage examination against all of the main lenders and related key individuals.

I stated at the outset that I have sought the Central Bank's initial views on the Bill, as it is appropriate and necessary to take its views into account given it would be utilising the proposed extension of powers. The Central Bank welcomes the spirit of reforms proposed in the Bill but it has expressed concerns about the way in which the reforms as currently drafted would fit into the existing enforcement framework and recommends a more holistic approach to legislative reform in the context I outlined earlier. The Government’s commitment to bring forward a considered and holistic legislative response is evidenced by its instigation and support of the reports from the Central Bank and Law Reform Commission to which I referred earlier. Previous Governments and all Members of this House have been proactive in radically reforming the Central Bank's statutory basis, as evidenced by the Central Bank Reform Act 2010, which enhanced the Central Bank's accountability and oversight mechanisms. This Act provided for the Central Bank's fitness and probity regime, which was rolled out in 2011. The regime provided for new powers to be exercised by the Central Bank to ensure the fitness and probity of nominees to key positions within financial service providers and of key officeholders within those providers.

The Central Bank’s powers under the administrative sanctions procedure to impose sanctions in response to 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 in relation to areas identified as weak points in the post crisis analysis such as risk management, consumer protection, audit processes and lending. Nobody wants to let bankers who engage in underhand practices or lie to the Central Bank off-the-hook. However, it is crucial that any changes to the legislation governing the Central Bank's powers are well reasoned and robust to withstand potential legal challenge.

To that end, I propose that we continue with the current approach which involves a wide range of stakeholders to ensure we achieve the best solution. I assure the House that Deputy Pearse Doherty's Bill will be fully taken into account in the Government's forthcoming proposals which I outlined.

Tracker mortgages have been mentioned here frequently. The actions of the Minister for Public Expenditure and Reform, Deputy Paschal Donohoe, were strong. I refer to when he brought in the main lenders on this matter. It is owing to his actions that the institutions are bringing this matter to a conclusion in the manner they are, for which the Minister should be complimented. Nobody wants to be soft on white collar or blue collar crime or any type of crime. That is not what anybody in this House wants.

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