That leave be granted to introduce a Bill entitled an Act to Bill entitled an Act to extend the application of Part IIIC of the Central Bank Act 1942 to provide powers to the Central Bank to conduct inquiries into the suspected provision of false or misleading information to it and to provide for the administrative sanctions that may be imposed by the Central Bank for the provision of false or misleading information to it; to create an offence of providing false or misleading information to the Central Bank; to amend the Central Bank Act 1942 for those purposes; and to provide for related matters.
Is Bille fíorthábhachtach é seo agus cearta á lorg ag gnáthdhaoine ó thaobh baincéirí agus daoine atá ag obair san earnáil airgeadais.
In 2015, the then Central Bank Governor, Professor Patrick Honohan, wrote to the Minister for Finance pointing out a lacuna or loophole in the Central Bank legislation that, to quote the Governor, effectively allowed "individuals to act without responsibility for their actions of lying or misleading". The context was a request by the Minister to the Central Bank to provide reasons as to why insurance premiums, especially for car insurance, were out of control. One would have thought that this warning from the Governor would have sent the Minister’s officials scurrying to draft the necessary changes in the law to close the loophole, but that did not happen. Here we are, two and half years later, and it did not even warrant a mention in the Government’s so-called plan to tackle white collar crime.
Solvency II has introduced some improvements but the two fundamental issues the Governor first raised remain. The powers under Solvency II can only be used if the false information is provided as part of a statutory request rather than any query from the Central Bank or, indeed, any voluntary information given by any bank or somebody in a financial institution. Critically, individual accountability is still avoidable unless the individual is proved to be participating in a breach committed by the regulated entity. Essentially, bankers can lie through their teeth to the Central Bank time and again, provide misleading information and documents and the Central Bank can do nothing unless it first proves that the entire regulated entity, the bank itself, was involved in that breach. That is what the Governor of the Central Bank wrote to the Minister in 2015, saying at the time that there was a lacuna in the law and it allowed those in financial institutions to lie without being able to hold them to account.
This Bill tries to introduce individual accountability. Yesterday, once again, the finance committee and the many victims listening were subjected to a major bank telling us that nobody in particular was responsible for the theft of hundreds of millions of euro from its customers. The Governor’s letter clearly had the insurers in his sights and it is no surprise that the industry is now under investigation from all sides, including from Europe. As things stand, however, no bank official, CEO or board member or any insurer who spun a web of lies to the Central Bank and to thousands of customers can be held accountable for their actions, what they did and said, or the lies they told unless it can be proven that the regulated entity was complicit. That has to change. The Governor called for this in 2015 and today could be the day when the change starts, when bankers, insurers or anybody else who misleads or lies to the Central Bank will be held accountable and face up to five years in jail if found guilty of the offences under this legislation.
This is only a small part of the jigsaw and I will bring forward other parts of that jigsaw in time, but what is needed is for the resources of the State to start taking white collar crime seriously. This Bill, if passed into law and used by the Central Bank, would see anybody, no matter how deeply entrenched in the establishment, face the same consequences for lying to the State’s financial regulator. It is high time that we brought individual accountability to bankers and those working in the financial services industry and ensure that they are not above the law when they tell blatant lies to the authority in which the Irish public has put its trust to ensure that the financial system is regulated, above board and sound.