I welcome the Minister for Finance and his officials. I think we can go straight back to where we left off. We had agreed section 43, as amended, so we will move on to section 44.
Central Bank (Individual Accountability Framework) Bill 2022: Committee Stage (Resumed)
SECTION 44
Question proposed: "That section 44 stand part of the Bill."
I have a query that might relate to other sections too but it can be addressed in the context of section 44, which provides that the Central Bank "may hold inquiry into suspected commission of or participation in prescribed contravention". As I said during our consideration of the Bill last week, obviously I support the legislation. I have sought individual accountability for many years, so I am glad that the Bill is before us. We need to make sure we try to look around as many corners as possible to ensure that it is sufficiently robust for any potential contravention that could happen in the future and that individuals are held accountable.
As we look at the Bill section by section, including section 44, we find that it talks about a person who is committing or has committed a contravention but what about the person who is planning to commit a contravention? There could be a case where we are coming in where the damage is done. In some cases, the damage to customers or the financial services may not be substantial and the contraventions are of a more minor nature. Unfortunately, in financial services and domestic banking we have seen contraventions of significance to both the financial system and the customers. Some were discussed and planned. In that case, I am not sure that this legislation would capture an individual. As a hypothetical example, someone might go to the Central Bank and say that a certain person who is in a controlled function has been discussing the idea of A, B, C or D with his colleagues. They could be planning to carry out that idea or there could be an email to that effect. In some of the banks and dealing rooms, there are recordings. There could be telephone conversations. Would somebody planning a contravention be subject to this legislation? It seems that the legislation is written in a way that means they have to be committing or have committed a contravention.
I will speak to the section first. This section substitutes a new section for section 33AO of the Central Bank Act 1942, which provides for the circumstances in which the Central Bank may hold an inquiry into the suspected commission of or participation in a prescribed contravention. This amendment will facilitate the breaking of the participation link whereby enforcement action can only be taken against an individual after wrongdoing by a firm in which the individual participation has been proven.
The Deputy's point refers to how advanced that intentionality is. If the intentionality is at a point where it can be shown to be in breach of the conduct standards that are in the Bill, my expectation is that at that point the phrase "suspected commission" would mean they would be subject to the rigours of the Bill. This section refers to the commission in a prescribed contravention. I would expect that if the intentionality gets to a point where it can be proven that it is material that they are planning to commit an offence or contravention, that act of planning - of itself - should constitute a breach of the conduct standards.
I hear what the Minister is saying. I had thought about whether that could be a contravention in itself. While the section heading says "Bank may hold inquiry into suspected commission of or participation in prescribed contravention", the legislation is quite clear. It refers to circumstances in which the bank "suspects on reasonable grounds that the person to whom the investigation related is committing or has committed a prescribed contravention". I am concerned that with respect to banking, if there is a plan that has never been executed and therefore there has never been a contravention, they have never committed a contravention or they are not committing it. It is not 100% clear to me that the planning or the intention to do something is covered. For example, in criminal law, the intention to carry out a crime is a crime in itself which warrants prosecution. Someone could intend to do something but for various reasons - maybe because of a superior, or they might have woken up the next morning and thought it was not a good idea, or things may have changed and sands shifted - the intention was not fulfilled.
If the intention is there and can be documented, can they be held accountable? Will there be an investigation? Could there be an inquiry?
That is a fair point. Section 53E defines the common conduct standards. Section 53(1)(a) refers to the person acting with "honesty and integrity" and "having regard to the legitimate interests of the regulated financial service provider, its staff, customers and other persons with whom it engages". The case could strongly be made that the person planning to commit a contravention is not acting with honesty and integrity. Section 53E(1)(b) makes reference to-----
Is the Minister talking about section 53 with regard to appeal confirmation?
I am referring to the new section.
The earlier section. My apologies.
I am referring to section 53E of the new section. It refers to "honesty and integrity...having regard to the legitimate interests of the regulated financial service provider". Section 53E(1)(b) refers to the person acting "with due skill, care and diligence". Section 53E(1)(b)(iv) says "acting without detriment to customers, the regulated financial service provider, its related undertakings, or the financial system in the State". I contend that the act of deliberately planning a contravention would be in breach of those conduct standards.
Is the breach of the conduct standards in the new section a prescribed contravention?
Yes. My officials have just reminded me that it is open to the Central Bank to look beyond this list of standards, if an act has been committed it believes is detrimental to the objectives of this Act. The Central Bank would have the ability to look beyond the conduct standards laid down here.
Thus, the Department has no concerns with regard to the ability to hold somebody to account with regard to planning a contravention that has not yet taken effect.
It does not because the key word is "planning". It will depend on evidence being made available to show planning has occurred. Assuming such evidence is available, I am satisfied the way the conduct standard is laid out with reference to the need to act with "regard to the legitimate interests of the regulated financial service provider ...[and its] customers" would cover off the planning of a contravention as opposed to being in addition to the act, delivery or completion of the contravention.
I understand that and I understand the planning of a contravention would be captured in the conduct standards. It is like saying in criminal law that everyone should be nice to each other and if they are not nice to each other, they can be found guilty. However, not being nice to somebody may be planning the murder of somebody else. As the Minister has read out, somebody could be held accountable for the breach of the conduct standards by not being truthful or honest or acting in the interest of customers in the financial institutions. However, can that person be held accountable for what he or she was planning to do? If the person did it, he or she could be held accountable for the contravention, but would he or she be held accountable for the intention to commit the contravention?
My Department and I believe the answer to the Deputy's question is "yes". Of course, the caveat to that, reasonably, is that there has to be proof the planning was occurring.
Of course.
If that proof is there, I am confident the drafting of the legislation would mean such planning would constitute a breach of the common conduct standards.
Question put and agreed to.
SECTION 45
Amendments Nos. 23 to 32, inclusive, and 47 are related and may be discussed together.
I move amendment No. 23:
In page 45, to delete line 42, and in page 46, to delete line 1 and substitute the following:
“(2) The notice under subsection (1) must specify the grounds on which the Bank’s suspicions are based.
(3) In the notice under subsection (1) or by a separate notice or notices the Bank shall also—”.
Section 45 of the Bill substitutes section 33AP of the Act of 1942 which deals with how the bank gives notice to an inquiry subject with respect to where and when an inquiry takes place. The amendment is related to other provisions of the Bill that deal with the breaking of the participation link. The replacement section restates the provisions of the existing section but in terms which provide for individual accountability, recognising that going forward an inquiry may relate to the commission of a prescribed contravention by a person who is not a regulated financial services provider.
At present, an inquiry can only deal with a prescribed contravention committed by a regulated financial services provider or participated in by a person concerned in the management of such a regulated provider. This section sets out the procedures which involve issuing a notice, specifying the grounds for the bank's suspicion and specifying the date, time and place at which the bank holds an inquiry. A person concerned, whether or not invited to intend the inquiry may, before the date of the inquiry, may lodge a written submission that the person wishes to have taken into account. The bank can adjourn the inquiry from time to time, provided the person who is the subject of the inquiry is made aware of it and the bank may proceed with an inquiry as long as the person has the opportunity to attend it and make a written submission.
Amendment agreed to.
