I move: "That the Bill be now read a Second Time."
The Bill before the House today was debated in the Seanad last week. That debate was very constructive and there was cross-party support and acknowledgement that the Government was bringing forward this Bill solely for the purpose of facilitating the work of the banking inquiry. In that respect, Deputies will have seen the very positive statement from the Chairman of the Joint Committee of Inquiry into the Banking Crisis last Thursday. He welcomed the tabling of the Bill which he said would enable the committee to have access to certain confidential banking information held by the Central Bank of Ireland.
The Chairman of the committee also emphasised that the purpose of the Bill was not to compel the Central Bank to co-operate with the inquiry but rather to remove a statutory prohibition in order that the Central Bank, which is willing to disclose information, is not statutorily barred from doing so. In fact, the Chairman of the joint committee went on to acknowledge the highly co-operative and constructive engagement the committee had to date with the Central Bank.
The Bill has two distinct provisions. First, it amends section 33AK of the Central Bank Act 1942 to allow the Central Bank to disclose confidential information to the Joint Committee of Inquiry into the Banking Crisis under certain circumstances. The information will be disclosed on condition that it remains confidential. As things stand, Central Bank officials are subject to professional secrecy requirements and could face criminal sanctions for sharing confidential information in this way. Second, the Bill provides for the Houses of the Oireachtas to make Standing Orders setting out the sanctions to apply to Members of the Houses for any failure to comply with these professional secrecy requirements.
On 14 May 2014, a joint committee of inquiry into the banking crisis, chaired by Deputy Ciarán Lynch, was established by orders of both Houses of the Oireachtas. The committee was tasked with the development of a relevant proposal for an inquiry into certain aspects of the banking crisis. The purpose of the inquiry is to seek to establish the reasons Ireland experienced a systemic banking crisis. On 26 September 2014, the committee submitted its relevant proposal to the Committees on Procedure and Privileges of Dáil Éireann and Seanad Éireann for the conduct of an inquiry in accordance with the Houses of the Oireachtas (Inquiries, Privileges and Procedures) Act 2013 into certain aspects of Ireland's banking crisis. On 26 November 2014, the committee was formally empowered to conduct an inquiry under Part 2 of the 2013 Act. The scope of the inquiry as outlined in its terms of reference is broad and enabling. It is broken down into two phases, the context phase and the nexus phase. The context phase is for the purpose of information gathering. As Deputies are aware, the joint committee of inquiry has already begun this work. This will inform the nexus phase, which will focus on three broad elements: banking systems and practices; regulatory and supervisory systems and practices; and crisis management systems and policy responses.
I will refer to the interaction between the Department of Finance and the banking inquiry. The Department of Finance is fully committed to supporting the work of the committee of inquiry into the banking crisis, and this has been stated clearly by the Secretary General to the committee Chairman in a number of letters. The Department is currently in the process of sourcing, examining and formatting the substantial number of records requested by the inquiry. To this effect, a full-time central co-ordination unit has been established in the Department consisting of seven full-time staff. I should add that 11 staff from other areas within the Department have been reassigned to process the records in the format required by the committee. In addition, ten temporary clerical officers have been recruited to assist in the processing of records for the inquiry, which gives a total of 28 staff working full-time exclusively on banking inquiry matters. Furthermore, a significant number of Department staff are actively sourcing and examining records relevant to the inquiry's direction in addition to their normal duties. Moreover, the Department's Secretary General has communicated directly with the banking inquiry Chairman to ensure its direction to the Department is being met effectively. The Department is, therefore, clearly doing everything in its power to assist the banking inquiry in its work.
I will now explain the origin of the Bill being debated today. Section 33AK of the Central Bank Act 1942 contains an express prohibition under the Rome Treaty, the European system of central banks statute and the supervisory EU legal Acts on disclosure of confidential information. This is a long-standing prohibition, dating back to section 16 of the Central Bank Act 1989, which was ultimately replaced by section 33AK. All current and former employees of the Central Bank, including the Governor and members of the Central Bank commission, are affected by this prohibition. In its relevant proposal, the joint committee stated that section 33AK of the Central Bank Act 1942 would prohibit listed categories of persons within the Central Bank from disclosing certain confidential information. The joint committee felt this provision may therefore prove problematic for the banking inquiry when it seeks this information, which may in many cases be vital to the progression of the inquiry. Having taken legal advice on this point, the committee was of the view that it would be necessary to amend section 33AK to overcome this issue.
