Regulator calls for review of law
The State’s financial regulator has called for an examination of the laws against white-collar crime saying the delay in taking high-profile cases arising from the financial crisis was eroding public confidence.
Central Bank deputy governor Matthew Elderfield said the start of the criminal cases arising from the crisis, “never mind their successful conclusion”, were some time away.
This track record “undermines public confidence” in enforcement and weakens its deterrent impact to “head off the next crisis or scandal”, Mr Elderfield told a Central Bank conference on enforcement.
The system of enforcement should be examined to see whether it could “really deliver results” in punishing individuals responsible for financial failures that impose costs on society and for financial white-collar crime generally, he said.
“More fundamentally,” he said, “I would argue that we should use the opportunity to examine some of the underlying legal offences in the area of financial white-collar crime and to consider whether they need amendment or bolstering.”
Nobody has yet been prosecuted for the failure of Anglo Irish Bank or Irish Nationwide Building Society or the wider banking crisis that has landed a €64 billion bill on the public.
The investigations into the collapse of Anglo have been ongoing since February 2009.
Mr Elderfield said the prosecution of people had lagged behind the growing number of financial firms to have been sanctioned over recent years and that criminal cases were still a long way from a successful conclusion. The Central Bank and Financial Regulator before it had imposed financial sanctions on just seven people in the past decade, he said.
He questioned whether the authorities should, like the UK regulator, consider introducing “some degree of presumptive liability or sanctions for directors of banks which failed and required public support.”
He queried whether there should be a general offence, either civil or criminal, for reckless trading of a financial firm.
He said this was a chance to question “how we can raise our collective game to ensure that we have a truly effective enforcement system that delivers deterrence where it really counts: at the door of the individual who breaks the rules”.
It was “only then will we be able to take comfort that we have created a system that will help deter the origins of the next financial crisis”.
The financial crisis should be a “catalyst” to create a “truly effective system to assist in the fight against white-collar crime, bringing with it individual responsibility for the actions of persons who hold senior positions in financial institutions”.