I move amendment No. 24:
In page 46, line 2, to delete “(b) specify” and substitute “(a) specify”.
Amendment agreed to.
I move amendment No. 25:
In page 46, line 4, to delete “(c) either” and substitute “(b) either”.
Amendment agreed to.
I move amendment No. 26:
In page 46, line 7, to delete “(3) A person” and substitute “(4) A person”.
Amendment agreed to.
I move amendment No. 27:
In page 46, line 11, to delete “(4) The Bank” and substitute “(5) The Bank”.
Amendment agreed to.
I move amendment No. 28:
In page 46, line 15, to delete “(5) The Bank” and substitute “(6) The Bank”.
Amendment agreed to.
I move amendment No. 29:
In page 46, line 18, to delete “ subsection (3)” and substitute “ subsection (4)”.
Amendment agreed to.
Question proposed: "That section 45, as amended, stand part of the Bill."
With regard to section 45 and the notice provided to the individual who is the subject of the inquiry, will the Minister inform the committee whether the inquiry will have the powers to notify others to appear before it such somebody who has evidence that Mr. X or Mrs. X has contravened specific provisions? Is that allowed? Where in the legislation do we have to serve notice with regard to that person? Such a person may be giving evidence against the individual or corroborating information he or she has.
I am informed there is a legislative basis under which the bank can write to the person who is not the subject of the inquiry to notify him or her of the inquiry.
If the Deputy bears with me, we will get the legislative reference for him and share it with the committee.
I thank the Minister and I take his word as to there being a legislative basis or not. The key question I had, because we are dealing with the powers of the inquiry and so on, was that I thought there would be provision in this legislation to make sure. This could be subject to severe legal challenges depending on what happens in the future. Is the Minister informing the committee that under this legislation and the establishment of an inquiry, the inquiry chairperson or team will have the power to invite or compel - maybe he would explain that - other actors or persons to come before the inquiry to give evidence and to accept submissions in its case. I just thought given that this section is on notice of inquiry, submissions, attendance, and adjournment, it only deals with the person concerned and I thought it might be appropriate to have-----
The answer to the Deputy's questions is "Yes", and during the course of the committee we will give him the legislative basis for that. This inquiry will have the ability to contact and acquire the attendance of persons other than the subject and we will provide the Deputy with the legislative reference for that.
This is the first time that an inquiry of this nature is being established in legislation. The way it is being established and the panel that will be appointed has not existed heretofore. Is that correct?
The Central Bank already has a regulatory standards committee in existence but the changes we are making here are partially prompted by the Zalewski case. The committee is already in existence within the bank which is why in turn the ability is there to invite or to require the attendance of a person other than the subject. Now the Minister will have an oversight role in relation to the committee which currently the bank has. That is somewhat extraneous to the Deputy's question but-----
It goes to the core of it.
-----the genesis of his question is around why the committee has the ability to require somebody who is not the subject to attend. The reason for that is that we already have legislation in place that allows the committee to exist within the bank and it has the power to require somebody to attend but the changes we are making here are prompted by the Zalewski case.
I appreciate that regarding the case and the notification that has to apply to a person concerned, however, while there is a regulatory committee set up within the bank already, in this legislation we are creating the entire architecture which you could argue is something similar but the panel that will be appointed by the Minister in conjunction with the bank, which we deal with in later sections, how an inquiry will be established, and how it will notify a person, is new. I would be concerned that if this was to be challenged, it could be said that this was something new and not the regulatory committee. It is given very clear specific roles, a clear function, a clear appointment and accountability process and it does not have the provision in this legislation to call other witnesses or accept other submissions.
While I have been answering the Deputy's question, my colleagues have accessed the original piece of legislation which lays out the powers that he is understandably raising with me. The Central Bank Act 1942, under section 33BA, refers to the power and I will quote it at length to deal with the concern that the Deputy raised. It states:
... the [Bank] may, in writing -
(a) summons a person to appear before the inquiry to give evidence, to produce specified documents, or to do both, and
(b) require the person to attend from day to day unless excused, or released from further attendance, by [the Bank].
Therefore, in the Central Bank Act 1942, under section 33BA, that power is there. Under subsection (4)
The person presiding at an inquiry—
(a) may require a witness at the inquiry to answer a question put to the witness, and
(b) may require a person appearing at the inquiry in accordance with a summons issued under this section to produce a document specified in the summons.
Is that inquiry we are looking at in terms of Section 33BA the same? The Minister makes the point that this will be the same inquiry that is being established under this legislation?
Okay.
Question put and agreed to.
SECTION 46
Question proposed "That section 46 stand part of the Bill."
I will ask a brief question on the balance of probabilities. Will the Minister inform the committee regarding that measurement in relation to the bank making a finding and if that is standard in these matters?
Yes, it is. I understand this is a standard provision in civil law that the bank shall have regard to the balance of probabilities and in so doing, should have regard to all relevant matters including the final investigation report. Any submissions produced are provided in relation to the draft investigation report and any evidence adduced or submissions made during the inquiry. This is, I understand, a standard provision in civil law.
Question put and agreed to.
SECTION 47
I move amendment No. 30:
In page 50, between lines 4 and 5, to insert the following:
“(7) Section 33AP, except subsection (2), applies to an inquiry under subsection (2)(b) or (4)(b) of this section as it applies to an inquiry under section 33AO.”
Amendment agreed to.
I move amendment No. 31:
In page 50, line 5, to delete “(7) At” and substitute “(8) At”.
Amendment agreed to.
I move amendment No. 32:
In page 50, line 8, to delete “(8) A notification under subsection (7)” and substitute “(9) A
notification under subsection (8)”.
Amendment agreed to.
Section 47, as amended, agreed to.
SECTION 48
Question proposed "That section 48 stand part of the Bill".
On section 48, two things that jump out at me on this. This obviously deals with what would be taken into account in terms of the level of monetary penalty to be imposed on a person following an investigation or following a determination that there has been a contravention. There are a number of issues mentioned here. One issue that is not there is the length of time that the contravention continued for. To my knowledge, it is not there and I thought there was an issue around this. Can the Minister speak to that?
It is there. Section 33ARA (1)(v) refers to "the duration of the period over which the person committed or participated in the prescribed contravention."
My apologies. I see it there.
I have a second issue, just to be sure to be sure on this, and this is why we tease these things out on Committee Stage. There is many a piece of legislation I go through just to see the intention and this piece has never ever been discussed so bear with me. Obviously, the courts can actually draw from the discussions that happen on Committee Stage in terms of the intention on the passing of the legislation where there is vagueness, so it is important to tease these issues out. Regarding to the same section, if we look at subsection (c)(ii), it refers to "the degree of cooperation by the person with the Bank or any other relevant regulatory authority, agency or criminal investigative body" provided during investigation of the contravention.
This is obviously how we deal with law in terms of civil law, criminal law, etc. If a person has co-operated, the penalty may be more lenient than it was originally. What about people who are just not co-operative? This is about people who have co-operated and provided evidence. In some cases, there has been no need for an inquiry because people have agreed after the examination that they have committed a contravention. What about cases of people who are deliberately non-co-operative or evasive and who is frustrating the issue? Does the degree of non-co-operation come into this? As opposed to there being a positive in respect of a reduction in the imposition of a financial penalty for those who co-operate, does non-co-operation attract an additional penalty?
