Davy scandal highlighted 'weak internal controls', says Central Bank

Oireachtas Finance Committee will hear the reprimand and fine imposed on Davy reflects the serious regulatory breaches and lack of candour when first reporting the matter to the Central Bank

The Davy scandal highlighted 'weak internal controls' when it came to conflicts of interest, the Central Bank will tell TDs on Tuesday. Picture: Sam Boal/RollingNews.ie

The Davy scandal highlighted "weak internal controls" when it came to conflicts of interest, the Central Bank will tell TDs on Tuesday.

In remarks set to be delivered to the Oireachtas Finance Committee, Derville Rowland, director general, Financial Conduct, will say such weaknesses served to create an elevated risk of investor detriment.

She will tell TDs the reprimand and fine imposed on Davy reflects the serious regulatory breaches and aggravating factors in the investigation, including the firm’s lack of candour when first reporting the matter to the Central Bank.

Davy prioritised facilitating an opportunity for a consortium of 16 employees to make personal financial gain over ensuring that it was complying with its regulatory obligations, she will say.

She will say that robust enforcement action is a critical component of the Central Bank's work to protect consumers and investors.

"When the Central Bank concludes an enforcement outcome, we publish detailed statements, outlining, among other things, the regulatory breaches we have established, the sanctions imposed, the reasons for those sanctions and, where appropriate, messages from the case which all regulated firms must heed. We do this because we believe sunlight is the best disinfectant," she will say.

"Publicised enforcement outcomes send a wider message to firms and individuals to drive improvements in compliance, behaviour and culture across the financial system. 

"In terms of cases, the Central Bank has concluded 141 enforcement actions, resulting in monetary penalties of over €128m, and has also issued a number of individual disqualifications and prohibitions," committee members will hear.