In only the fourth and fifth settlement this year, the Central Bank, last month, entered into its first settlement agreement with a credit union since the commencement of the Administrative Sanctions Procedure.
The Central Bank found that the credit union had breached its statutory obligation to provide the Central Bank with periodic financial statements and that an officer of the credit union, Mr Hogan, had participated in those breaches.
Significantly, when the Central Bank issued its enforcement priorities for 2015 earlier this year, prudential requirements and credit unions specifically, were identified.
The specific breaches in this case were that:
- The credit union failed to comply with its Prudential Regulatory Returns requirement for the quarters ending 30 September 2013 to 30 September 2014
- There were no adequate controls in place to ensure the submission of returns within the required timeframe
- The credit union failed to ensure the accuracy of the information provided in the submitted returns
The officer in question was responsible for preparing and submitting the prudential returns on behalf of the credit union and was found by the Central Bank to be personally responsible for the breaches. The Central Bank noted that it expects persons concerned in the management of regulated entities to act to the required standards.
The Central Bank has repeatedly stated that for it to effectively regulate credit unions, it is essential that it is provided with these returns as it informs the Central Bank of the financial position and regulatory compliance of each credit union.
As with previous settlements, the Central Bank took several factors into consideration when deciding upon a penalty, including the seriousness and repeated nature of the breaches, the need for a penalty to have a deterrent effect, the size of the credit union and the fact that the credit union had taken measures to resolve the breaches. Furthermore, the credit union admitted its liability for the breaches and agreed to implement systems and controls to remediate the three breaches and confirmed on 29 July 2015 that this work had been completed.
Ultimately, the Central Bank imposed a fine on the credit union of €5,000 and reprimanded both it and the individual officer for the breach of its statutory obligations.
Contributed by Hilary Rogers.