Mairead Farrell (Galway West, Sinn Fein) | Oireachtas source

When speaking about regulations such as these it is hard not to think about the financial crash. I did my leaving certificate in 2008 and went on to study finance. It was ever present in all I studied at the time. An acronym that was referenced a lot was "IBGYBG", which stood for "I'll be gone. You'll be gone". I will have got my commission and the person I sold to will have sold on and neither of us will be held accountable when something goes wrong. After studying finance I worked in banking and derivatives. This was always in the background. When we began looking at these particular proposals, it came to mind again.

The introduction of a new financial regulation with an emphasis on individual and personal accountability and responsibility is very welcome. We cannot have a situation where financial professionals who have engaged in wrongdoing and failed in their fiduciary duties can hide behind a corporate veil. We recognise that we live in an era of financialisation when financial markets and institutions are gaining greater influence. We now have banks that are seen as being too big to fail. In advanced countries the banking sector has become concentrated. This provides it with significant power. Our banking sector concentration is high even by international standards. With great power there needs to be great accountability. The Minister's new framework will introduce new conduct standards. It will enhance the existing fitness and probity regime. It will lay out the individual responsibilities of each senior executive and strengthen the Central Bank's administrative sanctions procedures. This will mean that individuals can be pursued directly for their misconduct as opposed to general participation of a firm's wrongdoing. I welcome these changes.

I have a query and the Minister can correct me if I am wrong, which I am sure he would. From what I can see the Bill only applies to certain customer-facing firms. This would mean those non-bank firms engaged in bank-like activities, that is, shadow banks, would not be included. Let us consider the size of the shadow banking sector compared to our domestic banking sector. In 2021, the sum total of the assets of AIB, Bank of Ireland, KBC, Ulster Bank and Permanent TSB was €343 billion while the size of the shadow banking sector is estimated to be in the trillions of euro. It has approximately €4.6 trillion worth of assets under administration here. Directors of these firms will not be held to the same standard. I worry this is a major weakness in the Bill.

We know from the financial crash that many large banks used shadow banks for a variety of reasons. They are not mutually exclusive. There can be the creation of grey areas where regulatory arbitrage might occur and enforcement issues could arise. If we take a securitisation transaction, when a bank makes a sale of a portfolio of non-performing mortgage assets to a special purpose vehicle, SPV, if there is a lack of clarity on the legal ownership of the collateral in this situation, the legal title to the security is splintered into many hands. This makes enforcement difficult. I would like the Minister to address this in his response.

I am concerned that a similar problematic enforcement situation could occur with the senior executive accountability regime. Senior executives of banks will be under the regime but the directors of a connected SPV will not. If some wrongdoing were to happen that was part of a complex chain of transactions involving various SPVs, and that wrongdoing occurred at the level of a vehicle, would the senior executive at the bank be able to credibly say it was nothing to do with the bank and to take it up with directors of the nominally independent firm? Those directors would not be under the senior executive accountability regime. This is an issue. I have more points but I am running out of time and this is the particular issue I would like the Minister to address his closing remarks.

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