Seanad Éireann debate -
Wednesday, 8 Feb 2023

The provisions contained in the Central Bank (Individual Accountability Framework) Bill 2022 will play a key role in driving positive cultural change in financial services organisations that will benefit consumers, employees and wider society. These provisions are designed to ensure that this change in the financial sector will happen in a way that is both real and enduring.

The Bill introduces the individual accountability framework, which comprises: the senior executive accountability regime, SEAR; conduct standards for individuals performing controlled functions; a duty of responsibility for those performing senior roles; and standards for business for regulated firms. The Bill is a further step in the process that began with legislation enacted in 2010 to enhance the regulatory powers of the Central Bank.

It will make individuals and financial services firms more responsive and responsible by improving individual accountability in decision-making at all levels, in particular at senior levels in financial institutions.

Part 1 deals with technical matters, such as the interpretation provisions and the commencement of the Bill. The Central Bank has undertaken to carry out a consultation process on the elements of individual accountability framework once the Bill has completed all Stages in these Houses and is enacted. I would urge those concerned to engage fully with that consultation. In the Department of Finance we are encouraging all entities to engage in that consultation.

Part 2 provides for individual accountability and standards. It amends the Central Bank (Supervision and Enforcement) Act 2013 to provide the Central Bank with a new regulation-making power. It provides for the establishment of common conduct standards, additional conduct standards and standards for businesses. The common conduct standards outline standards of behaviour for all individuals performing controlled functions, that is, those performing both junior and senior pre-approval control function, PCF, roles in all regulated financial service providers. Additional conduct standards will apply, along with the common conduct standards, to more senior persons and others who perform any other function that may exercise a significant influence on the conduct of the affairs of regulated financial services providers, RFSPs, typically the control function 1 roles, which are the senior roles, in all regulated firms.

The standards for businesses will apply to all regulated firms. The Central Bank will be empowered to prescribe business standards with which all RFSPs shall comply, in order to ensure that they act in the interests of customers and the integrity of the market. A duty of responsibility will also be established that will oblige senior executives who are subject to SEAR to take reasonable steps to ensure the firm does not breach its obligations under financial services legislation for the aspect of its affairs for which the person has been allocated responsibility. The Bill incorporates a safeguard for those individuals by providing for a list of factors the Central Bank must take into account when assessing a breach of the duty of responsibility and whether the steps taken to prevent it were reasonable. Where a firm is in breach of its obligations and the Central Bank is considering whether the relevant individual discharged his or her duty as required, the Central Bank will be required to consider all of the relevant circumstances.

Part 3 will make a series of amendments to Part 3 of the 2010 Act, which deals with the Central Bank's fitness and probity regime. These amendments will extend the regime to certain categories of holding companies and persons performing controlled functions in relation to them. The extension of the regime to financial holding companies will make it available to the Central Bank as a supervisory and enforcement tool. The amendments will also make changes to the operation of the regime, making it more efficient - we hope - more effective, and ensuring it conforms to the required standards of fairness in the administration of justice in light of the Zalewski case.

Part 4 will make a series of amendments to the Central Bank Act 1942, in particular to Part IIIC, which deals with the Central Bank's administrative sanctions procedure, ASP. These amendments will make changes to the operation of the ASP to: clarify the processes involved; ensure it conforms to the required standards of fairness in the administration of justice; and adapt the ASP to provide for individual accountability. A number of the changes to Part IIIC are necessary to break the participation link. This will facilitate individual accountability by removing the requirement that, before taking action against an individual, the Central Bank must first establish that a prescribed contravention has been committed by an RFSP in which the individual participated. Under the individual accountability framework, there will be much broader individual accountability. It is necessary to break the participation link and, to a large extent, do away with the related concept of a person concerned in the management of an RFSP. Participation in a prescribed contravention by a regulated firm will, however, continue to be a stand-alone contravention for which an individual can be held accountable.

Part 5 will make amendments to the Central Bank (Supervision and Enforcement) Act 2013 regarding the treatment of privileged legal material. These amendments will provide for a process whereby a person may agree to provide privileged material to the Central Bank for a specified purpose without waiving the privilege to any other person. This process will provide a legally robust and clear mechanism to facilitate this limited disclosure to the Central Bank should a person voluntarily wish to disclose legally privileged material for the performance of the Central Bank's functions under financial services legislation, and should the Central Bank agree to such disclosure.

