Minister seeks AG’s advice on banker accountability laws

Process of introducing Bill on issue has been delayed by several things, including Covid-19

Minister for Finance Pascal Donohoe’s officials are seeking the advice of the Attorney General’s office on the constitutionality of a planned laws aimed at making it easier to fine and disqualify senior bankers for failings under their watch.

"The department is currently engaging with the Attorney General's office in advance of submitting draft heads of Bill to Government so as to ensure that the correct balance between additional powers for the [Irish] Central Bank and the protection of individuals' constitutional rights is struck and that the provisions of the Bill are constitutionally sound in the event of legal challenge," said a department spokesman.

Mr Donohoe said almost two years ago, following a request from the Central Bank, that he planned to introduce laws in early 2019 to give the Central Bank more powers to make top bankers accountable for failings under their watch in light of the State’s tracker-mortgage scandal.

While the Minister received the go-ahead from the then cabinet in June last year to press ahead with the drafting of an outline – or heads – of a Bill on the matter, the process has been delayed by several issues, including Brexit planning, Covid-19 and a change in government. The new programme for government, agreed in June, committed to the setting up of the so-called Senior Executive Accountability Regime (Sear).

Tracker-mortgage scandal

Labour Party finance spokesman Ged Nash accused the Government this week of "dragging" its heels on the laws, as the Central Bank announced that it had fined a third lender – KBC Bank Ireland – for its role in the tracker-mortgage saga. The Belgian-owned lender has been ordered to pay a €18.3 million penalty, after the company admitted to 12 regulatory breaches as it devised a strategy in 2008 to move borrowers off cheap loans linked to the European Central Bank's main rate and "persistently" resist as regulators pushed it to admit its failings.

In addition to the fine, the bank has had to pay €153.5 million in refunds and compensation to 3,741 customers who had been affected for more than a decade.

The Central Bank has also fined Permanent TSB and its former subprime unit Springboard Mortgages for their involvement in the scandal. Bank of Ireland, AIB and its EBS unit, and Ulster Bank remain under investigation.

A Sear, similar to rules introduced in the UK in 2016, would require regulated financial firms to set out clearly where responsibility and decision making lie. It would impose a requirement that senior executives take all reasonable steps to ensure the area of the business for which they are responsible is controlled effectively and complies with any regulatory requirements.