New laws needed to stop bankers hiding wrongdoing - Central Bank
THE Central Bank has told an Oireachtas committee it wants legislation to stop bankers trying to hide wrongdoing.
The regulators want to hold bankers individually responsible for the type of dishonesty that led to the tracker scandal.
The new legislation was needed to stop senior managers in financial firms trying to cover up their dishonest actions, claiming the firm acted collectively.
The law would set out exactly who is responsible for various duties within a bank, and force them to adhere to certain conduct standards.
Director of Financial Regulation, Policy and Risk Gerry Cross told the Oireachtas Finance Committee there was a need for what he called an individual accountability framework.
“We recommended the introduction of an enhanced individual accountability framework, key components of which would apply to all regulated financial services providers,” Mr Cross said.
He said managers sometimes try to cover up their actions.
“Management in regulated entities may seek to insulate themselves, or be at a remove, from apparent misconduct.
“Senior individuals can seek to escape liability for wrongdoing by hiding behind the collective. This experience is directly relevant to our proposals for an individual accountability framework.”
And there was a need for a simplified approach to enforcement.
He explained that senior bankers and those running insurance firms can claim they “participated” in wrongdoing, which makes it difficult to hold them individually responsible.
“The current hurdle of “participation” should be removed such that the Central Bank could hold individuals to account directly for their misconduct under the administrative sanctions procedure, rather than only where they are proven to have participated in a firm’s breach of rules.
“Removal of the participation requirement is essential to enhancing the accountability of individuals for failing to maintain basic standards of conduct.”
A new law would set out enforceable conduct standards expected for firms and individuals, the committee, chaired by Fianna Fáil’s John McGuinness, heard.
Senior managers would be individually responsible for complying with regulatory requirements.
Sanctions could be taken against those who fall below the standards set out.
He added: “We welcome the Minister for Finance’s indication that he will bring forward draft legislation on these proposals for Oireachtas consideration.”
However, the legislation has been delayed because of Brexit preparations, Finance Minister Paschal has said.
The minister told the Dáil on Tuesday he had planned to seek Government approval to draft heads of the Bill by the end of March.
He said “all my officials involved in this area have also been involved in all of the issues in the Brexit Omnibus Bill”.
Mr Donohoe said he plans to seek Government approval for the Central Bank (Amendment) Bill “well in advance of the summer” and to debate the legislation after the summer recess.