Part 6 provides for various miscellaneous amendments to the Central Bank Reform Act 2010, the Central Bank (Supervision and Enforcement) Act 2013 and the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011.

Part 7 includes saving and transitional provisions to ensure there is certainty as to the provisions that apply to any investigation or inquiry already under way at the time certain provisions are commenced.

There were a number of amendments on Committee and Report Stages in Dáil Éireann that were technical in nature and did not involve any substantive change to the policy objectives of the Bill, which have been settled for some time, as Senators will be aware. I will take the opportunity here to flag the Minister, Deputy McGrath's intention to bring forward a further minor technical amendment on Committee Stage relating to a transitional provision in regard to Part 7. I look forward to Senators' engagement on the important objectives of this legislation, which has been some time in gestation and has already been the subject of significant consultation. It went through pre-legislative scrutiny and the Minister was well engaged with the committee at that point. I commend the Bill to the House and look forward to hearing the Senators’ views on it.

I thank the Minister of State for attending to discuss this important Bill. When we think about it, the issues of accountability and transparency are the kernel of this Bill, which itself is strengthening the original legislation. This is to be achieved by prescribing responsibilities and providing for the allocation of responsibility and accountability for the management and operation of regulated financial service providers, RFSPs, to individuals, while maintaining a balance with the responsibilities that properly belong to the firms themselves. The Bill will provide for obligations with respect to governance, management arrangements and senior executive accountability.

With regard to the responsibilities of the Central Bank, it is very important that there is accountability, clear regulation and strong legislation in place to cover all areas. The fact is that the legislation is being strengthened and the Government has brought forward amendments. While many of them are technical in nature and to the layperson probably do not mean anything, they are very important amendments. The Minister of State set out the different steps that are to be taken in the different amendments. I commend the Bill to the House.

First, I note this legislation started in Dáil Éireann and is coming to this House where it will effectively be amended and it will then, apparently, be approved by Dáil Éireann. There are a few points that I would like to raise, although maybe it is a bit late to do so as it has arrived at this stage in this House.

What we are doing here is conferring on the Central Bank massive powers in regard to individual persons carrying out controlled functions within any financial institution. What we are doing as well is saying that, in future, it will not matter whether the bank itself, or the insurance company or otherwise, is found to have misbehaved or fallen beneath the relevant standards, and that the Central Bank can go after individuals working in those firms.

I want to recall the position briefly for the Minister of State, although I have only been given five minutes to speak on this matter and I can say very little. The Central Bank itself was probably one of the chief architects of the financial crash of 2009 and it got away with murder at the inquiry that was held in these Houses at the time. It said in its annual report of 2007 - I remember it because it was published about a month after I lost my seat as Minister for Justice - that it had carried out due diligence on all of the banks and had stress-tested them, and that they were in a financially robust state. This body has now been given immense new powers, and this is the second tranche of powers that we are conferring on it.

I want to draw to the attention of the House that individuals face personal sanctions of a huge kind, not merely loss of their job but financial penalties, if they are found by a non-court to have offended by a breach of business standards being provided for in this legislation.

I also draw the Minister of State's attention to the fact that the duty of responsibility and conduct standards provided for in the new section 53E are demanding when deployed against an individual. These include: "operating without bias and preventing, or identifying and appropriately managing, conflicts of interest". That is a very vague statement, charge or standard to put against somebody who is an executive in a bank. The standards required of people include co-operating "in good faith and without delay with the [Central] Bank, and with authorities that perform functions in a jurisdiction other than the State ... responding to requests and requirements under financial services legislation in an open and timely manner ... disclosing information or records when required to do so under financial services legislation ... attending meetings and interviews when required to do so under financial services legislation". These will now be imposed on individuals personally as standards that they must comply with.

That is all very well but if the Central Bank decides to prosecute individuals within this process, they will be under massive obligations to comply with the inquiry into themselves. If we are not going for the bank, where will the legal aid be for these people? Will a system of legal assistance be provided for people who are at the wrong end of an inquiry of this kind, which can, first, end their careers and, second, impose massive financial penalties on them? Who will give them legal aid to defend themselves in those circumstances? It is all very well to say we will find these people accountable and make them amenable to new standards. I support and have no problem with high standards but when the Central Bank gets on people's case, will they receive any due process in defending themselves when they say it was not them but the board of governors, or their superior or direct line manager, who told them to do these things, and they thought they were doing the right thing? Will they have a defence?

