The Central Bank's Strategic Plan 2013 - 2015 sets out a strategy of assertive risk-based supervision underpinned by a credible threat of enforcement. Enforcement is an important tool to effect deterrence, achieve compliance and promote positive behaviour. The Central Bank will take enforcement action against regulated entities under its Probability Risk Impact Supervisory System (PRISM) supervisory model. PRISM represents a challenging and proportionate risk-based system of supervision for all financial institutions operating in Ireland.
In 2013, the Central Bank concluded 16 Administrative Sanctions Procedure (ASP) cases, imposing fines totalling €6.35 million. The cases involved firms across most of the Central Bank's areas of responsibility such as banking, insurance, investment firms, retail financial intermediaries and moneylenders. The breaches that arose related to issues such as breaches of prudential requirements (e.g. failure to maintain adequate solvency margins; failure to ensure accuracy of regulatory reporting to the Central Bank; failures in relation to systems and controls dealing with technical reserves), breaches of the Consumer Protection Code, failure to comply with the Consumer Protection Code for Licensed Moneylenders and the failure by a listed company to comply with the requirements relating to the proper maintenance of an insiders' list.
The total fines of €6.35 million for 2013 includes a €5 million fine imposed on Quinn Insurance Limited (Under Administration) that was waived due to the exceptional circumstances of the case, namely that the firm is under administration and is wholly reliant on funding from the Insurance Compensation Fund, which is ultimately funded by the public. The Central Bank has a policy of issuing detailed publicity statements following the conclusion of each ASP settlement. Further details of each of the above cases is available on the Central Bank's website.
In 2014 to date, I have been informed that the Central Bank has concluded 4 ASP cases, imposing fines totalling €575,640. The cases dealt with issues including breaches of large exposure requirements, capital adequacy requirements, the Insurance Mediation Regulations and MiFID Regulations. Detailed publicity statements in relation to 3 of these cases are available on the Central Bank's website. With regard to the fourth, relating to a breach of professional indemnity insurance requirements, I have been informed by the Central Bank that this is one of a number of cases relating to a particular enforcement theme and a publicity statement relating to this case along with other cases dealing with the same enforcement theme will issue as a batch later in the year. This approach seeks to maximise the public impact of the enforcement work.
I have been further informed by the Central Bank that its Enforcement Division currently has 29 open ASP cases. These open cases cover the range of areas of the Central Bank's supervisory responsibility. The issues under investigation also broadly align with the Central Bank's public statement of its enforcement priorities, which was published on its website on 25 February 2014.
The issues under investigation in the open ASP cases include compliance with prudential requirements by banks and insurance companies; compliance with the MiFID conduct of business rules by investment firms; compliance with the Consumer Protection Code and compliance with requirements to have adequate systems and controls in place. The open ASP cases also include investigations into historical lending practices at Irish Nationwide Building Society, financial irregularities at the former Bloxham Stockbrokers and issues related to Quinn Insurance Limited.
The open cases also include a case relating to a possible breach of the Market Abuse Directive Regulations, which has been referred to a panel of Assessors under Regulation 35 of those Regulations.
The open cases further include the Central Bank's investigations into Irish Bank Resolution Corporation (formerly Anglo Irish Bank) and Custom House Capital, both of which are currently suspended, following consultation with the Gardaí, to avoid the risk of prejudicing any current or future criminal prosecutions.
In addition, as set out in the Central Bank's Annual Performance Statement for 2012, 841 Regulatory Actions were taken in 2012. The 2013 Annual Performance Statement will be published in due course by the Central Bank. It is expected that the final number of Regulatory Actions for 2013 will be even higher than 2012.