Yes, it does. If the Deputy looks again at the new section 33ARA(1)(c)(i), it refers to "how quickly, effectively and completely the person brought the prescribed contravention to the attention of a regulated financial service provider, the Bank or...[the]...relevant regulatory" body. Failing to do so is as relevant an issue as doing something. The reference is to the "degree of cooperation" so the absence of co-operation would certainly be a relevant factor in how the Central Bank would act.
I do not think the first point is valid because it is only concerned with an individual bringing the contravention to the attention of the regulated financial service provider or the Central Bank. I am talking about somebody who has been found out and has not co-operated. In that instance, there would be no reduction in the penalty because there was no degree of co-operation. For somebody who actively frustrates an investigation, and I do not want to draw this out, I am not sure that the reading of this text can allow for this. There has been no degree of co-operation, so therefore the penalty imposed will take that into account. However, there can also be active non-co-operation and frustration of investigations. We saw this happen in the past. Some of this can be really big stuff. I just wanted to draw the Minister's attention to that.
The answer to the Deputy's question is "Yes", which is why there is reference to the "degree of co-operation". The lack of co-operation or a low-level of such co-operation is encapsulated in the drafting which refers to "degree".
I would argue that somebody who is non-co-operative, who does not co-operate with the investigation, is different from somebody who actively frustrates an investigation. There could be instances, for example, and this could be a contravention in itself, where people could do certain things to put documents beyond reach and so on. It is not just about non-co-operation but about actively frustrate investigations.
I am confident the matter is dealt with. If the Deputy has a look at the conduct standards, subsection 53E(1)(c)(v), and we are going back to where we were earlier, refers to "not destroying, hiding or putting beyond reach information or records that it is reasonable for the person to expect to be required to be disclosed under financial services legislation".
That would require a whole other process. If somebody was frustrating the process in the middle of an investigation, would that not be a contravention in itself? Would it not then require an examination and a report and, therefore, an inquiry if the person did not consent to the determination? It would be necessary to go through the process in terms of a prescribed contravention.
My officials advise me that this matter is dealt with under the drafting of "degree of co-operation". This is why it is captured. I completely understand where the Deputy is coming from, but this is why a consideration articulated in the legislation is the actual conduct of the person during the commission. In the Deputy's scenario, and it is more than hypothetical, unfortunately, what we have done is draft the sanction legislation in such a way that the performance of the person in engaging with the inquiry is relevant to the sanction that person will receive.
I am happy to leave it at that. As I said, in any of these disputed issues in the courts, the legislation is looked on as law, but so are the proceedings in this House. This is why I wanted to tease out this issue and make it very clear that the Central Bank has the power, not just in relation to the degree of co-operation, but also to look at non-co-operation and frustration. I am happy to leave it at that with this section.
Question put and agreed to.
Sections 49 to 51, inclusive, agreed to.
SECTION 52
Question proposed: "That section 52 stand part of the Bill."
Section 52(a) states:
If the Bank suspects on reasonable grounds that—
(a) a person is committing or has committed a prescribed contravention, or
(b) a person is participating or has participated, while performing a relevant controlled function, in the commission of a prescribed contravention by a regulated financial service provider,
it may, except where the person acknowledges the commission of or participation in the prescribed contravention, enter into an agreement under this section in writing with the person to resolve the matter".
This concerns a case where the Central Bank is of the view that a person is committing a contravention, in a bank or regulated financial service provider, the individual is denying this and the bank enters into an agreement in writing to resolve this matter. I assume this takes the form of the person concerned denying that he or she is doing anything wrong but will stop doing it, without admitting to doing it. This is really what this section does. From the Central Bank's point of view, the contravention stops. From the perspective of the person concerned, however, he or she is not held accountable and has never accepted that he or she was committing contravention. I would like to tease this out. I can understand that some of these infractions may be very minor and instead of going through a whole process, I can understand the motivation behind this approach. It is important, however, to tease this section out.
I will speak to the section. This Bill amends section 33AV of the 1942 Act to provide that the bank may enter into an agreement with an individual or regulated financial services provider to resolve a suspected contravention. It amends the section to provide that such an agreement may not be entered into where there is an admission by the person concerned of committing or participating in a prescribed contravention. In such circumstances, the matter would have to be dealt with under the amended section 33AR, which provides for the imposition of sanctions by consent and the sanction would then be required to be confirmed by the High Court. The Deputy is correct in what he said. This provision is intended to give the bank the options to deal with an issue like this. So far, there has always been an admission of wrongdoing if such an arrangement was made.
So far in the Central Bank.
Was this even with individuals or are we just talking about institutions?
I believe it would only be institutions, but I will check to see whether there were individuals. I would imagine it would only be institutions.
Until now.
Therefore, the game may change. There is the issue of an individual thinking that his or her institution is being held accountable but it is a different matter when it comes to him or her personally. While I am not completely opposed to this section, I am concerned about its application. I can imagine there will be situations, and we discussed this last week, whereby the Central Bank of Ireland will decide not to pursue an action because of resources. This is the kind of situation where there could be a long, drawn-out process. The Central Bank may go in and say, “Look. just stop it and we will not hold you to account, your name will not be published and you will not have any black mark against you”. This allows for that to happen. I imagine it could also allow for minor contraventions, which is why I have highlighted that it may be in the interest of the Central Bank to just stop the activity.
In terms of the culture within banks and prescribed contraventions, this section should only be used in exceptional circumstances. Yet, there is no limitation in the application of this section and that is a matter of concern. It is to be provided in law that an individual who could be involved in A, B, C or D could also be involved in practice that is a clearly prescribed contravention and that may impact on individual customers in a significant way. The Central Bank of Ireland could on reasonable grounds suspect that person and then could enter into an agreement whereby that person does not accept that he or she has carried out that act. However, there would be an agreement in writing between this individual and the Central Bank to cease the activity or to resolve the matter and therefore nothing more would happen about it. I am concerned about the flexibility of the individual accountability regime and how it would be applied.
I understand the Deputy’s point. It is exceedingly unlikely that the Central Bank would enter into such an agreement about matters that it would be concerned are of a serious nature. That is exceedingly unlikely, but I do understand the issue that the Deputy is raising and between now and Report Stage I will look at the drafting of this section.
I appreciate it.
I believe that is exceedingly unlikely-----
I agree.
-----that a scenario such as the one that the Deputy is referring to could happen, but I understand the matter that he is referring to. I give notice to the committee that we will consider the drafting of this section to see if it needs to be made more explicit.
I appreciate that.
What Deputy Doherty is saying is interesting. It is a live possibility that something like that could happen. In theory, the section allows for that and it could therefore happen in practice. If there is the potential for these kinds of situations to arise where there is suspicion of contraventions, where full hearings do not take place, and these issues are then resolved, how might this be recorded by the Central Bank? This would be an important reform regarding the consideration of the operation of the legislation. Does the Minister have a view on how that would be recorded and reported? Would it be done in the Central Bank annual review or annual report on the application or operation of the regime? How would that happen? It is standard that it would be recorded and reported in any case, although it may be anonymised because it would not have met the bar for an investigation.
I do not believe that it would be publicly acknowledged.