These powers are excessive, and not balanced. The Central Bank prints money, effectively, and individuals who, for instance, might be suspended from their jobs and find themselves defenceless, are provided with no system of defending their good name, or their financial well-being because they are liable to massive penalties, or their right to be employed in financial services in the future. This is overkill legislation.

It is my first time to greet the Minister of State. I welcome her to the House and congratulate her on her appointment. As the saying goes, it is never too late. Today is a good day but we all know it is long overdue. Several years after the Central Bank recommendation to make individual decision makers and financial institutions responsible for their actions, we now have a Bill that will make that a reality.

Despite the significant changes and improvements to regulation and supervision of the financial sector in the years since the financial crisis, the tracker mortgage examination brought serious failings in Irish banks to light. These failings have had severe financial and other consequences for customers of institutions in the financial sector and have resulted in low levels of public trust in the sector. This legislation, which introduces an individual accountability framework, has its roots in the Central Bank's report, Behaviour and Culture of the Irish Retail Banks. This was produced in 2018 at the request of the then Minister for Finance to examine the culture and behaviours and their associated risks in Irish retail banks, and the action that could be taken to ensure that banks prioritised customers' interests in future.

The individual accountability framework is made up of a senior executive accountability regime, a duty of responsibility and a conduct of standards for individuals, and facilitates the breaking of the participation link. The introduction of this framework will build on the reform that has taken place in the regulation of the financial sector in Ireland since the financial crisis, placing new emphasis on individual and personal accountability and responsibility.

The Government approved the drafting of the Central Bank (Individual Accountability Framework) Bill in July 2021. It introduces legislative changes beyond those approved by Government in the general scheme in order to incorporate provisions guaranteeing fair and transparent procedures in light of decisions of the Supreme Court.

The overall aim of the Bill is to enhance individual accountability for senior executives in a number of customer-facing financial sectors and to clarify appropriate levels of conduct for a large cohort of individuals across all regulated financial service providers while at the same time balancing individual accountability with collective responsibility. It also aims to improve the processes by which individuals are assessed for their suitability for a financial service role and allows for investigation where there are reasons to doubt their suitability under the fitness and probity regime for financial holding companies established in Ireland. The Bill seeks to incorporate fair and transparent procedures in light of decisions of the Supreme Court and enhance the sanction procedures so that breaches of individual accountability provisions are penalised appropriately and proportionately.

Fianna Fáil supports this Bill. It is never too late and this is a positive move. We hope that adopting this legislation will restore public confidence in our banking sector. Many people have doubts about the sector. We support the Bill.

Cuirim fáilte roimh an Aire Stáit. Improving individual accountability in decision-making at all levels, especially at senior level, is to be welcomed. However, I do not see transparency and accountability for the so-called vulture funds. The services of those loans are regulated. The history of the great recession is well-known to us all. Banks over-lent to the residential property sector, driving prices sky high. Increasing prices meant everybody was winning until the music stopped. House prices then collapsed, bringing the economy and the banks with them. When the dust had settled years later, the banks had been bailed out but the debts remained for ordinary house-owners. Those debts continue to be serviced by tens of thousands of people up and down the country.

As interest rates rise across the world, the spectre of further possible mortgage defaults appears again. In Ireland, it is particularly acute for three reasons. First, the level of debt for ordinary people who borrowed in the run-up to the 2008 crash remains very high. Second, most are on variable rates, which means they are fully exposed to interest rate increases. Third, tens of thousands of loans have been sold to overseas investment funds whose business models are opaque - a point I will return to later - and who may well be taking advantage of increasing interest rates. We simply do not know the extent of it.

For borrowers still with the banks, there is some protection. The variable rate offered by the banks is a standard variable rate meaning that the rate applies across its entire book. AIB or Bank of Ireland cannot single out an individual borrower because their rates apply across their books. Borrowers are, therefore, protected by being part of a big group of borrowers. Bank borrowers are usually in better financial condition than borrowers whose loans have been sold. Those loans are often sold for a reason. This means that if bank A increases its rates, the borrower can move to bank B in a competitive market. They are protected by competition. However, borrowers whose loans have been sold are generally distressed books and they do not have that protection. They are largely on their own. It appears that funds do not apply standard variable rates and how they charge rates is only known to them. It is a secret, a mystery. Once a borrower's loan has been transferred to a fund, it is highly unlikely that any bank would be willing to take them on as a customer so they do not have that benefit of shopping around. In many cases, borrowers will have used up their once-in-a-lifetime chance of personal insolvency, hence they represented a distressed loan in the first place. People on safer ground probably still have that one lifeline. In many cases, they will not have used it yet.

