Tenfold rise in fines urged for financial bodies

FINES for banks who deliberately flout regulations should be increased 10-fold to a maximum of €50 million, an Oireachtas Committee report said last night.

The all-party body on Finance and the Public Service’s hard-hitting report also called for statutory internal audits in financial institutions to tackle overcharging.

The body also found that the banking sector is not sufficiently competitive and that consumers were paying too much for credit and money payment services.

It called on the Government immediately to enact legislation to protect ‘whistleblowers’ who expose irregularities within banks.

Committee chairman Sean Fleming said several banking scandals would have been avoided if legally-binding accounting checks were carried out.

He said such a system could have prevented the overcharging scandal at National Irish Bank, the Rusnak affair at AIB or the DIRT inquiry.

The report called for maximum fines to increase to €50m plus provisions for additional daily penalties for further non-compliance.

“A pub can be closed for a week if it sells drink to minors. If it suffers a loss of profits for a full week, banks should also be forced to pay equally proportional fines.”

Defending the efficiency of the financial watchdog, IFSRA, Mr Fleming said: “It has succeeded in bringing about changes in senior management level in some institutions in this country over the last year or so.”

Opposition finance spokesman Richard Bruton said: “Traditionally, the penalties in the banking sector have been very weak, but the Oireachtas is belatedly catching up with the bolted horse.”

Labour TD Joan Burton said she hoped that the industry was finally entering a new era of regulation.

“There is a culture in Irish society that white collar tax fraud and bank fraud is not as serious as somebody scamming social welfare.”

Caoimhghín Ó Caoláin of Sinn Féin stressed that the findings were part of an interim report and further work in the area was still in progress by the committee.

Calling for the bank levy to be increased, he added: “Banks that are hugely profitable need to make a proper contribution to the overall needs of the Exchequer.”

The 50-page report also called for low-income groups to have equal borrowing access and for stamp duty on bank cards to be levied on a sliding-scale basis.

The findings, based on two years of the committee’s public hearings, have been presented to the Finance Department which will respond in due course.