Requiring Information and Review
The Central Bank Supervision and Enforcement Act 2013 sought to significantly improve and enhance the Central Bank’s powers of supervision over credit institution and financial service providers generally.
The Central Bank may require a regulated financial services provider or any related undertaking to it by notice, a report on any specified matter in relation to which it has the power to require the production of information documents of books under financial services legislation.
The Central Bank may appoint a reviewer with the requisite skills to prepare an objective report in the matters concerned. The reviewer might be an actuary, auditor, accountant, lawyer, etc. with the relevant technical, technological or business skills. The Bank may enter a contract with the reviewer in relation to his terms of appointment. The costs of the report are to be borne by the institution being reviewed.
The reviewed institution or entity must give all assistance to the reviewer. It must provide appropriate explanations as the reviewer considers appropriate. It is an offence to provide false information subject on summary conviction to a Class A fine or 12 months or both or up to five years imprisonment on €250,000 fine. It is an offence to obstruct or impede the reviewer.The Bank may apply for a High Court action to enforce non-compliance.
The Bank has comprehensive powers to obtain information from regulated financial service providers, applicants and a range of persons whom they believe who are acting as such or have been acting as such, whether with or without authorisation. The power extends to related entities including employers, officers and employees or agents of any such persons. The Bank has the power to require information, records, and documents, accounts, forecasts, and plans. They may be required to be attested as the Bank requires.
The Bank may appoint authorised officers with extensive powers. They may enter premises as required. A warrant is required to enter a dwelling house. They may search, inspect, require persons to produce records, summon persons and require them to answer questions, give explanations of decisions, courses of action, systems or practices or provide any records under their control. They may make copies and remove records. They may secure records for later inspection.
Authorised officers may require persons to give answers and make a declaration of truth in relation to the answers. They may require persons to provide a report on any matter on which the officer reasonably requires information. They may require persons to state to the best of their knowledge where a record is located or from whom information may be acquired. Access may be required to electronic information. Persons may be required to produce computer records. Failure to comply is an offence.
Information, documents and records etc. may be required notwithstanding that their forced production might otherwise breach provisions of law or statute such as confidentiality etc. or a lien. Failure to comply is an offence.
Obstruction, impeding of an officer or failure without reasonable excuse to comply with a requirement or to give false or misleading information is an offence. A person who fails or refuses to comply may be certified to the High Court in respect of the same and the High Court may make such orders as it sees fit on account of such failure. Failure to comply is subject to the same sanctions as above.
There is provision for an application to the High Court to consider disclosure of ostensibly privileged legal information. This may be based on the information not being privileged or relating to the commission of an offence under financial services legislation. There is a duty to preserve the information pending a determination by the High Court. The High Court may examine the information and consider its privilege and whether that privilege is lost by reason of a contravention of or constituting an offense.
Where the Bank considers it necessary owing to the nature, scale or complexity of activities, it may require its auditor to conduct an examination for the purpose of providing a statement of the extent to which the institution has complied with its obligations under financial services legislation. The auditor is obliged to comply within two months.
A person appointed to perform a preapproved control function in relation to a financial service provider must as soon as practicable disclose the Bank information in the above categories which he or she believes to be of material assistance to the Central Bank. The disclosure is to be a protected disclosure.
Failure to disclose with a reasonable excuse includes that the disclosure might tend to incriminate the person or that it has been supplied by another person. An anonymous disclosure is not protected. The disclosure is to be made to the Central Bank. The disclosure must be made to the Bank, its employees, officers, or an authorised officer. The Bank may publish guidelines for providing practical assistance in the making of protected disclosures.
The legislation reaffirms whistleblowing protection for persons making disclosures. They are protected from dismissal, suspension, layoff, transfer, unfair treatment/coercion, harassment etc.The protected disclosures are those made in good faith to an appropriate person where the maker has reasonable grounds for believing the disclosure will show the commission of an offense under financial services legislation a prescribed contravention or possible contravention or the concealment of evidence.
Persons who make protected disclosures are protected from civil liability provided that the disclosure is not known to be false or misleading or false or misleading information is not provided in relation to it.
The Bank may not disclose the identity of a person who has made the protected disclosure without his consent except for investigations, enquiries and other assessments under financial services legislation.
There is protection for employees on the above terms. It is an offence for an employer to penalise or victimise an employee in any way for making a protected disclosure. A person who causes a detriment for another because of the disclosure is liable as if it was a civil wrong. The detriment in this context includes intimidation, harassment, discrimination, disadvantage, threat or reprisal, injury, damage or loss.
The Bank is given extensive powers to make directions to regulate financial service providers. They may be made in the interests of the proper and effective regulation of financial service providers. Where certain circumstances apply;
- the institution has or may become likely to be unable to meet its obligations to creditors or customers.