In light of that, we are looking at increases in applications by funds to potentially repossess more homes. One thing we know for sure is that property prices have increased so there is a commercial rationale for funds to increase rates, causing defaults, before looking to repossess properties. It might take a year or so but the profits could be very large indeed.

We need to act. This House and the Government need to act. We must be in the vanguard of this action. First, we must bring transparency to the process. Funds must be required to publish increases in their rates. That is not too much to ask for and would ensure that the public, and the regulator, can see what is going on. If the regulator does not have the power then the Government should enhance those powers. We know that AIB and Bank of Ireland charge what they charge. We need to know and understand what all the funds charge and that needs to be public information.

Second, where borrowers meet their payments under the old interest rate, then it is entirely unfair to create a default by raising the rate precipitously. In other words, legislation must provide protection to borrowers so that any repossession court proceedings can be defeated where it is shown that the default was caused by such a precipitous interest rate increase. This is not overly burdensome on lenders. They bought those loans at discount and their underlying security has increased. They must appreciate that rates can increase so why should individual borrowers be on the hook for this risk?

Finally, though this is a matter for the courts, we must ask why borrowers have been deprived of bank rates when they entered into their original agreements with banks. That is an issue. Will the Government protect those people?

The individual loan agreements give the power to the banks to amend their interest rates where those rates are variable rates but the power is given to the bank and not to any subsequent owner of the loan. It has been well established in the courts that loans can be sold on and that is not what this is about. It is certainly not established that the new owner can disregard the agreement made between the bank and the borrower. In my view, the borrower is entitled to rely on the original conditions, and the sale does not give the fund a carte blanche to charge interest rates as its likes in a way which is not transparent.

It is important that the regulator consider this. If the regulator is unable to put manners on the funds then the Government should enhance any powers or the courts will have to put manners on the funds.

The ordinary people of Ireland bailed out the banks and continue to pay for their over extension of credit, which damaged our economy and national life for a decade and a half. Through the good offices of various groups, some benign legislation and ultimately through the recovering economy, the worst of the mortgage arrears crisis was dealt with without mass repossessions. The wound of that is still very raw in this country and the financial position of so many is still quite weak. We must not allow the current global changes to set back our recovery. We must also not allow those funds that have done so well in their investments to put their own profits above the needs of homeowners the length and breadth of this country.

The Senator made a fine speech. Well done.

Today is my first time dealing with the Minister of State and he is very welcome. As he will know, we have waited a very long time for the introduction of this legislation. Every customer has the right to be treated fairly and have their interests upheld. At a minimum, they should have a guarantee that they will be protected from gross misconduct, unethical behaviour and corporate mismanagement, and where such injustices or misconduct occur, that those individuals responsible will be held to account. That is where I would respectfully disagree with Senator McDowell because, from the point of view of the class of people whom I represent, there just has not been enough accountability in terms of banking scandals and the individuals responsible for them.

As we know all too well, customers of banking and financial services have not been afforded that protection or been confident that individuals will be held to account when they fall victim of mistreatment, mismanagement or overcharging by financial institutions. More than a decade since the Irish banking sector plunged our economy into crisis, it is truly shocking that we are only now reaching the final stages of legislation that would allow senior bank and financial services executives to be held to account for their failures. We have witnessed a tracker mortgage scandal, which left 40,000 customers overcharged and many losing their family homes. Public trust in the banking sector can only be restored when the culture at the heart of our banks changes. That can only happen by ensuring individuals are held to account for failures when they occur.

An individual accountability regime was introduced in Britain in 2016 in the form of the senior managers and certification regime, and in Australia in 2017 with the introduction of the banking executive accountability regime.

In January 2017, Sinn Féin tabled a motion in the Dáil that called for legislation that would ensure individuals and financial institutions could be held to account. In July 2018, the Central Bank published its report on the behaviour and culture of the Irish retail banks on foot of the tracker mortgage scandal. Its recommendations included legislation introducing a new individual accountability framework, including new conduct standards; a senior executive accountability regime and enhancements to the fitness and probity regime and the enforcement process. These are recommendations to ensure that senior bankers could be held to account for their actions.