Even in an anonymised format?
Yes, because there would not have been an admission of wrongdoing.
Would it be useful for the functioning and operation of the legislation to keep a record and to make that record available? There is deep public interest in the operation of this new regime. Everybody welcomes it and it is more than necessary. It would be useful to give some consideration to how that would be recorded from the Central Bank’s own perspective on the operation of the legislation and how to process this function. Can the Minister comment on the broad nature of the behaviour that an investigation would examine?
This legislation does give the power to the Central Bank to do that. My officials have indicated that section 64, the proposed new section 33BC(3A) of the Act of 1942 states, "If the Bank has entered into an agreement with a person under section 33AV, it may publish, subject to subsection (4), in such form and manner as it thinks appropriate ... the following particulars”, which include the name, the details of the contravention and details of any sanction where imposition is accepted under the agreement. The power is therefore there for it to be done in the event of a contravention. Where a contravention has been committed and where the Central Bank has entered into an agreement, it does have the power to publish the details that I have just outlined. The Central Bank may decide over time that this is an operational matter and it may indicate how many of these agreements it has entered into and their broad nature.
May I make an intervention on that? On section 64, my reading of the proposed section 33BC(3A)(c) is that it relates to a situation whereby there has been a contravention and the Central Bank enters into an agreement with the individual. Then, after an examination, the individual would agree that there was a contravention and therefore that provision can apply. However, the section we are currently discussing relates to a situation where the individual has never accepted that there was a contravention and therefore this naming and provision of details could not apply.
I ask the Chair if we can go into private session so that one of my colleagues can direct the answer to that question to Deputy Doherty.
The select committee went into private session at 6.17 p.m. and resumed in public session at 6.26 p.m.
Question put and agreed to.
SECTION 53
Amendments Nos. 33 and 56 are related and may be discussed together by agreement.
I move amendment No. 33:
In page 54, to delete lines 17 to 24 and substitute the following:
“(6) On an application under subsection (5), the High Court shall confirm the decision unless it is satisfied—
(a) that, by reason of a serious error or omission, whether in the record of the decision or in the conduct of the proceedings, it would in all the circumstances be unjust to do so, or,”.
I will focus my remarks on section 53 primarily because I am not too concerned about the judicial review process and the scope of that. I am somewhat concerned at the way in which section 53 is drafted and the apparent limitation of the scope of the High Court and what it is the court can consider. It seems to me that, as drafted, the relevant section limits the scope of the High Court in terms of the consideration of matters before it. We all want this legislation to work and to be as effective and robust as possible but I have a concern about this section which is why I am proposing amendment No. 33. I do so in good faith, on the basis that I want this legislation to work and to operate as best as it possibly can.
In his response, I ask the Minister to elaborate a little on his view of the intention here, in terms of the operation of the High Court, the confirmation of a decision and the scope that the High Court has to confirm a decision because it seems quite limited to me.
Section 53 of the Bill amends section 33AW of the 1942 Act to enhance oversight by the High Court of sanctions imposed by an inquiry decision of the Central Bank or an appeal decision of the Irish Financial Services Appeals Tribunal, IFSAT, and provides for procedures that must be adhered to. These changes are made in light of the requirement for court oversight of decisions on foot of the Zalewski case.
In terms of the process in section 53 of the Bill, an individual can appeal the decision to IFSAT and the decision in the appeal will have to be considered by the High Court; or an individual may not appeal in the allotted time and may withdraw an appeal and in such case, the Central Bank shall apply to the High Court for confirmation of the inquiry decision. The High Court must consider an application for confirmation and it will have sight of all of the evidence that was before the Central Bank or before IFSAT. The proposed change to the role of the High Court in section 53 of the Bill provides for a specific two-stage test. First, that the High Court considers whether, having regard to the evidence, there is an error of law in the inquiry decision or appeal decision which is manifest from the record of the decision and is so fundamental as to deprive the decision of its basis.
The High Court considers whether the sanction imposed by the bank or the tribunal is manifestly disproportionate to the wrongdoing of the individual on whom it is imposed. The High Court can set aside the decision, substitute a decision that could have been made by the Central Bank or IFSAT or remit the decision for reconsideration by the bank or IFSAT, as the case may be.
The Deputy's amendment would delete the provision in section 53 which deals with the circumstances in which the High Court can refuse to confirm a decision on the basis of an error of law. It would substitute it with a specific requirement that the High Court would confirm the decision unless it is satisfied there was an error or omission in the record of the decision or in the conduct of the proceedings such that the confirmation of the decision would be unjust. The legal threshold for confirmation by the High Court as provided for in the Bill was set after very careful consideration, particularly in light of the Supreme Court's decision in the Zalewski case. It is not intended that the confirmation proceedings should constitute a new appeal on the facts of the case. It is a necessarily limited role, as in the case of other processes, as it would otherwise be unduly cumbersome to operate.
There is a long-standing principle of curial deference being shown by the High Court when reviewing decisions of expert administrative bodies. The Legislature creates expert adjudicative administrative bodies which are expected to have specialist skills, competence and experience in the particular matters for which they have responsibility and the aim here is to allow the High Court to determine any errors of law by the bank and the proportionality of the sanctions to be imposed. This is considered an appropriate change in the law to protect the rights of individuals in line with the requirements of the Zalewski decision.
Curial deference is not a phrase that we hear every day.
It is not one, to the best of my knowledge, that I have used in front of this committee previously.
It is a first for the Minister and it is the first time I have heard him use that phrase. It is a significant phrase, loaded with meaning. I thank the Minister for his response. I understand his explanation and the intention of this section. The intention of my amendment is to further strengthen the robustness of the legislation because those who will be covered by it are the kind of people who have resources available to them to challenge decisions with which they may be uncomfortable. None of us wants to see this legislation challenged. We want to see it work from day one. The public expects that to be the case and the intention of my amendment was to add an additional robust step to galvanise the robustness, procedural and otherwise, of the legislation. We are all mindful of the impact of the Zalewski case and it clearly punctuates practically every section of this Bill. There is a lot of learning to be done from the Zalewski judgment and the outcome of that case. I would prefer it if the Minister accepted this amendment but I understand and appreciate the case he has made for not doing so. I do not intend to press the amendment because I have made my point on the record.
Amendment, by leave, withdrawn.
Section 53 agreed to.
SECTION 54
Amendments Nos. 34 and 35 are related and may be discussed together.
I move amendment No. 34:
In page 55, to delete line 24 and substitute “ex parte.”.
Amendments Nos 34 and 35 provide for a mechanism for the enforcement of sanctions imposed by consent under section 33AR of the Central Bank Act 1942. Amendment No. 34 is a technical amendment to facilitate the insertion of the new subsection and amendment No. 35 provides clarity as to when a sanction imposed by the Central Bank with the consent of a person who has admitted to the commission of, or participation in, a prescribed contravention takes effect once confirmed and deals with the enforceability of the decision as an order of the High Court. I recommended that these amendments be approved by the committee.
Amendment agreed to.
I move amendment No. 35:
In page 55, between lines 24 and 25, to insert the following:
“(5) The imposition of a sanction confirmed by the High Court under this section—
(a) takes effect on the day on which the Court’s decision is given or such later date as the Court may specify in its decision, and
(b) has effect as an order of the Court and may be enforced accordingly.”.”.
