Saturday 24 March 2018

Central Bank admits €5m Irish Nationwide fine comes too late to collect

The Central Bank
The Central Bank
Colm Kelpie

Colm Kelpie

The Central's Bank's fine against Irish Nationwide is the second occasion in two years in which it has levied the maximum penalty of €5m on a firm.

But on both occasions it noted it wouldn't be collecting the money. The Central Bank announced yesterday that it was fining the now defunct lender, which Dame Street said had admitted to multiple breaches of financial services law and regulation, including persistent failure to comply with its own internal policies and procedures.

The Central Bank said it was imposing the maximum applicable fine of €5m - five years after the probe was set up.

But it added: "As INBS does not have any assets, it would not be in the public interest to pursue the collection of the fine and, accordingly, the Central Bank will not do so on this occasion."

The Central Bank levied a €5m fine against Quinn Insurance in February 2013. It was the last occasion that the maximum fine was imposed, but Dame Street did not collect it that time either as the firm was under administration at the time.

The Central Bank announced last week that it had appointed a panel of outside experts to investigate what it described as suspected regulatory breaches at INBS before it was bailed out and nationalised.

It was the latest phase in the long-running investigation into the nationalised bank.

The inquiry will involve public hearings and the Central Bank said its focus will be to determine whether certain individuals were complicit in the commission of the breaches.

The Central Bank has declined to name any individuals who have been written to or who are expected to appear at the public hearings.

However, former chief executive Michael Fingleton is certain to be among the key witnesses at any inquiry into the failed lender, along with other senior executives and directors.

Mr Fingleton was INBS chief executive for 38 years before he stood down in March 2009 after receiving a highly controversial €1m bonus and a retirement gift of a €11,500 watch.

Derville Rowland, director of enforcement at the Central Bank, said the investigation has been unparalleled in its degree of complexity and scale.

"INBS has admitted multiple failings at several levels of its commercial lending process, from operational lending, to credit review, its Credit, Provisions and Audit Committees all the way to its Board of Directors," Ms Rowland said.

"INBS's admitted failings amount to a consistent and, at times, wholesale disregard for its own policies and procedures.

It is imperative that all regulated firms comply with financial services law and regulation and have robust systems and controls in place to continuously test and ensure compliance with their internal processes and controls."

Ms Rowland would not hesitate to use the powers available to it to take the necessary enforcement action against "firms with deficient compliance practices and against those responsible for the management of such firms."

The long-running Central Bank INBS probe has been hampered by poor record-keeping at the bank prior to its bailout and legal cases involving former directors and liquidators who took control of its assets in 2013.

The INBS probe was run separately to an Office of the Director of Corporate Enforcement (ODCE)-led investigation into the former Anglo Irish Bank, which later merged with INBS, because as a building society INBS was not subject to oversight by the Companies Office.

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