We are considering this legislation over four years since that report was published. It is an indictment of the lack of priority that Governments have placed on this issue but, finally, the legislation is before us. The Bill grants regulation-making powers to the Central Bank to effectively implement the individual accountability framework, IAF, in respect of senior executives in regulated financial service providers. It sets out four key pillars to the IAF, namely the new senior executive accountability regime; new conduct standards for regulated financial service providers and their management and staff; enhancement to the Central Bank's fitness and probity regime; and stronger enforcement capabilities for the Central Bank. The senior executive accountability regime, SEAR, will be introduced mainly by amendments to the Central Bank Act 2013. The Bill provides regulation-making powers to the Central Bank with the bank to set out details of allocated responsibilities and requirements regarding management responsibility maps and statements of responsibility. The Bill does not set out the sectors to be included in the SEAR. This will be set out by the Central Bank regulations, although it is intended that the SEAR would initially apply to banks, insurers and certain investment firms. We await the sectors to be included in these regulations but we hope they will be expansive.

We are aware that in Australia, plans are under way to extend its banking accountability regime to other financial services and entities following recommendations from the Hayne Royal Commission. Similarly, it will be important to ensure that the scope of these regulations are kept under constant review.

I will raise a few brief issues with the Minister of State as we work through this Bill. First, my colleague, Deputy Doherty raised the issue of training that will need to be undertaken within firms to ensure that those were responsibilities under the legislation can implement its requirements. The second is the choice of six years as the duration for which an individual can have left the role and still be subject to Central Bank investigation. Many issues have not come to light under such a time, which could pose a problem for ensuring accountability after the fact.

Section 15 relates to discontinuation of an investigation for a reason of lack of resources. This would not be acceptable with respect to a Garda investigation and we can see little reason for it to be acceptable in this instance. Again, we would ask the Minister of State to re-examine that provision.

The legislation is welcome but long overdue. Regulators and the public have waited far too long for legislation that will finally enable the regulators to hold senior bankers to account. Those subject to untold and significant harm at the hands of our banking industry have had to suffer while those responsible go unnamed and unpunished. That should never have happened.

It is lovely to see the Minister of State in the Chamber. I congratulate her on her new role and wish her well.

As we all know too well in Ireland, misconduct by those in the banking sector has the potential to destabilise the entire country. We are 15 years on from the banking crisis. In those 15 years, we have evidence that the culture of greed and impunity within the banking sector has not abated. The tracker mortgage scandal of recent years saw banks knowingly overcharging customers, in some cases by tens of thousands of euro by denying them better mortgage rates to which they were legally entitled. Even after they were found out, they doubled down on it. In 2017, we heard how a widowed father of five was pursued by Bank of Ireland through the courts for the repossession of his home, despite the bank admitting he was overcharged as a result of this scandal. The tracker mortgage scandal was evidence of a concerted, wilful strategy by the banks to cheat customers out of their money. An accountability framework is welcome and overdue. The provisions in the Bill that allow executives to be pursued for up to six years after the resignation are particularly important while the longer window for accountability is a positive step. However, I wonder if the six-year statute of limitations is long enough. White-collar crime is complex and requires detailed, time-consuming investigations to uncover.

I worry that a six-year period is insufficient. For example, in the tracker mortgage scandal customer accounts were impacted as long ago as 2004. We have to ask if executives who made money from corruption a decade ago are to be exempt. I and my Civil Engagement Group colleagues look forward to engaging with the specifics of the legislation on Committee Stage.

Much of the detail of the accountability regime will be set out within Central Bank regulations rather than the primary legislation. That means we are unable to scrutinise all the specifics-----

-----of the regime in this House. As the Minister of State outlined, the regulations will be drafted following a comprehensive consultation process, so it is very important we ensure that the public's input is given the maximum possible weight within that process. I fear we will see, as we have seen many times before, the outsized influence of banking lobbyists. A recent article in The Irish Times highlighted that 84% of compliance officers in relevant financial services firms said this accountability regime would make it hard to hire senior executives. This is the same scaremongering rhetoric we heard in respect of banking executives' pay. It was disappointing to hear the Government repeating those talking points before Christmas, when it removed the cap on bank executives' pay. Prudent, responsible people have nothing to fear about a robust regime of accountability for senior executives.

