01 Nov 2019
New rules to hold individual bankers who do wrong to account will not result in jail but will still help to change culture, the finance minister has said.
Paschal Donohoe said yesterday that he is working on legislation to bring in a senior accountability regime (Sear) for prominent figures in financial services companies. The rules are being introduced as a response to the tracker mortgage scandal, where banks overcharged thousands of their own customers.
This resulted in almost 100 people losing their homes and caused significant financial hardship to thousands more. The final report from the Central Bank found that more than 40,000 people were affected.
Mr Donohoe told an event hosted by Ibec, a business lobby group, that regulators will not be able to take criminal proceedings against individuals under SEAR. However, he said that the new rules will be strong and will help to dampen wrongdoing in the sector.
“The sanctions of the Sear regime will be civil in nature, I would anticipate. They will either be around fines or the inability of individuals to work in those roles in the future, if they are found to be in breach of the legal requirements that we have of them,” he said.
“I am confident that when we have actually drafted the legislation and published it, that we will have a sanction regime that will be proportionate and will be a deterrent to the kind of behaviour that I think could pose a future risk to our financial sector.”
He added: “The context of this legislation is the tracker mortgage scandal, and the issue is that the behaviour I was most disappointed in happened after the financial crisis. It was the reaction to the issue, not just the issue.
“For too many of our citizens, they experienced a degree of hardship that is simply unacceptable. That this happened in the aftermath of the financial crisis is the catalyst for this legislation.”
Derville Rowland, the director general of financial conduct at the Central Bank, has previously said that introducing Sear is crucial in ensuring that firms are properly regulated.
While it is unlikely it will allow for criminal proceedings, it is expected that Sear will make it easier for the Central Bank to fine, discipline, or disqualify senior bankers found responsible for failings in their organisations.
By Paul O’Donoghue, The Times, 1 November 2019
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