Brian Lenihan Jnr (Dublin West, Fianna Fail)

The effect of the amendment would be to set the maximum fine that the regulator can impose as either €5,000,000 or a sum equal to the amount involved in the financial impropriety. That is the substance of the proposal. The fine is a punitive fine, not a restitutionary fine. The fine prescribed in legislation is what the Oireachtas marks as the just punishment for a particular wrongdoing. In that sense it is different from the issue of a sum equal to the amount involved in the financial impropriety. Section 33AQ(3) already provides that one of the sanctions the regulator can impose is a direction to refund or withhold all or part of an amount of money charged or paid by a financial institution. This legislation contains a provision that the regulator can require a refund in the case of an impropriety. At present there is no legislative power to do that and civil proceedings would require to be instituted in the courts to ensure the necessary recompense took place. This legislation will confer upon the regulator an express power to require a refund. That addresses to some extent the amendment raised by the Senator.

From the point of view of a customer of a financial institution, this is the most important sanction the regulator can impose because it means the consumer is given direct financial compensation without the need to institute proceedings in the courts which may be expensive and protracted. One can easily envisage circumstances based on recent events where the cost to an institution of refunding its customers in respect of a charge incorrectly imposed could exceed in a significant way the figure of €5 million if inserted in the legislation. That is possible under this legislation once the regulator makes the necessary direction.

The question of €5 million is the amount which we propose the regulator can impose by way of exaction, irrespective of the element of wrongdoing. The Minister has power under paragraph (4)(c) to increase this maximum fine if experience suggests it is desirable. In those circumstances, the Minister is of the opinion that €5 million is a very substantial sanction, especially if it is in addition to an order to refund customers and to pay some or all of the costs of the regulator's investigation. If experience suggests that the limit of €5 million should be increased, the Bill gives the Minister a simple mechanism to do so. I hope I have addressed the legitimate concerns raised by the Senator.