We know that impunity for bankers does not attract top-quality talent; in fact, it acts as a perverse incentive which attracts the wrong kinds of individuals. The truth is that these executives are very well compensated for the burden they take on. A report by the European Banking Authority revealed that nearly 50 financial institution executives in Ireland were paid over €1 million each last year. Bank executives do not need to be mollycoddled; they need to do their jobs and to be answerable for the decisions they make. I hope the fearmongering from the banking lobby does not outweigh the public's interest in rigorous regulation during the consultation process.

What we need to prioritise in the upcoming consultation process, as I said, is the voice of the public. We need the detail of the accountability regime to live up to the promise of this legislation. If what emerges from that consultation process is a watered down compromise, the legislation will have failed. Recent Irish history demonstrates that inadequate regulation, oversight and accountability of the banking sector can have disastrous consequences which impact the most vulnerable members of our society most. We must therefore ensure that history does not repeat itself. The stakes are too high.

As I said, I and my Civil Engagement Group colleagues look forward to engaging on the specifics of the legislation on Committee Stage.

I congratulate the Minister of State as well and wish her well in her portfolio.

This is very important legislation. We have seen over the years the hardship and so on that was visited at many doors in this country - not just in this country but right around the world - from the crash until now.

The first two paragraphs of the explanatory memorandum set out quite clearly what the Bill purports to do:

The principal purpose of the Bill is to confer powers on the Central Bank of Ireland to strengthen and enhance individual accountability in the financial services industry. This is to be achieved by prescribing responsibilities and providing for the allocation of responsibility and accountability for the management and operation of regulated financial service providers ... to individuals, while maintaining a balance with the responsibilities that properly belong to the firms themselves.

What exactly is meant by "maintaining a balance with the responsibilities that properly belong to the firms themselves"?

The memorandum goes on to state:

The Bill will provide for obligations on RFSPs with respect to governance, management arrangements and senior executive accountability; by providing for conduct standards setting out standards of behaviour for RFSPs and individuals performing functions in relation to them; and by providing for the sanctioning of individuals who breach their responsibilities under financial services legislation.

In fairness to Senator McDowell, he has raised a very important aspect of the Bill. We saw with tracker mortgages and with the crash that the Central Bank was slow enough to take up a lot of issues. I refer to the Jonathan Sugarman case, where he brought to the attention of the Central Bank practices that were taking place in financial services that he as an accounting officer was not happy with, and it was quite slow to act. Jonathan Sugarman, as a whistleblower, was treated very poorly. He was unemployable afterwards. To this day, he is unemployable.

With tracker mortgages, the Central Bank had to be brought before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach on numerous occasions to bring it back on track with what was happening.

Various financial services are provided, and new products are always coming on stream. Is it the Central Bank that decides on the product? Does it have to vet every product that is sold by individual financial institutions, be it a credit union, banking service or insurance company that is providing the product? Where does the buck stop? Senator McDowell has raised a very legitimate question. It could be an individual at the lower end of the scale that makes the decision on the sale of the product. Perhaps he or she did not properly understand what senior management said, or he or she did not interpret the rules properly and ended up in hot water. As Senator McDowell says, they are on their own. I presume there is no free legal aid for them, unlike what Deputy Paul Murphy was able to tap into when he went to court.

I welcome the legislation. There must be accountability because we are dealing with people's money. However, issues arise, and I hope they are addressed when we go through the Bill in detail on Committee Stage. The Minister of State, Deputy Carroll MacNeill, is very capable in this regard and she will be able to give us the answers we require. Senator McDowell has raised an important issue about this aspect of the Bill.

I welcome the legislation that has been published, which is very important. The general public is looking in on the debate and people are looking for accountability within the banking sector itself. They will ask questions such as who the banking system is. The traditional bank manager in branches no longer exists. Technically, call centres have replaced them. If a person applies for a loan, he or she does it online. We do not know who we are dealing with, and we have no personal relationship with that individual. When a person rings a call centre to go through the details, one speaks to a different operator on each occasion. There is a lack of accountability regarding who is the individual dealing with the application. That is very questionable when it comes to having an effective banking system.

