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CBI publishes new ASP Sanctions Guidance

  • Ireland
  • General

14-11-2019

On 14 November 2019, the Central Bank of Ireland (CBI) launched its Administrative Sanctions Procedure (ASP) Sanctions Guidance (the Guidance).

The Guidance sets out the CBI’s high-level overview of the factors it takes into account in deciding on what sanction, if any, to impose on a firm or individual under the ASP. The factors (as set out in the CBI’s 2018 Outline of the ASP) are:

  • The nature, seriousness and impact of the contravention;
  • The conduct of the regulated entity after the contravention;
  • The previous record of the regulated entity; and
  • Other general considerations

In her speech launching the new Guidance, the CBI’s Derville Rowland, Director General, Financial Conduct, emphasised the need for firms to demonstrate a positive culture in terms of how they deal with regulatory breaches. In particular, the CBI:

“expect[s] pro-active co-operation  with our investigations. That extends from self-reporting, through remediation and cooperation with the investigation, to proactive engagement with the settlement process, if it comes to that.”

The Guidance makes clear, for example, that adequate disclosure to the CBI in a timely fashion is a “neutral” sanctioning factor ie it is an expected minimum standard of behaviour. Firms will not get any credit for meeting this minimum standard.

On the other hand, responses to CBI requests that require protracted engagement with the CBI or are imprecise or deliberately vague “possibly with a view to frustrating the Central Bank investigation” will be treated as “aggravating” sanctioning factors.

Firms will benefit, in an ASP, from more favourable treatment by the CBI where they have demonstrated “exemplary co-operation”, which is treated as a mitigating factor. Such “exemplary co-operation” may include constructive engagement by the firm with the CBI’s investigation and proactive and voluntarily providing additional information to the CBI that assists the investigation.

Derville Rowland noted that the nature of a regulated firm’s engagement with the CBI is quite different to standard litigation because of the on-going nature of the regulatory relationship: “the parties do not walk away at the conclusion of an enforcement action, perhaps hoping that their paths never cross again.”

Accordingly, all regulated firms and individuals working in these firms will need to take full account of the CBI’s expectations regarding co-operation by firms and individuals and ensure that they have in place an appropriate strategy of constructive engagement with the CBI.

Failure to do so may well lead to increased fines and more negative publicity for firms where breaches occur and negative consequences for unco-operative individuals, including in the context of the Fitness & Probity regime (eg where the individuals apply for the requisite prior CBI approval to take up a senior, Pre-Approval Controlled Function role).

For further information, please contact:

Ciaran Walker, Consultant - CiaranWalker@eversheds-sutherland.ie

Pamela O'Neill, Partner and Head of Dispute Resolution & Litigation - PamelaONeill@eversheds-sutherland.ie

 

Disclaimer

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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