Financial Services Regulation

Dáil Éireann Debate, Wednesday - 18 April 2012

Wednesday, 18 April 2012

Questions (219)

Joan Collins

Question:

212 Deputy Joan Collins asked the Minister for Finance with regard to the general question of bank regulation, the person responsible for ensuring compliance with statutory and code-of-practice regulation of banks and other financial institutions generally in the State; if the Governor of the Central Bank and Financial Regulator have written contracts of employment with clear performance related conditions; in the context of the performance of the duties of the Governor of the Central Bank and the Financial Regulator, is a code of practice, or code of conduct, an integral element of their employment contracts and conditions; if the immediately-preceding Financial Regulators and Governors of the Central Bank of Ireland had written contracts of employment; in view of the collapse of the banking system and the consequent bailout, and the prior assurances given by the then Financial Regulator and Central Bank Governor to the contrary, if the performance of these two most recent holders of the offices of Governor of the Central Bank and Financial Regulator raised the question that the persons involved failed to honour those contracts; if directors of financial institutions, including banks, subject to compliance with the same legal obligations as directors of non-banking companies, including the legal strictures relating to reckless trading and personal liability; and the significance, if any, of the recent amendment to advertising code practice that states that regulation is now implemented by the Central Bank of Ireland as opposed to the Financial Regulator, which assertion was in place until recently. [19117/12]

Written answers

Minister for Finance (Deputy Michael Noonan)

The Central Bank of Ireland is responsible for financial regulation in Ireland. The Irish Financial Services Regulatory Authority (the Financial Regulator) ceased to exist on 1 October 2010 with the commencement the relevant provisions of the Central Bank Reform Act 2010, which created a single structure within the Central Bank controlled and managed by the Central Bank Commission. The powers and functions of the Financial Regulator were subsumed into the Central Bank of Ireland. Under sections 19 and 23 of the Central Bank Act 1942, as amended in 2010, the terms and conditions of employment of the Central Bank Governor and the Deputy Governor (fulfilling the role largely filled by the former office of Financial Regulator) are matters for the Central Bank Commission. Therefore, I am not privy to the contractual arrangements that apply. However, I am informed by the Central Bank that both positions are subject to the Ethics in Public Office Act and the Central Bank's Code of Ethics and Behaviour. It would not be appropriate for me to comment on the contractual position of individuals who have held these posts previously.

Finally, regarding reckless trading and personal liability, the obligations of managers of regulated financial service providers imposed by Irish financial service legislation are in addition to any obligations imposed on them by other law. As regards the Companies Acts, financial institutions are in the same position as all other companies.

The Central Bank has referred a number of issues to the Office of the Director of Corporate Enforcement concerning appropriate standards of behaviour on the part of a number of institutions. These issues are currently the subject of investigations by the Director of Corporate Enforcement and the Garda Síochána.