I always refer to what happened in west Cork in the past six to eight months when there was a proposal to close the automated teller machines, ATMs, throughout the entire area. Castletownbere would have been an hour from the nearest ATM if AIB got its way. That is what it proposed to do in rural parts of west Cork. The question is who the individuals in charge of the banking sector at a local level are. We do not know who they are any more. Traditionally, one knew one's bank manager on first-name terms and one could contact him or her but that is no longer the case. Now, the bank manager is assigned from Dublin and there is no personal connection. Because of that, the public will ask what we are doing to make sure that we have accountability when it comes to the people who make decisions on stocking loans or small farm developments. Now, it is literally done online in a manner that provides no accountability for the punter on the other end of the line.

To say the very least, that is questionable. We must have a line of accountability or otherwise it will fail.

An interesting point was made about vulture funds. Those of us who have people coming to our clinics who have issues with vulture funds, would have a better chance of contacting God than the companies involved. They are uncontactable. They do not return a letter, phone call or email. They are entities in the cloud that do not exist for anyone who has an issue pertaining to them. They are nearly as bad as the pillar banks we have. A significant issue arises with how we are going to ensure the required engagement and accountability. Perhaps it is personal to me, but I have never received a response to issues raised on behalf of constituents who come to my office, in particular in the past eight months. In that period there has been a significant change in how vulture funds are operating within the marketplace. I do not have the answer to that, but I am nervous about what their long-term game here is.

I very much welcome the legislation. I look forward to it being teased out. The public want accountability and now, unfortunately, they generally feel frustrated by the lack of accountability.

I will try to address the points raised by the Senators as best I can. Senator Lombard is correct to raise access to cash points. He will have heard me speak forcefully on the radio that morning about Castletownbere in particular and the impact that would have. As Minister of State with responsibility for financial institutions, credit unions, and insurance, one of the things I am very committed to doing is going to communities where there has been an exit by retail banks to speak with chambers of commerce and others about the impact on the operation of their businesses and the practical effects of it. I am also committed to augmenting and amplifying the role of credit unions as lenders to SMEs, mortgage lenders and the provision of cash services. An Post also provides cash services. I am very sensitive to the effect, in particular on rural Ireland, and the impact on towns where there has been an exit of retail banks and the impact on cash. Senators will be aware that the retail banking review that was published at the end of last year contains specific measures on access to cash. It is intended to bring forward the heads of a Bill on access to cash in 2023 as a response to precisely that issue and making sure that cash is available. I can discuss that with Senator Lombard in greater detail at any stage. I thank him for raising the point.

He also raised a point about engagement with non-bank lenders. Senator Martin raised a similar point. I am familiar with the difficulty from my constituency work. I have brought that experience to the Department of Finance and used it in my engagements to date. The Minister for Finance is also very aware of it and has discussed the broad issue with the Governor of the Central Bank, with whom he speaks regularly, as well as the lack of engagement by non-bank lenders and whether the Central Bank believes it may need further powers to address any of the concerns Senators have validly raised today. I will try to update the Seanad on that in due course.

The point Senator McDowell raised, which was also raised by Senator Burke, related to the power of the Central Bank. They are correct to highlight it if is about finding the right balance. Senator Gavan outlined the change that was introduced in the UK some seven years ago. The effect it has had on organisations there is that it has become a cultural issue within organisations. It has become about centralising the cultural question around individual accountability but at CEO level, so it is not something just for compliance, it relates to the whole-of-bank or whole-of-institution function and is driven by the CEOs office. The broad thrust of it is a complete cultural change through every aspect of the organisation. Senators are correct that there must be fair procedures in every aspect of this.

I would go back to the appeals process that is there in the event of an individual being unhappy with the outcome or the process of a Central Bank investigation with the Irish Financial Services Appeals Tribunal, of which the chairperson had been Mr. Justice John Cooke. There are a number of solicitors and barristers on that to ensure fair procedures in regard to the appeals process.

There have to be fair procedures at every stage. I want to go through some of the engagement that was correctly highlighted with the committee at an earlier stage. The fair procedures have to work both ways. For example, there is the six-year rule highlighted by Senator Black and the look-back in regard to fitness and probity. The reason that is being introduced is that there was a concern that a person who had reason to believe they would be the subject of a fitness and probity investigation could prevent the investigation by simply resigning, that is, by a strategic resignation in advance of that, which limits the opportunity to conduct that investigation. This is a measure to reverse the balance of fairness on that side.

