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Central Bank - New Supervisory and Enforcement Powers

The Central Bank (Supervision and Enforcement) Bill 2011, published on 28 July 2011, proposes enhancing the Central Bank’s supervisory powers over financial service providers (FSPs) and its powers to enforce financial services legislation. Once enacted, the legislation will introduce greater transparency in the financial services industry and give the Central Bank greater access to information.

The Bill provides for the following:

  • Independent expert reports on regulatory matters to be procured for the Central Bank by FSPs at their own cost. The independent expert may be an accountant, lawyer, auditor or any person with business, technical or technological skills engaged by the FSP and approved by the Central Bank.
  • Consolidated authorised officer regime to be introduced detailing the ability of the Central Bank to access premises and records, seek regulatory information and attend FSP meetings.
  • Whistleblowers to be offered protection from civil liability and victimisation where they make protected disclosures.
  • Mandatory disclosure regime to be provided for those performing pre-approval controlled functions (senior or influential positions within FSPs). Any failure to disclose may be investigated and action may be taken under the Central Bank’s new fitness and probity regime.
  • Power to Central Bank to issue regulatory directions and make regulations.
  • FSP authorisation may be suspended or revoked as an administrative sanction.
  • Increase in the maximum penalties under the administrative sanction regime from €5m to €10m (or 10% of turnover) for firms and from €0.5m to €1m for natural persons.

Currently the Bill is awaiting a second reading in the Dáil, but is hoped to progress before the year end. It is a welcome step forward in financial regulation in Ireland. However, it does not come completely without risk and while there are protections in place for individuals, one can only speculate as to how these protections will be achieved on a daily platform and whether the penalties will follow the rogues.

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