Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

Ba mhaith liom fosta céad míle fáilte a chur roimh Uachtarán na Portaingéile agus an fhoireann iomlán atá in éindí leis. Tá míle fáilte rompu agus tá súil agam go mbainfidh siad sult as an turas.

I welcome the opportunity to speak on this legislation. Many have waited a long time for the introduction of this legislation, too long a time. All customers, whatever the company, product or service concerned, have the right to be treated fairly and have their interests upheld. At the very least, they should be safe in the knowledge that they will be protected from gross misconduct, unethical behaviour and corporate mismanagement. For far too long, customers of banking and financial services have not been afforded that protection and have not confidence that when they are the victims of misconduct or mismanagement at the top of our banking and finance sector that those responsible will be held to account.

More than a decade since the Irish banking sector plunged our economy into crisis, it is shocking that we are only today debating legislation that would allow senior bank and financial services executives to be held to account for their failures. The financial crisis revealed a culture at the heart of our banking sector that prized corporate greed at the expense of good governance and consumer welfare. Unfortunately, that culture was allowed to fester when Irish citizens were paying the price. The deep mistrust felt towards the sector finds its origins in the financial crash of 2008, but this by no means is the only reason or explanation for the public mistrust of the banking sector.

As a result of the tracker mortgage scandal, banks have been fined more than €270 million, with €680 million paid out to more than 40,000 customers in compensation. This scandal saw banks move customers onto more expensive interest rates, depriving them of the benefits of the cheaper interest rates they were entitled to. These headline figures fail to convey the harm and devastation that the banks visited on citizens and families. The banks' actions led to the loss of 327 family homes. As well as the financial harm inflicted on families, the impact of the banks' actions on the mental health of customers will never be quantified. As the Central Bank of Ireland has noted, when the examination began in 2015, some lenders initially attempted to minimise the number of affected customers to whom they would have to pay redress and compensation.

The fines imposed by the Central Bank on retail banks highlight a litany of failures that should bring shame to those responsible. The enforcement actions published by the regulator spoke of the unacceptable and avoidable harm caused to their customers by the devastating impact of the banks' failures. Shockingly, the Central Bank found that banks, including the Bank of Ireland, KBC, Ulster Bank and AIB, continued to mete out harm to their customers even during the tracker mortgage examination. Failing to comply with the stop-the-harm principles of the examination, they adopted a culture of continuing to harm, with family homes being lost even during that time.

The Central Bank described in shocking detail the unacceptable harm Permanent TSB caused to its tracker mortgage customers, from extended periods of significant overcharging to the loss of 12 family homes; the impact of KBC's failings on its customers, which was devastating and included significant overcharging and the loss of 66 properties; how Ulster Bank caused unacceptable and avoidable harm to its impacted tracker mortgage customers from extended periods of significant overcharging to the loss of 43 properties, 29 of which were family homes; how Bank of Ireland, when faced with a choice, prioritised its own interests with little or no regard given to the impact on its customers, resulting in a significant and, at times, devastating impact on nearly 16,000 customers and leading to the loss of 25 family homes; and with respect to AIB, a litany of failings resulted in significant financial strain and distress for those affected and their families and the loss of 13 family homes.

It is important to read these devastating findings into the Official Report. As I said, however, these fail to convey the financial, emotional and mental devastation that these actions caused to those affected. It should be a cause of astonishment and deep anger that banks were found to have breached regulations even as recently as this year. Despite the devastation visited upon borrowers and families as a result of this scandal and the behaviour of the banks, not one individual has been held to account. That is truly shameful. The Public Trust in Banking Survey 2022, published by the Irish Banking Culture Board, IBCB, found that only 22% of people believe Irish banks have leadership teams that act with integrity, particularly when things go wrong, with general trust in the banking sector remaining low. This lack of trust is not a general feeling that banks prioritise themselves above the needs of their customers, but a demonstrable fact that has been established by each enforcement action published by the Central Bank in recent years.

