Enforcement action sees two directors disqualified

The Central Bank of Ireland took enforcement action against 10 financial providers, securing the disqualification of two directors and collecting fines of €5m last year.

Deputy governor of the Central Bank, Matthew Elderfield, said that this year their enforcement efforts would be prioritising mortgage arrears, retail intermediaries, payment protection insurance and client asset requirements.

Speaking at the Central Bank of Ireland Stakeholder Conference, Mr Elderfield said the bank had invested in training to give their enforcement teams more teeth.

“We have significantly upgraded the skills of our supervisors both by recruitment and training programmes. They will ask difficult questions, they will be sceptical and ready to engage in sometimes unpalatable but necessary conversations and analysis,” he said.

Mr Elderfield said that a number of staff in the Central Bank are ready to help carry out the inspections and ensure that financial institutions were staying with in the new stricter regulations. In 2009 the Central Bank had 385 in 2009 by the end of this year they plan to have 714 employees.

As part of the increased emphasis on enforcement the Central Bank is extending its Probability Risk and Impact SysteM or PRISM audits to investment firms and credit unions.

Mr Elderfield said that the PRISM audits are the central plank of their new pro-active approach to financial supervision.

The PRISM audits focus on the impact a firm would have on consumers and the economy if the firm was to experience difficulty.

Mr Elderfield said that he was looking forward to the implementation of the new Supervision and Enforcement Bill, which will provide the Central Bank with increased powers and provide protection for whistle-blowers.

“This is a flavour of recent regulatory developments in Ireland. The process of rethinking our philosophy, changing our culture and re-engineering our processes continues,” said Mr Elderfield.

The governor of the Central Bank, Patrick Honohan, said that the days of the Central Bank shying away from enforcement orders was gone.

“A word on enforcement; the days when the raised eyebrow of the governor could be relied upon to ensure compliance are long gone (though sometimes we have a go).

Financial firms know that they operate in a rules-driven environment and that compliance is expected,” he said.