Bernard Durkan (Kildare North, Fine Gael)
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Question 155: To ask the Minister for Finance the steps he will take to prevent a recurrence of the departure from good banking and lending practice throughout the sector for the past ten years; and if he will make a statement on the matter. [28436/09]

Bernard Durkan (Kildare North, Fine Gael)
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Question 156: To ask the Minister for Finance if it has been possible to identify with accuracy the exact cause or causes of the departure from good banking practice throughout the sector in the past ten years; and if he will make a statement on the matter. [28437/09]

Bernard Durkan (Kildare North, Fine Gael)
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Question 157: To ask the Minister for Finance if instruction, leave or any other indication was given to the banking sectors in the past ten years which might cause an understanding that deviation from good banking practice might be acceptable; and if he will make a statement on the matter. [28438/09]

Bernard Durkan (Kildare North, Fine Gael)
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Question 158: To ask the Minister for Finance the reprimands, restrictions or impositions of a financial or disciplinary nature imposed on the banking sectors when departure from good banking or lending practice has been identified; and if he will make a statement on the matter. [28439/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 155 to 158, inclusive, together.

It is important at the outset to highlight that the problems currently being experienced in the Irish banking sector are part of a wider international phenomenon. The causes of the current financial crisis have been extensively analysed and reported on internationally by various international bodies. Within the EU, the Report of the High Level Group on Financial Supervision in the EU, chaired by Mr. Jacques de Larosière, identifies a number of areas where financial services regulatory reform is required.

The de Larosière Report makes a number of recommendations to strengthen risk management on both a micro- and macro-prudential levels, including improvements in risk management in individual firms; improved systemic shock absorbers; reductions in pro-cyclical amplifiers; strengthening transparency; and improvements in the incentives in financial markets and in directors' remuneration.

Separately, EU Finance Ministers and the G20 have each recognised that the Basel II capital adequacy framework, which is implemented in the EU through the Capital Requirements Directive, should be strengthened with regard to risk management on both a micro- and macro-prudential levels. The Basel Committee on Banking Supervision and the European Commission are currently developing proposals to address these various recommendations, which can be expected to be implemented over the coming years.

The impact of the crisis on the banking system in Ireland has emphasised the importance to the wider economy of the framework for financial regulation as well as the links between financial regulation and functions of central banks. The reform of regulatory structures which I announced on 18 June last will underpin a much more effective and efficient financial services regulatory system. In particular, the reforms will see the establishment of a single fully integrated institution, the Central Bank of Ireland Commission, with responsibility for both the supervision of individual firms and the stability of the financial system generally.

At domestic level, the Government has increased the disclosure requirements for directors of banks, through the recent Companies (Amendment) Act 2009. This Act improves the disclosure requirements for loans made by banks to their directors and to persons connected with them. The Act also increases the powers available to the Director of Corporate Enforcement to enforce compliance with company law. These powers will apply to all companies and not just financial institutions.

In relation to the reprimands, restrictions or impositions of a financial or disciplinary nature imposed on the banking sectors when departure from good banking or lending practice has been identified, the Deputy will be aware that in my role as Minister for Finance, I set out the legislative framework within which offences and penalties are contained. I am satisfied that such offences and penalties are in line with international best practice. The Financial Regulator is empowered under the Central Bank Acts to initiate administrative sanctions procedures where it suspects, on reasonable grounds, that a prescribed contravention may have been committed by a regulated financial service provider. The following sanctions may be imposed: · Caution or reprimand;

· Direction to refund or withhold all or part of an amount of money charged or paid, or to be charged or paid, for the provision of a financial service;

· Monetary penalty (not exceeding €5,000,000 in the case of a corporate and unincorporated body, not exceeding €500,000 in the case of a person);

· Direction disqualifying a person from being concerned in the management of a regulated financial service provider;

· Direction to cease the contravention if it is found the contravention is continuing;

· Direction to pay all or part of the costs of the investigation and inquiry.

Obviously, it is important that where offence and penalty provisions are provided for in law that they are properly enforced. In this regard, the Financial Regulator has taken 18 enforcement actions (16 administrative sanctions procedures and 2 market abuse actions) since these powers became available to it in 2004. Seven individuals have been disqualified from working in the financial services industry (for various periods of time). There have been five breaches of the Consumer Protection Code, two breaches of Market Abuse Regulations and eleven breaches of other codes of conduct (five prudential and six consumer breaches). There have been twelve fines imposed, one of €3,250,000, one of €200,000, 1 of €80,000, 1 of €50,000, 1 of €45,000, 2 of €20,000, 2 of €10,000, and 3 of €5,000, which totals €3,700,000.

To date, one credit institution has been reprimanded and subject to a monetary penalty of €50,000.

By way of concluding, I would not accept any suggestion that an instruction, leave or any other indication was given to the banking sector in the past 10 years which might cause any understanding that deviation from good banking practice might be acceptable. While it is not my role as Minister for Finance to seek to intervene in the decision-making of individual financial institutions, I would repeat my desire that the sector provides prudent and responsible lending that is in the interest of the financial institutions, the borrower and the wider economy.