Amendment agreed to.
Section 54, as amended, agreed to.
Section 55 agreed to.
SECTION 56
Amendments Nos. 36, and 48 to 55, inclusive, are related and may be discussed together by agreement.
I move amendment No. 36:
In page 55, line 31, to delete “section 33BE(5)” and substitute “section 33BE(7)”.
I propose to discuss amendments Nos. 36, which amends section 56, and amendments Nos. 48 to 55, inclusive, which amend section 66, together because they all deal with the separation of functions in the Central Bank's processes in line with the requirement for the independence of decision-makers handed down in the Supreme Court decision in the Zalewski case. Amendment No. 36 is a technical amendment to a cross reference, in light of the amendments to section 66, which amend section 33BE. It amends a cross reference from subsection 33BE(5) to section 33BE(7). Amendments Nos. 48 to 55 are grouped together as they deal with the separation of functions during the course of an inquiry. This is to provide for fairness of procedures in inquiry processes on foot of the Supreme Court decision in the Zalewski case.
A number of the amendments to section 66 are technical in nature to facilitate the insertion of subsections (5) and (6) in amendment No. 52. These are amendments Nos. 48, 50, 51 and 53 to 55, inclusive. Amendment No. 49 amends an incorrect reference in the Bill that should refer to section 33AO.
Amendment agreed to.
Section 56, as amended, agreed to.
Sections 57 and 58 agreed to.
SECTION 59
Amendments Nos. 37 to 46, inclusive, 57, 58 and 63 to 67, inclusive, are related and may be discussed together by agreement.
I move amendment No. 37:
In page 56, line 26, to delete “order” and substitute “direct”.
I propose to discuss amendments Nos. 37 to 46, inclusive, 57, 58 and 63 to 67, inclusive, together because they make technical corrections to the Bill. They change references to "an order" to " a direction" to clarify that certain notices must be given in writing and that for the purposes of section 69, "the Bank" includes the Governor and the Head of Financial Regulation and makes minor textual or technical changes to the Bill.
Amendment agreed to.
I move amendment No. 38:
In page 56, line 29, to delete “An order” and substitute “A direction”.
Amendment agreed to.
I move amendment No. 39:
In page 57, line 1, to delete “an order” and substitute “a direction”.
Amendment agreed to.
I move 40:
In page 57, line 2, to delete “order” and substitute “direction”.
Amendment agreed to.
I move amendment No. 41:
In page 57, line 3, to delete “an order” and substitute “a direction”.
Amendment agreed to.
I move amendment No. 42:
In page 57, line 6, to delete “an order” and substitute “a direction”.
Amendment agreed to.
Section 59, as amended, agreed to.
Section 60 agreed to.
SECTION 61
I move amendment No. 43:
In page 58, line 7, to delete “ordered” and substitute “directed”.
Amendment agreed to.
Section 61, as amended, agreed to.
SECTION 62
I move amendment No. 44:
In page 59, line 3, after “notice” to insert “in writing”.
Amendment agreed to.
I move amendment No. 45:
In page 59, line 11, after “notice” to insert “in writing”.
Amendment agreed to.
Section 62, as amended, agreed to.
Section 63 agreed to.
SECTION 64
I move amendment No. 46:
In page 60, line 25, to delete “and (2)” and substitute “to (3)”.
Amendment agreed to.
I move amendment No. 47:
In page 60, line 38, to delete “33AR(7)” and substitute “33AR(8)”.
Amendment agreed to.
Question proposed: "That section 64, as amended, stand part of the Bill."
We discussed issues relating to section 64 earlier, as well as when the committee was in private session. Where there have been significant contraventions by financial instructions, the Central Bank has published the details of the contravention and of the sanction and has named the institution. This section allows for the same to happen for individuals. This may include the name of the person involved and the details of the contravention and of the sanction imposed on the individual. I welcome that this Bill enables that. I would like to ascertain the likelihood of this actually happening. What is the Central Bank’s intention in relation to publishing the names of individuals and the details of the contraventions and of the level of sanctions applied to those individuals? Does the Central Bank expect to continue in the same way as it did with financial institutions? Obviously, not every contravention by the institutions is published by the Central Bank. I would like to get an understanding of the intention behind this section.
As the Deputy well knows and understands, I cannot speak on behalf of the Central Bank regarding what its intent could be. However, given the amount of consultation we have gone into with the Central Bank on this legislation over a number of years, this section has been drafted and included in the Bill with my expectation that it will be used. How it will be used and how frequently it will be used is a matter for the Central Bank rather than for me, but my expectation is that it will be used, which is why we are including it.
By way of background, under the existing fitness and probity legislation, the Central Bank has prohibited 12 individuals from performing one or more controlled functions in regulated firms, either for a specified period or indefinitely. Details of prohibition notices have been published on the Central Bank’s website where that is appropriate. I hope the fact that information has been made available in the past will give confidence to the committee that it will be used again in the future. As I said to the Deputy in the earlier part of my answer, I am including this power with the expectation that it will be used, but it is up to bank itself to determine how frequently or in what form it wishes to use it.
Question put and agreed to.
Deputy Bernard Durkan took the Chair.
Section 65 agreed to.
SECTION 66
I move amendment No. 48:
In page 62, to delete line 3 and substitute “subsections (4) and (6):”.
Amendment agreed to.
I move amendment No. 49:
In page 62, line 15, to delete “section 33AQ” and substitute “section 33AO”.
Amendment agreed to.
I move amendment No. 50:
In page 62, line 19, after “section,” to insert “or”.
Given the number of the amendments in this grouping and given the importance of the Bill, I will speak to the grouping to indicate briefly to the committee what the amendments are for. Amendments Nos. 48 to 55, inclusive, deal with the separation of functions during the course of an enquiry. A number of amendments to section 66 are technical in nature and facilitate the insertion of subsections (5) and (6) by amendment No. 52. These refer to amendments No, 48, 50, 51 and 53 to 55, inclusive. Amendment No. 49 amends an incorrect reference in the Bill that should refer to section 33AO. Amendment No. 52 inserts subsection (5) to provide that the person who makes the decision to hold an inquiry shall not be involved in making submissions, in leading evidence, or in examining witnesses on behalf of the Central Bank. Subsection (6) provides that restricted functions shall not be performed by a person who is involved in making submissions, leading evidence or examining witnesses on behalf of the Central Bank at the inquiry.
Amendment agreed to.
I move amendment No. 51:
In page 62, line 21, to delete “(b), and” and substitute “(b).”.
Amendment agreed to.
I move amendment No. 52:
In page 62, to delete lines 22 and 23 and substitute the following:
“(5) A person performing or exercising functions or powers under section 33AO(1) or (2) of deciding whether to hold an inquiry shall not be involved in making submissions, leading evidence or examining witnesses on behalf of the Bank at the inquiry.
(6) Functions or powers which are restricted under any of paragraphs (b) to (d) of subsection (3) in relation to an inquiry shall not be performed or exercised by a person involved in making submissions, leading evidence or examining witnesses on behalf of the Bank at the inquiry.”.
Amendment agreed to.
