Dáil Éireann Debate, Wednesday - 18 November 2020
61. Deputy Ged Nash asked the Minister for Finance the number of enforcement actions for breaches of the consumer protection code since July 2016, excluding the tracker mortgage scandal, that have been considered by the Central Bank in each year since then; the details of same without identifying the individual or firms in question; the reason none progressed to an enforcement action; and if he will make a statement on the matter. [37368/20]
View answer62. Deputy Ged Nash asked the Minister for Finance the threshold that must be met for enforcement action to be commenced by the Central Bank for breaches of the consumer protection codes; if the current policy is to pursue other options first; and if he will make a statement on the matter. [37369/20]
View answer63. Deputy Ged Nash asked the Minister for Finance his views on the lack of enforcement action for breaches of the consumer protection codes since July 2016 exclusive of the tracker mortgage scandal; if he has discussed this directly with the Governor of the Central Bank; and if he will make a statement on the matter. [37370/20]
View answerI propose to take Questions Nos. 61 to 63, inclusive, together.
The Deputy will be aware that the Central Bank is independent in its functions and decisions in relation to taking enforcement actions are for the Central Bank alone.
I am advised by the Central Bank that it has utilised its broad range of enforcement powers in an effective manner since 2016 to address breaches that may/have result(ed) in consumer harm and that enforcement is an integral part of the Central Bank’s risk-based approach to supervision.
The Central Bank’s strategy focuses on the following desired consumer protection outcomes:
- a positive consumer-focused culture that is embedded and demonstrated within all firms;
- a consumer protection framework that is fit for purpose and ensures that consumers’ best interests are protected; and
- regulated firms that are fully compliant with their obligations and are treating their customers, existing and new, in a fair and transparent way.
The Central Bank has also advised me that it cannot comment on suspected breaches that are not pursued by way of enforcement.
Within its enforcement powers, the Central Bank has a broad range of tools, which it carefully deploys in appropriate circumstances, including the imposition of sanctions but up to and including the revocation of authorisations and the refusal and prohibition of individuals. The Central Bank has taken a number of actions in these areas since 2016 in furtherance of its consumer protection mandate. Regarding case selection, the Central Bank carefully considers which cases will best achieve the Central Bank’s strategic objectives, and through strong enforcement outcomes motivate compliant behaviour and promote a culture of fairness and high standards within the financial services industry. To this end, the Central Bank maintains effective processes for the selection of referrals to enforcement. As well as evidential matters, factors such as the seriousness or significance of the suspected contraventions and the harm or risk of harm to consumers are among the considerations relevant to the appropriateness of the use of enforcement tools.
The objective is to ensure that the Central Bank is strategically deploying its enforcement tools and efficiently using its resources to achieve effective and strong enforcement outcomes. The two largest monetary sanctions imposed to date by the Central Bank – Permanent TSB plc sanctioned €21million in 2019 and KBC Bank Ireland plc sanctioned €18.3million in 2020 - evidence the Central Bank’s commitment to taking strong enforcement action with real deterrence value where serious and significant breaches of consumer protection requirements are committed.
The Central Bank, as a systemic regulator, holds regulated firms and the people who run them accountable where there are serious or significant breaches of regulatory requirements and standards.
Since 2006 the Central Bank has concluded 139 cases under the Administrative Sanctions Procedure (ASP) framework with fines imposed of €123.98m. Of the 139 outcomes, 22 were imposed against individuals. The Central Bank has also taken action to revoke 28 firms’ authorisations on an involuntary basis. A further 13 firms were refused authorisation to undertake regulated activities.
While the Central Banks enforcement work spans the entirety of its mandate and is wider than the Consumer Protection Code alone, since 1 July 2016 it has delivered a number of significant outcomes which were integral to the Consumer Protection Code, including:
- against Axa Insurance Limited, which related to the operation of the Minimum Competency Code and Consumer Protection Code;
- against the New Ireland Assurance Company plc which related to the provision of incomplete information to consumers under the Consumer Protection Code;
- against Springboard Mortgages Limited in respect of tracker mortgage failings under the Consumer Protection Codes;
- against Permanent TSB plc in respect of tracker mortgage failings under the Consumer Protection Codes; and
- against KBC Bank Ireland plc in respect of tracker mortgage failings under the Consumer Protection Codes.
In addition to the above, the Central Bank uses a wide range of other tools to support its consumer protection work. It has settled 36 cases under the ASP framework, prohibited/suspended or refused 12 individuals under the Fitness and Probity regime and revoked 12 firm authorisations. It has also issued 168 Warning Notices against unauthorised providers.
Ultimately for all cases, whether they are specifically based on a breach of the Consumer Protection Code, or another sector of legislation, it is important to note that while a case may not have been settled under the Consumer Protection Codes, protecting consumers is at the centre of all of these enforcement outcomes. For example, since July 2016 the Central Bank has:
- delivered outcomes concerning (4 by ASP, 7 by revocation) retail intermediaries for failing to have adequate professional indemnity insurance (PII) in place. The Central Bank views PII as a key prudential and consumer protection safeguard and compliance with PII obligations is therefore fundamental to the Central Bank’s mandate of protecting consumers.
- delivered an outcome against an individual in the insurance sector who under-reserved loss claim reserve estimates which resulted in the firm’s financial position being artificially enhanced. This led to a significant risk to policy holders and consumers in the event the insurance firm did not hold sufficient assets to meets its liabilities. It is imperative that individuals working in regulated financial services and particularly those in senior roles, fully understand the risks and consequences that their decisions, actions and behaviours may have for an organisation, its employees, its customers and the wider market.
- issued 7 prohibition notices against individuals whose actions may have or had the potential to result in consumer harm. The Central Bank may issue a Prohibition Notice prohibiting an individual from performing a controlled function for a specified period or indefinitely, if we form the opinion that an individual is not of appropriate fitness and probity.
The Central Bank intervenes, within the scope of its regulatory mandate (which extends beyond the Consumer Protection Code), to ensure the interests of consumers are protected by focusing on the issues, which pose the greatest potential or actual risk of consumer harm. Its targeted interventions are aimed at addressing widespread issues that affect many customers.
A credible threat of enforcement underscores its powers to protect. It takes robust enforcement action aimed at promoting principled and ethical behaviour by and within regulated entities. Transparent and strong action where entities or individuals fall short of required standards helps to deter poor practices, achieve compliance and encourage the behaviour it expects.
