Online Coverage(See below):
Business Post: One in four financial experts fear new Central Bank powers risk ‘ruin’ for workers
A quarter of financial compliance experts believe that new Central Bank rules could result in “financial ruin” for workers, according to a survey by the Compliance Institute.
The survey of 175 compliance financial services professionals relates to laws that will allow the regulator to fine individuals up to €1 million for rule-breaking and empower the regulator to go after a person’s assets.
More than two thirds of those surveyed, however, agreed with the new powers and will reserve judgement until it is seen in practice – with 17.5 per cent believing it to be “necessary and well-measured".
Commenting on the research, Michael Kavanagh, chief executive of the Compliance Institute said most people were still undecided in their view of the new framework.
“Just 12 per cent of the people we surveyed agreed the changes could hamper the industry in Ireland, but a larger percentage (25 per cent) believe they could in fact result in financial ruin for the workers involved. In reality however, most people are on the fence, but one in three are confident that the Central Bank will be proportionate in the application of the powers,” he noted.
The Individual Accountability Framework (IAF) Act, signed into law last March as part of the regulator’s move to clamp down on corruption in the financial services industry, allows the Central Bank to take direct enforcement actions against individuals in authorised roles for the first time.
The rules are to be introduced on a phased basis from the middle of this year.
12 percent of survey respondentsagreed that the measures were “probably too severe” and “could stiffen development within the industry”, while 3.5 per cent “definitely” disagreed with the new powers.
Regarding what factors should be considered in determining the size of a fine, two thirds of compliance professionals felt that the establishment of a new insurance policy – partially or fully covering financial executives, and paid for by their employer – should be considered.
62 per cent of respondents felt that the wealth of the individual being investigated should be a factor, while 59 per cent believing that whether the individual is being financially supported by their employer in terms of expert external advice should be considered.
The Administrative Sanctions Procedure (ASP), amended last year by the IAF, is the Central Bank’s main tool for carrying out investigations and imposing sanctions on individuals or firms that have breached financial services law.
A previous Compliance Institute survey found last year that nine in ten firms in the sector feared the new rules would make it difficult to hire individuals in senior executive roles.
In a statement, the Institute noted that the Central Bank has said it will apply the sanctions to individuals in a way that takes account of the “unique challenges” that they face compared to firms.
Broadcast Coverage (See below):
Newstalk - Michael Kavanagh, CEO, Compliance Institute interview with Joe Lynam