I move amendment No. 53:
In page 62, line 24, to delete “(5) Subject to subsection (4)” and substitute “(7) Subject to subsections (4) and (6)”.
Amendment agreed to.
I move amendment No. 54:
In page 62, line 31, to delete “(6) A person” and substitute “(8) A person”.
Amendment agreed to.
I move amendment No. 55:
In page 62, line 34, to delete “(7) Subsection (6)” and substitute “(9) Subsection (8)”.
Amendment agreed to.
Section 66, as amended, agreed to.
Amendment No. 56 not moved.
Section 67 agreed to.
Section 68 agreed to.
SECTION 69
I move amendment No. 57:
In page 64, line 11, after “Bank” to insert “, the Governor or the Head of Financial Regulation”.
Amendment agreed to.
Question proposed: "That section 69, as amended, stand part of the Bill."
I wish to tease out the process for the appointment of a panel from which inquiry members will be drawn. The Minister is going to be the person who will establish a panel from which appointments will be made by the Central Bank. Subsection (2) states, "The members of a panel established under this section shall be appointed by the Minister following a process conducted by the Bank after consulting the Minister." I have several questions on this, setting aside the legislation. I have no issue with how it is drafted or any of the provisions within it, but I would like the Minister to discuss how the measure will apply in practice given he will have a role in it. How many people will be on the panel? By what process will the Central Bank proceed and consult the Minister to allow him to appoint panel members? What are the appropriate qualifications of those to be appointed? Will the Public Appointments Service, for example, be used, or will it simply be the Central Bank?
Will the Minister speak about subsection (7), which relates to "a contract of service or contract for services with a member of a panel", and its implications?
The Deputy has asked many questions. If he lists them again, I will go through each in turn.
That is no problem at all. We will start with the simple ones first. How many individuals is the Minister likely to appoint to the panel? It is to get a sense of how big the panel is likely to be. Will the Minister speak about the requisite qualifications mentioned in subsection (3)? I refer to the skills, experience and knowledge an individual would have to have.
I will deal with that because I want to go through each in turn. There are currently 24 external members of the panel. There is no threshold or limit to how many people the Minister can appoint. My plan is to appoint the current 24 members as members of a transitional panel so the group will be in place to act once the legislation is in place. They have a background as senior legal practitioners and industry experts. If it would be of help to Deputy Doherty, I will be very happy to share with him the list of names on the current panel, in case he does not have it. I am informed it is publicly available but I can give it to him during the committee meeting. When he sees the list of people, he will note their backgrounds are in financial services, law, law enforcement and financial services regulation.
I thank the Minister for that. There will be a transitional panel. That is fine. Will the old panel be stood down? Will the regulatory panel still exist alongside the new panel?
It will not be. The existing panel will become the transitional panel and it will then be up to the Minister to determine who should be on it in future. The panel will be in place for up to three more years.
That answers my next question, on the term limits. The transitional panel, which will apply for three years, will provide a continuation of service. Is the panel populated at different stages? Is the Minister taking 24 off and putting 24 on? Is there a process involving different term limits? If all the members are getting an extension of three years, does that not create an issue? Will the Minister clarify that?
Is the Deputy's concern that they would all go at a single point?
This is part of the thinking regarding why there is not a cap or threshold in place regarding the number of members of the panel. What will happen, subject to the legislation being passed by the Oireachtas, is that the other members of the panel will be appointed in the time ahead. As members exit the panel, there will be members who will have served already on the panel for a period. I would want to avoid the cliff edge with regard to the panel in the future.
I appreciate that. The Minister referred to the exact intention behind the questions. Subsection (4) allows the Minister to appoint for a specified period. What is the practice regarding that period? I see there are no limitations on rolling over and reappointing. Is there any other legislation that applies?
They will be appointed for a four-year term, which may be renewed for one further period of up to four years. Then the Minister has the power to terminate in certain circumstances. To deal with part of the Deputy's question, one further renewal as possible. Beyond that, the person's position cannot be renewed any further.
That would mean all of them would have to be on their first term if the transitional panel is to be appointed for another three years.
Yes, they are all in their first term.
That takes me back to the earlier point on rolling on and off. Are we moving everybody at the same time? The panel does not operate as a board, as such.
The panel comprises individual members from which the Minister draws anyway-----
So it is not a committee or decision-making body in itself.
There is no leader or chairperson of the panel; it is just individual members that the bank draws from.
Yes. It is not a board, just a group.
Exactly. The term is four years. Is it a remunerated position? Is that what subsection (7) is dealing with in terms of contracts of service?
Being on the panel is not remunerated.
Does being drawn from the panel entail remuneration? Does the bank enter into a contract of service if a person is drawn from the panel to be a member of the inquiry?
Yes. If they are appointed to perform a role on the panel, they are remunerated at that point. For a legal chair, the rate would be €1,000 per day, or €200 per hour. A professional panel member would get €850 per day, or €170 per hour.
I presume those are the going rates.
So the Minister may appoint individuals to the panel after a process conducted by the bank, and the bank consults the Minister. Am I correct that the bank goes through a process, identifies a wide range of individuals who have the necessary qualifications, scope and breadth to deal with any issue that may arise, and speaks to the Minister on the pool it is putting forward? Ultimately, the Minister has the final decision and appoints the individuals, although the bank does the heavy lifting in identifying them.
That is correct.
How does a conflict of interest arise? It is a small island, particularly when we are dealing with individuals.
It will be considered case by case with the Central Bank. The Minister would not appoint an individual to be involved in a case if there were a conflict of interest.
The Minister will just appoint to the panel. At that time, he or she will not be able to figure out if there is a conflict of interest. The individual-----
Sorry, it is the Central Bank that will select from the panel.
Yes, the Central Bank.
Therefore, it is the Central Bank that would make adjudication on a potential conflict of interest.
How many individuals will be appointed from the panel to conduct an inquiry? There will be a chair and what else?
It will be a chair and up to two panel members. It will then be up to the bank to determine how many are needed. There would be a minimum of two and a maximum of three, including the chair.
Where in the Central Bank is this decision taken? Who has the responsibility? Is it the head of regulatory-----
It is the head of regulation.
I appreciate the Minister going through this with the committee. I ask him to explain section 33BI(7), which relates to a contract of service or a contract for services.
This refers to who the internal panel members are and will comprise all Central Bank staff holding a qualifying role, being the role of director or head of division in all directorates with the exception of the enforcement directorate, any anti-money laundering directorate and the strategy and governance directorate. The Governor, deputy governors and chief operating officers are not members of the panel.
This relates to the external members of the panel, the 24 who are already there and will now make up the new transitional panel. Are there internal members of the panel? What is the process of appointment for internal members of the panel?
There will be internal Central Bank employees on the panel. They will focus in particular on the fitness and probity dimensions of the work.
If there is an inquiry, is there a requirement to have a mix of external and internal members?
No, we have not laid that down.
How many internal members are currently on the panel?
I will need to get that for the Deputy.
I appreciate that.
Question put and agreed to.
Sections 70 to 88, inclusive, agreed to.
SECTION 89
I move amendment No. 58
In page 70, line 29, to delete “served on” and substitute “given to”.
Amendment agreed to.
Amendments Nos. 59 and 60 are related and will be discussed together.
