Joe Costello (Dublin Central, Labour) | Oireachtas source

I thank all Senators who contributed to the wide-ranging debate on this legislation. I also welcome the complimentary remarks they had for the text of the legislation and the manner in which the Minister for Finance, Deputy Noonan, dealt with it. It is positive that several Private Members’ Bills from various parties covering the regulation of bill payment firms and the publishing of complaints against financial firms by the Financial Services Ombudsman, as well as other proposals, have been incorporated in the legislation.

All Members referred to how the checks for the banks, the regulatory process and the auditors were inadequate and how light-touch regulation ended up being no regulation. There was poor supervision and a deferential attitude on the part of the regulators with poor assessment of risk. It is almost difficult to imagine such a perfect storm of inadequacy, failure and negligence which brought about the current crisis. The proposals in this Bill go a long way to dealing with these problems on foot of the Central Bank Reform Act 2010.

Senator Darragh O’Brien referred to the new statutory code of conduct on mortgage arrears which will be published later this month and said it should direct the banks in as strong a manner as possible. Senator Michael D’Arcy gave examples of the heavy-handed manner in which some of the banks are still operating when dealing with mortgage arrears. He asked that the statutory code of conduct should be sufficiently strong to ensure the bankers treated citizens in a proper and fair fashion. That is being worked on and I am sure it will be a strong code.

Senator Michael D’Arcy also asked about the sacking of bank employees who do not inform customers about their rights under the mortgage arrears code. The fitness and probity regime allows for the Central Bank to investigate employees of financial institutions who breached the requirements of the code and remove them from their roles. There is existing legislation that covers that area. However, we must make sure that cases where customers have come under pressure from their lending institutions to take a particular course of action that may not be in their interest are dealt with effectively.

The Professor Honohan report, the Nyberg report and the Regling-Watson report on the financial crisis all reference the role of auditors in the collapse of the banking system. That should not be the case. Auditors should have been watchdogs. They have the accounting mechanism but nevertheless, as Senator Barrett said, they appeared to be works of fiction in many cases. In regard to the big four auditors he suggested, perhaps rather strongly, that the Irish Government was sold a pup and that the audited accounts were works of fiction. The point is well made that the auditors did not do anything to prevent the crisis taking place and that some of the audited accounts left an awful lot to be desired.

The Bill makes a number of changes to address the role of auditors but the broader issues on this matter fall under company law and not the Central Bank Acts. Nevertheless it has been dealt with fairly strongly and no doubt the message has gone out loud and clear at this point in time. The same situation pertains in relation to pensions. Pensions are regulated by the Pensions Board and not the Central Bank. Again, this matter was raised by a number of Senators, including Senator Barrett.

All Senators who contributed referred to whistleblowers. We are all in favour of protection being given to whistleblowers. We are all in favour of the need for whistleblowers to be provided for in the relevant legislation in order that inside information, where misdeeds are taking place, should come into the public domain and the particular improprieties, frauds or misdeeds can be dealt with. It is difficult to find a mechanism whereby the whistleblower is adequately protected because whistleblowers by their nature find that the forces within the area in which they are working tend to close in on themselves and to react against the whistleblower. An important provision that must be included in the Bill and in all legislation is that whistleblowing is a good practice for citizens. Where misdeeds are taking place it is the duty of citizens to blow the whistle where they have information that would bring to light something that is wrong. That is often where we do not provide sufficient protections. In this case, the Bill is amended in order that the Central Bank commission will hold the Central Bank to account and follow up in respect of this matter. There is an attempt to deal with the issue as strongly as possible. I remember dealing with the issue very strongly in 2005 when the Garda Síochána legislation was introduced and how whistleblowers might be protected and more measures put in place to do so.

Senator John Gilroy asked if foreign companies are covered. The Bill allows for improved co-operation with international regulators and also applies to "related undertakings" of Irish firms so that the Central Bank has the full picture of the firms it regulates. Therefore, it applies to international companies for improved co-operation with international regulators as well as our new regulations that are in place. There is also the question of retrospection in respect of a former financial service provider. Unfortunately, there cannot be any retrospection in law without incurring the wrath of the Constitution. Former financial service providers need to be covered in order that a firm cannot evade sanctions by handing in its authorisation so that it can avoid responsibility for what it did in the past. Nevertheless the acts that took place in the past are covered by law and can be pursued in any case but the Bill per seis not retrospective.

Senator Cullinane suggested that the rule whereby there would have to be three complaints should be removed. That matter was considered in detail by the Minister and he concluded that in the requirement to have three complaints before bringing the matter into the public domain, it was necessary to have some protection. For example, there is a need to protect to some degree a small operator in a small provincial town or village suffering reputational damage over a single complaint. The single complaint might not be enough to warrant bringing damaging information into the public domain in relation to a particular small service provider in a small area. The protection of having at least three complaints would appear to be a reasonable way of going about it.

Senator Paul Coghlan made it clear that the banks and the financial institutions had let us down. That is the message that has come through in the overall discussion on the legislation. I am not sure if I have covered all the issues raised. It is clear that we have had a cosy club for far too long where people could operate with relative impunity and where self-regulation or light regulation was the order of the day. That can no longer be the case and that is clearly spelled out in every single provision of this legislation.