Senator Gavan raised section 15 around the discontinuance of an investigation. I will make two points in that regard. First, the Senator focused on resources. The Minister, Deputy Donohoe, when he wrote back to the committee that had raised that question, said he wholeheartedly agreed that the Central Bank should not be prevented by lack of resources from conducting any investigation that it considers necessary. To quote the Minister, he said it is “a view with which I wholeheartedly agree”. He went on to say that it was entirely within the discretion of the Central Bank as to whether to conduct the investigation or not, and a corollary of that discretion is the discretion to cease or discontinue it. It is not simply a question of the Government holding back resources from the Central Bank. It is about the discretion of the bank to continue with it or otherwise.

Second, that section is also very important because it speaks to the need to provide an individual with the reasons for the discontinuance of an investigation, and it speaks directly to the point Senator McDowell has raised around fair process. If I am investigated for something and the investigation is ceased, the mere fact of the naming of the fact I was investigated could act as a barrier to my future employment or to my opportunities elsewhere. The reason for discontinuing the investigation should be as transparent as the taking of it in the first instance. As I see it, the change in section 15 is a measure to try to rebalance that.

With regard to the delay, it was not a matter of cynicism from the Government but due to awaiting the outcome of the Supreme Court case in regard to fair procedures across financial institutions and the State more broadly. The Zalewski case, which I referenced in my opening remarks and which required much better and fairer procedures right across the board, only concluded in 2021, so there was some period needed to implement that.

Senator Black highlighted what came out of the retail banking review in regard to bonuses. When I look at the banking sector, some people jump immediately to the executives within the banking sector, whereas I actually look at the many thousands of people who work at clerical and middle management level, all of whom were prevented from receiving any sort of recompense in a way that might easily have been obtained in other sectors. That has to be addressed over time.

The crucial point about this legislation is that it is about trying to improve culture more broadly, trying to balance fair procedures and trying to be proportionate. While the penalties may vary up to €1 million for an individual, the necessity is to be proportionate at every level, and I know Senators will be well aware of that. There is provision for training and for relevant resources in that regard. Much of the balance around that can be addressed in the consultation period. It is my understanding that the Central Bank will leave that open for a period of up to three months, with three months for analysis, and that is following the consultation that has already been done.

We look forward to engaging further on Committee Stage. This Bill is the latest step in enhancing the Central Bank’s regulatory powers. Senators are correct to raise the role of the Central Bank and the financial services architecture generally in the crash. There has been a real focus on transforming the culture within the State's response to that but also the culture in financial services organisations. That has been a key focus of financial regulators in general internationally in recent years.

This Bill will place the Central Bank among the most forward-looking of those regulators.

As the House is aware, the Bill has been the subject of ongoing consultation and pre-legislative scrutiny going back to April, and I know the Minister has addressed the points raised by the committee at that stage. Of course, it has been through the House. This really is about driving individual accountability for decision-making at all levels but particularly at senior level in financial institutions. The overall aim is one that is protective rather than trying to be punitive. It is trying to prevent misdemeanours from happening in the first place by encouraging a genuine cultural change driven, as I said, at CEO level and managed from the office of the CEO. Success will not be measured in terms of the number of sanctions meted out but by a transformation and enhancement of culture, which I hope will make enforcement less necessary.

Like everybody in the Seanad, I want to see a financial services sector that prioritises customers, that is well and highly regulated and where honest, ethical and professional behaviour is the default for everybody working in the industry. This Bill adds to the changes we have already made and will help to ensure the financial services industry in Ireland is one that meets those needs. We have an internationally well-regarded regulatory system for financial services here. It is a mark of respect to have Irish regulation as opposed to other regulation elsewhere, and it is, if not a strong marketing tool, then a strong tool in the arsenal of any organisation precisely because of how well-regulated we are now comparatively. This Bill adds to that and adds to the quality of regulation. I commend it to the House.

Before we move on, I welcome the ladies from the ICA group in Santry. They are very welcome to the Visitors Gallery and I hope they have a very good visit.

I must now put the question. Is it agreed?

Senator McDowell is a long-standing Member of the Houses of the Oireachtas and he has made this point on more than one occasion, in his defence. We might discuss this at the Committee on Parliamentary Privileges and Oversight, CPPO, with the leaders and Whips. The Senator has made the point repeatedly about time allocation for debates, and I think he is correct.