I move amendment No. 59:
In page 70, lines 30 and 31, to delete “subsection (2)” and substitute “subsections (2) and (3)”.
Amendment No. 59 is a technical amendment to extend the reference to include the new subsection to be added by amendment No. 60. Amendment No. 60 provides a new subsection (2) to provide that the obligation to provide a discontinuance notice under the new section 25A(4) of the 2010 Act will apply immediately from the commencement of section 15 and recasts the existing subsection (2) as subsection (3). I commend both amendments to the committee.
Amendment agreed to.
I move amendment No. 60:
In page 70, to delete lines 32 to 34 and substitute the following:
“(2) Subsection (4) of section 25A of the Act of 2010 as inserted by section 15 applies in relation to an investigation referred to in subsection (1) which is discontinued on or after the commencement of section 15.
(3) Section 41 of the Act of 2010 as substituted by section 25 applies in relation to an investigation referred to in subsection (1) on and after the commencement of section 25—”.
Amendment agreed to.
Have we dealt with amendment No. 58?
Yes.
It was discussed under section 59.
It was discussed along with amendment No. 37.
Section 89, as amended, agreed.
Section 90 agreed to.
NEW SECTIONS
Amendments Nos. 61 and 62 are related and will be discussed together.
I move amendment No. 61:
In page 71, between lines 16 and 17, to insert the following:
“Continuing functions under section 52 of Act of 2010
91. (1) In subsection (4) of section 52 of the Act of 2010 as amended by section 35—
(a) paragraph (a) does not apply where the person concerned formed the opinion referred to in that paragraph before the commencement of section 35,
(b) paragraph (b) does not apply where the person concerned performed the function under section 26 of the Act of 2010 referred to in that paragraph before the commencement of section 35, and
(c) paragraph (c) does not apply where the person concerned was involved in the investigation referred to in that paragraph before the commencement of section 35.”.
Amendment No. 61 inserts a new section, section 91, entitled “Continuing Functions under section 52 of the Act of 2010”, into Part 7 to provide that fitness and probity investigations already begun under the current legislation are not affected by the commencement of the new requirements that provide for separation of functions on foot of the Zalewski case. The amendment is included to protect the integrity of ongoing investigations so that they can continue and that decisions made by persons concerned prior to the commencement of the new legislation will stand. The requirements for the separation of functions under the 2010 Act are inserted by section 35 of this Bill to amend section 52 of that Act. They are not and cannot be retrospective requirements.
Amendment agreed to.
I move amendment No. 62:
In page 71, between lines 16 and 17, to insert the following:
“Application of Part IIIC of Act of 1942 to participation in prescribed contraventions before commencement of section 46
92. Part IIIC of the Act of 1942 as amended by this Act applies as if references to participation, while performing a relevant controlled function, in the commission of a prescribed contravention by a regulated financial service provider were, in the case of participation or suspected participation before the commencement of section 46, references to participation, while concerned in the management of a regulated financial service provider, in the commission of a prescribed contravention by the regulated financial service provider.”.
Amendment agreed to.
SECTION 91
I move amendment No. 63:
In page 71, line 33, to delete “Section 33AO of the Act of 1942 as substituted by section 44, where it applies” and substitute the following:
“Subsections (1) and (2) of section 33AO of the Act of 1942 as substituted by section 44, subsection (2A) of section 33AQ of that Act as amended by section 46, and subsections (1)(a) and (3)(a) of section 33AR of that Act as substituted by section 47, where they apply”.
Amendment agreed to.
I move amendment No. 64:
In page 71, line 34, to delete “has” and substitute “have”.
Amendment agreed to.
Question proposed: "That section 91, as amended, stand part of the Bill."
We are coming to the end of the Bill. This point does not necessarily fit in with the section as the section has more to do with transitional issues in the new legislation and how it interacts with the investigations that are up and running. On previous sections we discussed penalties and awards. We are all too familiar with penalties being imposed on regulated financial institutions and the penalties are reduced by up to one third as a result of acceptance of the penalty. The argument is that it saves the Central Bank from having to go to court to fight this. Does the same provision apply in regard to individuals and, if so, how would it apply? It sticks in the craw of many people that we see there is a reduction of one third after having been caught for something that might be significant.
It will apply for individuals as well.
Is that just because they do not appeal this to the High Court on a point of law?
Where a regulated firm or an individual agrees to enter into a settlement agreement with the Central Bank, a reduction may be applied to the sanction. Details of the early settlement discount scheme are set out in the outlines of the administrative procedure of 2018. Once the terms of the settlement agreement have been agreed by the Central Bank and the regulated firm or individual, the bank prepares the public statement, and the public statement will usually contain details of any discount applied for early settlement. In regard to the reduction that is possible, which is up to 30%, the regulated entity - and, in the future, the individual - will be required to confirm its willingness to enter into a settlement procedure and to settle within the timeframe indicated by the Central Bank. For a further reduction, which would be up to 10%, if the regulated entity does not confirm its willingness to enter into the settlement procedure and or fails to settle within the indicated timeframe, the earlier discount will no longer be required. A discount will only be allowed on that point until such time as a notice of inquiry is issued.
If the notice of inquiry is issued, there is no early discount. If they do not accept the findings of the examination and it is proceeding to an inquiry, the discount is gone. Is that correct?
We dealt with this last week but the Minister might remind me as to whether a financial institution can pay the penalty on behalf of an individual.
I will answer that question shortly.
I will go to something else that is unrelated to the Bill but connected in a way when we are talking about holding individuals to account. We welcome the provisions to hold individuals accountable. However, there is a gap in the toolbox for the Central Bank to be able to operate. In many circumstances, particularly those that are most public and most damaging, issues have been identified after the fact, in some cases by consumers who brought forward issues to the Financial Services and Pensions Ombudsman, for example, regarding the tracker mortgage scandal. It is worth considering the merits of an incentivised whistleblowing regime within financial institutions. Just in the past couple of weeks the Securities and Exchange Commission, SEC, paid out $10 million to a whistleblower in America. This is normal practice for the SEC, flowing from legislation introduced there many years ago, known as the Dodd-Frank Act, which encourages or incentivises whistleblowing within financial institutions. Where a prosecution flows from the information that is provided, the individual can receive anything up to 30% of the fine that is levied. Crucially, the money provided by the SEC is not money that normally would have gone to investors or consumers, and there is a fund for these penalties that encourages and incentivises this.
There is provision in this legislation relating to individuals coming forward in respect of immunity and so on, but I want to hear the Minister's view. It is important that we have the tools to hold individuals to account but we need to have the information. We have an important financial services sector in Ireland but it is also small in terms of its footprint and its personnel, particularly at the higher level, and I think this would be another deterrent. That is what this Bill is about. We hope it is a deterrent to bad practice. We hope that people will understand it is no longer the company but the individual who will be held accountable, and people may think twice or thrice before they involve themselves in activity that is inappropriate. Knowing that somebody may provide information to the Central Bank and may be financially rewarded as a result of doing so, in certain circumstances, would also be a serious discouragement to some of the activity we have seen in the past.
I will deal with the two points the Deputy has put to me. First, as to whether a financial services provider can pay the fine on behalf of an individual, yes, that is possible - it can. I am advised that changing that would require a lot of careful consideration regarding how it could be done and would take further legislative work. The answer to the Deputy's question is that, yes, it can happen.
