Ireland will introduce laws from next year to make senior bankers directly accountable for failings at institutions, including fines and regulatory findings against individuals, Finance Minister Paschal Donohoe said yesterday.
A decade ago, the country faced the costliest bank bailout in the eurozone after the bursting of a credit-fuelled property bubble and, more recently, began punishing lenders for overcharging tens of thousands of mortgage customers.
The new laws will include a senior managers regime (SMR) similar to that introduced for top bankers in Britain three years ago after taxpayer bailouts and market rigging scandals saw banks fined but few individuals punished.
Key staff and firms will be obliged, under the SMR, to spell out where decision-making and responsibility lie, making executives directly accountable to regulators for any misconduct that occurs on their patch.
Conduct standards for individuals and firms will also be introduced and the Central Bank’s Fitness and Probity Regime, brought in after the banking crisis to vet senior executives, will also be enhanced.
Mr Donohoe said the €1m maximum fine that the Central Bank can levy on an individual will remain in place. “Because they (banks) are such an important part of our economy, the behaviour of individuals within it can have such a powerful effect on other citizens,” Mr Donohoe told reporters.
The proposed measures also include breaking the “participation link” which addresses the known deficiency in the legislation which requires the Central Bank to first prove a contravention of financial services legislation against a regulated financial service providers before it can take an action against an individual.
Welcoming the approval of his Cabinet colleagues, Mr Donohoe said: ‘This is an opportunity to bring about real change in the financial services industry — changes that are not reactionary but proactive and carefully considered.
“I am determined to adopt a strategic approach in proposing and bringing through legislation that allows the Central Bank and firms within the financial sector to drive the necessary changes needed in culture.”
- Reuters. Additional reporting Irish Examiner