Public mistrust in the banks is driven by real examples, by real lives and by real harm caused by real actions. It is clear is this public mistrust is well founded. This mistrust, together with banking failures - the tracker mortgage scandal, for example - demands an outcome-driven response. For too long, a rotten culture has been allowed to fester at the heart of the banking sector. Bad behaviour has been unaccountable.

In July 2018, the Central Bank published its report, Behaviour and Culture of the Irish Retail Banks, on foot of the tracker mortgage scandal. Its recommendations included a call for legislation to introduce a new financial accountability framework including new conduct standards, a senior executive regime, enhancements to the fitness and probity regime and an enforcement process. The recommendations sought to ensure that senior bankers would be held to account for their actions. They were not radical or novel proposals.

In January 2017, Sinn Féin brought a motion to the Dáil calling for legislation to ensure that individuals in financial institutions would be held to account. A senior accountability regime was introduced in Britain in 2016 and in Australia in 2017. It is disappointing that it has taken nearly six years since we brought the motion to the Dáil, and over four years since the Central Bank made its recommendations, for this legislation to be brought before this House. This delay reflects what I believe has been the lack of priority and urgency attached to the issue by this and previous Governments.

The Central Bank (Individual Accountability Framework) Bill aims to finally bring individual accountability to bear on the financial services industry. Its enactment would be followed by the Central Bank issuing draft regulations and guidelines for public consultation and it would grant the Central Bank the powers to implement a new individual accountability framework for senior executives and regulated financial service providers.

There are four key pillars to the individual accountability framework. First, there will be a new senior executive accountability regime. This will involve the regulator setting out details of inherent and allocated responsibilities and requirements, including statements of responsibility and management responsibility maps. Senior executives with pre-approval control functions, such as executives and non-executive directors, chairpersons of the board and key committees, heads of finance and heads of audit, will now be subject to the new regime. However, the definition of senior executive function is not given in the Bill but will, instead, be given in the Central Bank regulations that will follow its enactment. Similarly, the Bill does not detail the sectors that would be included under the regime, with these, too, to be set out in the Central Bank regulations.

Second, there will be new conduct standards for firms, their management and staff. These will include new business standards, such as requiring firms to act in the best interests of consumers and not mislead their customers. It will also include common and additional conduct standards that will apply to performing control functions, such as requiring individuals to act honestly and with integrity.

Third, there will be enhancements to the fitness and probity regime. For example, a new certification requirement will be introduced similar to that already in place in Britain. An important provision of the Bill is that it extends the scope of investigations to include individuals in a control function position in holding companies and allows the Central Bank to undertake an investigation with respect to the fitness and probity of any person who performed a control function up to six years prior to the investigation. At present, the regulator can only investigate individuals who are in the position at the time when the investigation begins.

Fourth, the Bill strengthens the enforcement capabilities of the Central Bank. A crucial part of this is breaking the participation link. This means that the Central Bank will no longer be required to prove breaches against a firm before it can pursue sanctions or hold individuals to account who held positions within that firm. That is a crucial provision. The Bill further includes provisions giving the High Court oversight of the settlement process under the administration sanction procedures and requiring it to confirm sanctions imposed by the Central Bank.

I welcome the provisions of the Bill. They are long overdue but, plainly, the Dáil, the regulator and the public have waited far too long for legislation that will finally enable the regulator to hold senior bankers to account. Citizens who have been subject to untold and significant harm at the hands of the banking industry have had to suffer while those responsible have gone unnamed and unpunished and that should never have been the case.

It is long overdue that accountability and individual responsibility are being put at the centre of how banks and financial firms operate so that consumer welfare is a priority rather than an afterthought with devastating consequences. I welcome the provisions of this legislation, while noting that many details of the scope and application will be set out in regulations to be published by the Central Bank. It is crucial that what we have on paper is enforceable in practice. Sinn Féin looks forward to scrutinising these elements of the Bill on Committee Stage.

See this speech in context