The prohibition on the disclosure of confidential information by the Central Bank is derived from the supervisory EU legal Acts and the statute of the European system of central banks. These EU instruments provide that where the Central Bank acquires confidential information in the course of its functions as a supervisory authority, it has an obligation not to disclose that information unless a gateway is provided under one of the supervisory EU legal Acts. The relevant supervisory EU legal Act in this case is the capital requirements directive and the gateway identified is the one allowing the disclosure of information to parliamentary inquiry committees. However, the obligation on the Central Bank not to disclose confidential information applies to all the Central Bank's duties and not just those imposed by the capital requirements directive. There is no definition of confidential information in the supervisory EU legal Acts, which instead refer to the concept of professional secrecy. It is entirely a matter for the joint committee to make the decision on the types of information which it requires from the Central Bank and for the Central Bank to decide on whether it can comply with the joint committee's request within the legal framework that applies.
In its relevant proposal, the joint committee further stated that ancillary amendments to the Standing Orders of Dáil Éireann and Seanad Éireann would also be required to put in place a process for how the Houses of the Oireachtas deal with confidential information and provide sanctions for Members who disclose such information without authorisation. The reason for Standing Orders to be amended is to accommodate the constitutional position of the privilege of Members of the Oireachtas, which restricts the extent to which criminal sanctions could be applied. In its consideration of the relevant proposal, the Committees on Procedure and Privileges considered that the preparation of the necessary amendments to section 33AK should be expedited by the Government.
As Members are aware, this banking inquiry will inquire into the reasons Ireland experienced a systemic banking crisis. It will consider at the political, economic, social, cultural, financial and behavioural factors and policies which impacted on or contributed to the crisis. In doing so, the joint committee may inquire into the findings and recommendations of previous reports into the crisis. Previous reports include the Honohan report, the Regling and Watson report and the Nyberg report. These reports identified that poor supervision, poor assessment of risks and a lack of follow-through on enforcement all played a part in the financial crisis. Acting on the recommendations contained in these reports, a number of significant reforms have been introduced to build a strengthened regulatory framework. These include the creation of a single fully integrated Central Bank of Ireland with a unitary board, the Central Bank commission; a regime to ensure the fitness and probity of key officeholders within financial service providers; a resolution mechanism to enable the Central Bank to intervene where a credit institution gets into serious difficulty and is in danger of becoming destabilised or otherwise failing; and strengthened powers for the Central Bank to impose and supervise compliance with regulatory requirements and to undertake timely prudential interventions.
A comprehensive overhaul of the regulatory framework in the financial sector has also been pursued at EU level since the financial crisis. Through the introduction of various initiatives, the stability and resilience of the financial sector has been strengthened. Ireland has played a key role in driving these reforms at European level, including the single supervisory mechanism and the bank recovery and resolution directive. The wide-ranging and comprehensive reform in the financial services sector at both domestic and EU level in recent years is to be welcomed. We must never return to the failed policies which led to the banking crisis. Lessons must be learned and, in that regard, this banking inquiry is essential.
Under the EU treaties, Ireland is required to consult formally with the European Central Bank on any new legislative provisions relating to the Central Bank. The opinion which was received from the president of the ECB was largely positive but the ECB made the point that the scope of section 33AK(6) of the Central Bank Act 1942 should be broadened to comply with Article 37.2 of the Statute of the European System of Central Banks. There is a duty of secrecy under the statute and that is why an amendment was brought forward on Committee Stage in the Seanad to broaden the scope of section 33AK(6) to provide for such obligations of professional secrecy. That amendment, which was approved by the Seanad, has the effect of removing any ambiguity over the scope of professional secrecy requirements pertaining to persons who would receive information disclosed by the Central Bank.
The banking inquiry will be examining the reasons Ireland experienced a systemic banking crisis which resulted in great upheaval for the Irish economy and the Irish people. Thankfully, we are starting to emerge from those difficult times. The macroeconomic and fiscal outlook is much more favourable than it has been for a number of years, exports are growing and consumer spending and investment are on an upward trajectory and the number of people at work has increased by over 100,000 since the low point. However, the Irish people have sacrificed much and the crisis has impacted heavily on their lives. They are entitled to understand the origins of the crisis and, importantly, the actions that have been taken to ensure the same mistakes do not happen again. That is why there is cross-party support for the banking inquiry and this Bill, which is designed to facilitate the work of the inquiry in getting access to information which otherwise would have been statutorily barred from disclosure.
I already mentioned the constructive debate in the Seanad and the cross-party support for the Bill. There was widespread consensus on a related matter also - that the costs of the inquiry should be strictly managed and that legal costs should be kept to a minimum. That is something we can all echo in this House. I thank the House for agreeing to take all Stages of this Bill today and I look forward to a constructive debate. I commend the Bill to the House.