Business Irish

Friday 24 January 2020

Central Bank staffs up a new regime to police banking sector


Siobhan Creaton

THE Central Bank is switching to a new regime to supervise banks and other financial companies. Financial Regulator Matthew Elderfield says he will be working to ensure it does its job in an appropriate fashion. But he cautions that the Central Bank will never be "infallible".

"We cannot guard society against all risks," he said, but the new system would give them the best chance "to guard against the most severe threats to financial stability and consumers in the future".

Addressing the Association of Chartered Certified Accountants, Mr Elderfield said he and his more than 700 supervisory staff would be better equipped to spot problems before they became crises.

The Central Bank has almost doubled the number of people working in this area compared with 385 at the end of 2009.

"This significant increase in staff numbers, together with internal restructuring, is necessary to ensure we can operate effectively and efficiently," he said.

There are no plans to hire any further staff in this area. He said at these levels Ireland was marginally behind its peers in other countries.

It would be targeting "the energy and expertise" of its supervisors to where they make the greatest difference, according to the Financial Regulator.


Banks and other financial services firms can expect their dealings with the Central Bank supervisors to be "robust".

They will be using a new computer-based system that will assist them to sift through important data and will alert them to unusual activity. But it would merely assist the supervisor, Mr Elderfield said.

"It isn't a black box. Instead, what we have built helps the supervisor work the answers out."

It will mean that firms would be consistently challenged on their activities, and Mr Elderfield said bankers and others in the sector should not be "too thin-skinned" about the process. "I would suggest they work with us to adapt to the new reality," he told the accountants.

The recent problems at Custom House Capital, he said, were a stark and timely reminder of the importance of having an effective supervisory framework to protect client assets.

In this case, large-scale abuse of client funds could have continued without being detected in audit reports and other reviews. The Central Bank has commissioned a review that will report in the New Year, to recommend how to strengthen the audit and supervisory processes to prevent further abuses.

"I must caution that no amount of skilled supervision or enhanced audit can absolutely guarantee that determined and deliberately concealed efforts to misuse client funds can be prevented in the future," Mr Elderfield added.

Irish Independent

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