- If not maintaining or in a position to maintain adequate capital or other financial resources having regard to the volume and nature of its business
- it has failed or is failing to comply with conditions or requirements imposed by legislation.
- it is conducting business in a manner as to jeopardise or prejudice money, securities or investments held on behalf of customers or customers’ interests.
They may be grounds for revoking or not renewing its license.
The directions may include suspension in relation to any one or more of the following:
- provision of particular services,
- making of particular payments,
- acquisition and disposal of assets and liabilities,
- entering into transactions of a specified type,
- soliciting business of a specified type,
- carrying on business specified.
The direction may require assets and liabilities to be disposed of. It may require the raising of capital, modification of systems and controls, business practices and compliance with conditions. The requirement may be made to notify third parties of the above actions. Directions may be made to third parties such as account holders of the institution.
The regulated service provider or undertaking to whom a direction is made may apply to the High Court to set it aside in 14 days. Where the High Court is satisfied because of the nature and circumstances of the case, or otherwise in the interest of justice that it is desirable, then the whole or any part of the proceedings may be heard otherwise than in public.
A direction may provide that no proceedings are to be commenced and continued, no assets are to be attached or enforced against, except with prior approval of the High Court.
The Central Bank may apply to the High Court for orders enforcing the direction. Persons who fail or refuse to take the required action may be made subject to such orders as the High Court deem fit.
The Central Bank Supervision and Enforcement Act 2013 enhanced the Central Bank’s powers as a regulator of financial institutions and other regulated entities. As part of a more intense financial services regulation, the Central Bank maintains constant contact with significant financial institutions, gaining substantial information through ongoing supervision.
The Central Bank has investigatory powers in relation to regulated entities. It can appoint authorised officers with the power to obtain information, including documents and records, and attend meetings of regulated firms. It may issue warrants to enter premises. Disclosure of information to the bank’s officers does not constitute a breach of any duty, including client confidentiality.
Where information is subject to legal professional privilege, the bank may apply to the High Court for a determination on whether the information is privileged. Persons may be obliged to answer questions despite potential self-incrimination, with failure to answer truthfully or at all constituting an offense. However, this evidence may not be used in a criminal trial, and issues of constitutional rights may arise.
The Central Bank may serve notice on a bank or related business to provide a report on specified matters related to regulation. This is for the purpose of proper and effective regulation. The Central Bank must consider the adequacy of its powers for investigation and the knowledge and expertise available.
Notices to regulated entities may specify deadlines for completion of reports by a nominated reviewer. The costs are borne by the entity reviewed, and the reviewer provides assistance to the Central Bank regarding the report.
The Central Bank may serve notice on a bank’s auditor to conduct an examination or provide a statement on the bank’s compliance with obligations. These requirements are specified based on the nature, scale, and complexity of the activities and conform to internationally recognised standards.
The Central Bank enjoys extensive immunity from litigation in its regulatory functions, ensuring its actions do not grant third parties any right of action due to failures in exercising supervisory powers in regulation, licensing, and supervision
The 2013 legislation gives the Central Bank increased enforcement powers. There is a range of new and enhanced powers available to it.
There is provision for application by the Bank to the High Court to restrain a person from conduct involving a contravention of financial services legislation. The court may make the appropriate order requiring the enforcement of the duty. The Bank may apply on a one-sided application in the first instance as is necessary. The court may make an interim order as required. Orders may be varied and discharged.
The order may prohibit the person from engaging in conduct and may prohibit recurrence of the conduct. It may be exercised, whether or not the person appears to intend to repeat or continue the conduct, has previously engaged in the conduct of whether or not there is a danger or damage to another person if he so does so. The application may be heard other than in public if the court determines that it is desirable in the circumstances or in the interests of justice.
The Bank may require publication of notices where a person is operating without the requisite financial services authorisation. It may provide for restitution orders. It implies where sanctions have been imposed on persons under certain provisions.
The Bank is given enhanced powers in relation to prosecution. Notwithstanding the general six months period for prosecution of summary offenses, offenses may be prosecuted summarily within three years of commission or six months of re-entry into the State if the accused is outside the state or three years from the date the evidence justifying the proceedings comes to the attention of the relevant persons proving the offence. The proceedings are to be commenced within five years.
There are provisions in relation to furnishing of documents to the jury to assist consideration of their verdict. This includes transcripts of speeches of the Counsel, transcripts of evidence, transcripts of judges’ charges and other documents which in the opinion of the trial judge are desirable.
A person convicted of an offence under financial services legislation is required to pay the costs and expense unless there are special substantial reasons for not ordering. The expense includes those for the investigatory and prosecution phase.