Thursday, 25 October 2018
Ceisteanna - Questions - Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
Banking Sector Reform
3. To ask the Minister for Finance the steps he plans to take to follow through on the Central Bank's recommendation that an enhanced individual accountability framework be introduced for banks and other regulated financial services providers; and if he will make a statement on the matter. [44280/18]
I want to raise with the Minister the recent Central Bank report into the culture across our banking system and in particular its recommendation that we move towards the introduction of an enhanced individual accountability framework. I want to know if the Minister and the Government support that call by the Central Bank. There is such a regime in the UK for the last number of years. It would be appropriate and a positive step and I look forward to the Minister's response.
As the Deputy will be aware, I have long been on record as stating that there are cultural failings in the banking sector that must be addressed. I want to acknowledge the Deputy's role in addressing all of this, particularly in relation to the tracker mortgage scandal.
The Deputy pursued the issue forensically at the Oireachtas finance committee.
The Central Bank section 6A report on the culture and behaviour of the main retail banks was drafted by the Central Bank in response to my request last November. Indeed, I just spoke on the report at a conference this morning. I reassure the House that many of the specific issues unearthed by the tracker scandal took place more than a decade ago, although the costs still live with us to this day. The new approach to banking supervision has radically changed through, for example, the Central Bank Reform Act 2010, the Central Bank (Supervision and Enforcement) Act 2013 and the European Single Supervisory Mechanism. The Central Bank is now acknowledged as being one of the most robust and challenging institutions in the world.
My Department's analysis of the culture report found that it was a detailed, qualitative and considered analysis of culture within the banking sector. The Central Bank's proposals on enhancing individual accountability by way of conduct standards for all regulated financial services providers and the individuals working within them, having a senior executive accountability regime and enhancing the current fitness and probity regime are being considered by me in light of my intention to introduce a Central Bank (amendment) Bill in early 2019. There is significant merit in the proposals and I look forward to engaging with the Central Bank and the Oireachtas on how we can implement the principles contained in the report in a way that reflects best practice across the world.
For me, this is not about a witch hunt. It is about having accountability at the top level of our financial institutions. The impact of decisions and behaviours is profound. The Minister referenced the tracker scandal. Approximately 3,000 directly affected customers are yet to receive redress and compensation despite us being almost three years on from the commencement of the investigation. It is their money and they have not got it back, which is a scandal. We need accountability across the financial system, particularly at senior levels where decisions are of such significance for people's lives and the conduct of business and trade in our economy.
The Central Bank report was a good one and we have the recent experience of the UK's introduction of a senior managers accountability framework. It is now a global concept. Hong Kong, Singapore, the US and Australia have made moves in recent years to improve accountability frameworks at senior level across their financial systems. The Minister will have the support of our party in making moves to implement what the Central Bank has called for.
I thank the Deputy. I have also considered how Holland has been implementing the regime in question.
Regarding redress and compensation, a total of €580 million had been provided to impacted customers up to the end of August. That amount was their money and it required a large amount of effort from the Central Bank to get to this point.
As to sanctions to date and as the Deputy will be aware, there have been six criminal prosecutions in respect of banking matters, defrauding the Revenue Commissioners, fraud and deception. The Deputy acknowledged the work of the Central Bank. We have a strong enforcement regime reflecting the difficulties of our recent past. On the back of what is a very reflective report from the Central Bank, one that deserves the time we have given to its consideration, I will work with the Deputy, the rest of the Oireachtas and the Central Bank to consider how to progress that into an effective legal regime. There is a need in this respect, which was the point I made earlier today.
It remains to be seen whether the enforcement investigations that are under way in the tracker scandal will deliver answers. The people affected will want to know how it could have happened in the first place, that is, how all the main banks could have made the same mistake in a manner that was adverse to the interests of their customers and was favourable to the interests of the banks. I hope that we get a simple and straightforward answer to that question. There should be individual accountability if people are found guilty of wrong-doing. That is the bottom line. We are nearly three years into the investigation, yet there are still nearly 3,000 customers waiting to get their money back.
The Central Bank's recommendations are crucial and it is imperative that we as a House move swiftly to put them into effect. I hope that the Government will make specific legislative proposals to that end without delay so that people can have greater confidence in the financial system and in there being accountability when things go wrong.
Those customers and citizens who are concerned - I share that concern - about the need for accountability and redress should be cognisant of the amount of money that has now been correctly returned to customers who were wronged.
The inquiry is being led by the director general of the Central Bank. The Deputy mentioned his hope that there would be a single and clear answer. My expectation is that there will be many different answers to this. I only need to reference the recent tribunal report from the Charleton inquiry to point to the fact that, at the root of great difficulties that we have to confront, many factors tend to be at play. I am not going to prejudge what the Central Bank will do, but I have absolute confidence in the focus and effort that it is putting behind understanding why this happened. I have seen at first hand its determination to ensure that the right level of sanction is applied and customers get their money back. I will continue to work with the Central Bank on dealing with this issue.