A new analysis of central bank data shows that 27% of settlements have been counted against banks in the last six years. Investment and insurance firms are also strong. However, if the Watchdog gets its will, the focus will be on individuals, writes RDJ Regulatory Partner, DR. Brian Hunt in the article below. The implementation of the administrative penalty procedure does not only cause financial pain to companies; This is a process designed to be a deliberately intrusive and less enjoyable experience, where the Central Bank, without exception, requires individuals to participate in an interview, be accountable, and justify their own behavior and that of their company. The wide dissemination of the result is also a central element in the implementation of the Central Bank`s policy. When the central bank enters into a transaction agreement with a company, it shall publish a statement detailing the nature of the infringement, the amount of the penalty imposed and the factors taken into account by the central bank in deciding on the amount of the penalty to be imposed. In addition to traditional mortgage cases, transaction agreements with banks have covered a number of areas, including regulatory reporting breaches, breaches of the code of conduct for credit institutions, breaches of the Consumer Protection Act, breaches of the code of conduct on loans to close businesses and breaches of anti-money laundering requirements. According to the Central Bank, since 2006 it has concluded 139 settlement agreements as part of its administrative sanctions procedure, bringing the fines imposed by the Central Bank to more than €123 million.
Transaction agreements with investment/insurance intermediaries amounted to fines of €1.1 million, but most of this figure consists of a transaction agreement with Capita Life & Pensions. Of the 40 transaction agreements concluded by the Central Bank during the period 2016-2020, the breach was detected in the vast majority of cases by the Central Bank through the use of its own monitoring and investigation tools, mainly thematic audits and on-site inspections. Out of about forty comparative agreements examined, it would appear that, in only 6 or 7 (15%) of the cases, the company was itself responsible for identifying the potential infringement and notifying the central bank of the case. However, even in these cases, companies that took the initiative to self-report infringements were punished with substantial fines ranging from €185 million to €3.5 million. The average was €1.3 million. Among the violations that served as the basis for concordation agreements with credit unions were the management of long-term loans, directors` remuneration, breaches of suitability and probity requirements, governance and risk management errors that led to the migration to a new IT system, and breaches of anti-money laundering requirements. Last year, the total amount of fines was the highest, based on comparisons made by the CBI in a single year. Two of the fines imposed in 2019 were higher than any fines previously imposed by the CBI. What is remarkable about these particular comparative agreements is that, in all cases, the enforcement measures taken against the person come essentially from a previous enforcement measure of the Central Bank against the company in which that person previously worked. . .