Regarding the Deputy's second point, frankly, it is not something I have given to consideration to before. My initial reaction would be one of unease and we would have to consider that further.
I understand that.
I do not believe we should pay people. We should not have to pay people for revealing wrongdoing or reward them for so doing. That is my initial reaction to it. With regard to people who bring forward information under whistleblowing legislation, in my experience, the overwhelming majority of them do it for good reasons. I worry that offering financial reward for that could send out the wrong signal. That is just an initial reaction. I am sure, if it has been in operation in the SEC in America, that they have given that matter consideration and considered whether it could be a trigger to vexatious claims. That would be my initial reaction.
I appreciate that. I have two points. Financial institutions being able to pay the fine for the individual is problematic and maybe that is something the Central Bank could consider. It is difficult to have individual accountability in sanctioning somebody when it is the financial institution that is paying for it anyway. There are questions of probity and so on, but there is a difference in the sanction against an individual compared to an institution. The measurement would be different if applying a sanction against an individual and if we knew the institution was paying for that, it might be higher. That is one issue.
That is why I said this merits careful consideration with regard to incentives. The problem is that under the Central Bank's toolbox at the minute, immunity is provided - the Minister can correct me if I am wrong, and, therefore, there is an incentive where somebody brings an issue forward, although not for first movers, as far as I understand it.
I believe the Deputy is correct.
Yes, I think so. I agree with the points and that is why I say it needs to be considered, because there is an unease in that regard. There is also the question of the financial sector being small.
The issue is that it is hard to get information. We are talking about the domestic bank sector, which does so much good too, but in all the big scandals we have had, which we saw too often but which it is to be hoped we have seen the end of and that this legislation will help in that, not once did anybody in a senior level come forward and provide information. It is a small country. You could be ruined. People have been before this committee or have corresponded with it who have never worked a day after bringing information forward. That is why there is a need for this. It is tangential to the legislation but it is important and another piece in the toolbox that is worth considering.
Question put and agreed to.
SECTION 92
I move amendment No. 64:
In page 71, line 34, to delete “has” and substitute “have”.
This is a group of amendments that includes Nos. 65 to 67, inclusive. Amendment No. 65 removes a definition no longer required. Amendment No. 66 is a technical amendment to include all notices issued by the bank so that none are excluded. Amendment No. 67 provides clarity as to how ongoing cases are to be dealt with following the commencement of the new provisions.
Amendment agreed to.
I move amendment No. 65:
In page 72, lines 2 to 6, to delete all words from and including “In” in line 2 down to and including line 6 and substitute the following:
“In this section, “inquiry decision” has the same meaning as it has in section 33AW of the Act of 1942 as substituted by section 53.”.
Amendment agreed to.
I move amendment No. 66:
In page 72, lines 7 and 8, to delete “under section 33AP of the Act of 1942” and substitute “by the Bank”.
Amendment agreed to.
I move amendment No. 67:
In page 72, to delete lines 10 to 15 and substitute the following:
“(3) Section 33AW of the Act of 1942 as substituted by section 53 applies in relation to an inquiry decision made before the commencement of section 53 if the decision has not, before that commencement, been notified by the Bank to the regulated financial service provider or person concerned.
(4) In subsection (1)(a)(iii) of section 33AW of the Act of 1942 as substituted by section 53, the reference to a decision imposing a sanction under subsection (2)(b) or (4)(b) of section 33AR includes a reference to a decision imposing a sanction under subsection (1)(b) or (2)(b) of the said section 33AR as it had effect before the commencement of section 47.
(5) In relation to an inquiry decision which has, before the commencement of section 53, been notified by the Bank to the regulated financial service provider or person concerned, the Act of 1942 continues to apply as if sections 53 and 55 and Chapter 3 of Part 4 had not been commenced.”.
Amendment agreed to.
Section 92, as amended, agreed to.
NEW SECTIONS
I move amendment No. 68:
In page 72, between lines 15 and 16, to insert the following:
“Disqualification under section 33AQ of Act of 1942 in case where contravention or participation occurred before commencement of section 46
93. (1) For the purposes of the imposition of a sanction in respect of the commission, before the commencement of section 46, of a prescribed contravention, paragraph (d) of subsection (3) of section 33AQ of the Act of 1942 continues to apply as if paragraph (b)(iv) of section 46 had not been commenced.
(2) For the purposes of the imposition of a sanction in respect of participation, before the commencement of section 46, in the commission of a prescribed contravention, paragraph (c) of subsection (5) of section 33AQ of the Act of 1942 continues to apply as if paragraph (d)(ii) of section 46 had not been commenced.
(3) In relation to—
(a) a direction imposed under paragraph (d) of section 33AQ(3) of the Act of 1942 as it applied before the commencement of paragraph (b)(iv) of section 46, or as it applies by virtue of subsection (1), or
(b) a direction imposed under paragraph (c) of section 33AQ(5) of the Act of 1942 as it applied before the commencement of paragraph (d)(ii) of section 46, or as it applies by virtue of subsection (2),
section 33AU of the Act of 1942 continues to apply as if section 51 had not been commenced.”.
Amendment agreed to.
I move amendment No. 69:
In page 72, between lines 15 and 16, to insert the following:
“Continuing functions under section 33BE of Act of 1942
94. (1) A person who, before the commencement of section 66, has taken any action referred to in any of the paragraphs of subsection (4) of section 33BE of the Act of 1942, as amended by section 66, as the said subsection (4) applies in relation to an inquiry, is not, by reason of having taken that action, or by reason of taking any action referred to in any of those paragraphs after the commencement of section 66, prevented by the said subsection (4) from performing or exercising a function or power which, in relation to the inquiry, is restricted under paragraph (a) of subsection (3) of the said section 33BE.
(2) A person who, before the commencement of section 66, was involved in making submissions, leading evidence or examining witnesses on behalf of the Bank at an inquiry is not, by reason of that involvement, or by reason of any such involvement after the commencement of section 66, prevented by subsection (6) of section 33BE of the Act of 1942, as amended by section 66, from performing or exercising functions or powers which, in relation to the inquiry, are restricted under any of paragraphs (b) to (d) of subsection (3) of the said section 33BE.
(3) A person who, before the commencement of section 66, has exercised the power referred to in subsection (8) of section 33BE, as amended by section 66, in relation to an investigation, is not prevented by the said subsection (8) from being involved in carrying out the investigation.”.
Amendment agreed to.
Section 93 deleted.
Sections 94 and 95 agreed to.
Title agreed to.
I thank the Minister for the back and forth we had on the Bill over the two sessions and for his own work on this. I also thank his officials for their help in private sessions in clarifying some of the more technical aspects of the Bill. When is it intended to go to Report Stage so that we might get a sense of a deadline for amendments?
I hoped to be in a position to go to Report Stage next week but that has not yet been confirmed to me. At this point it is very likely that the most we would get done is Report Stage in the Dáil next week. That means it will have to go to the Seanad in the new year.
Okay. I am sure we will be notified in due course.
I thank everybody for their patience during the long duration of this session and for their participation. The Minister, the members of the Opposition and the officials were so patient for so long and have come so far.