Regulatory investigations: launch of Central Bank of Ireland consultation

Further to the signing into law of the Central Bank (Individual Accountability Framework) Act 2023 (IAF Act) on 9 March, and its partial commencement on 19 April, the Central Bank of Ireland (Central Bank) has now launched a 12 week consultation on amendments to its Administrative Sanctions Procedure (ASP). The Consultation Paper is accompanied by draft ASP Guidelines.

Overview

The IAF Act introduces a number of changes to enhance the Central Bank's ASP under Part IIIC of the Central Bank Act 1942. The Consultation Paper and draft ASP Guidelines seek to clarify these various legislative amendments to the ASP and the Central Bank's approach to these amendments.  It also reflects a number of policy amendments to the operation of the ASP that the Central Bank is also proposing to introduce. Additionally, the Consultation Paper sets out transitional guidance to provide clarity as to the practical impact of these amendments to the ASP on both new and existing investigations and inquiries.

Key changes

The draft ASP Guidelines consolidate the existing published ASP Outline 2018, Inquiry Guidelines 2014 and ASP Sanctions Guidance 2019 into a composite set of new ASP Guidelines. At a glance, the draft ASP Guidelines address the following key legislative and policy changes to the Central Bank's ASP:

 

Legislative changes

Policy Changes
  • Introduction of a statutory ASP investigative process, including a new role of Responsible Authorised Officer and an investigation report process
  • New requirements in relation to the functional separation and the independent performance of certain Central Bank functions under the ASP
  • Extension of ASP scope to include ability to take direct enforcement action against all individuals in controlled functions for breach of individual obligations (e.g. under the Additional and Common Conduct Standards under the Individual Accountability Framework)
  • A duty to provide reasons for the discontinuance of an investigation
  • Amended disqualification sanctions for individuals
  • Introduction of a new sanction of imposition of conditions on individuals
  • Non-exhaustive prescribed sanctioning factors for individuals
  • Inquiry member appointments to be made from a panel established by the Minister for Finance
  • Codification of the civil standard of proof (i.e. on the balance of probabilities) in ASP inquiries
  • Three distinct ASP settlement processes available during the investigation process
  • Provisions for confidentiality, absolute privilege from defamation and the operation of disclosure agreements relating to the disclosure of legally privileged material
  • Revised provisions in relation to court confirmation of sanctions and the conduct of appeals

 
  • Earlier disclosure of documents to subjects of an enforcement action
  • Reconsideration of the stages at which discounts on monetary penalties are potentially available as part of any settlement arrangement
  • Articulation of factors where settlements involving ‘no admission of liability’ will likely be unsuitable
  • More detailed guidance on procedures pertaining to the conduct of ASP inquiries
  • Clarity as to the role of the Central Bank's enforcement division at an ASP inquiry, including regarding the making of submissions, leading evidence and examining witnesses
  • Publication of the Central Bank's general approach to the determination of sanctions
  • Publication of methodologies for the determination of monetary penalties for both firms and individuals

Next steps

The ALG Regulatory Investigations team will provide you with further updates on what the consultation and draft ASP Guidelines mean for you and your firm over the coming days. 

The consultation will remain open for 12 weeks from 22 June 2023 to 14 September 2023.

This consultation is another important stage in the implementation of both SEAR and the IAF in our regulatory framework. To aid clients/stakeholders in this engagement, we will be publishing a detailed analysis of the consultation and draft ASP Guidelines shortly.

Visit our Individual Accountability Framework website for further materials and thought leadership on this important topic, including our 'ALG Guide to the IAF and SEAR' addressing the core concepts and practicalities of the IAF and what it means for your implementation project, and our 'ALG Guide to Central Bank Consultation and draft Guidance' providing a detailed overview of the Central Bank's consultation on key aspects of implementation of the IAF launched in March.

For further information on the Individual Accountability Framework and SEAR, and how ALG can assist your business, please contact Dario Dagostino, Partner, Mark Devane, Partner, Chloe Culleton, Partner,  Patrick Brandt, Partner, Christopher Martin, Of Counsel, Sian Langley, Knowledge Lawyer, Duncan Inverarity, Partner, Noeleen Meehan, Partner, Michael Doyle, Partner, James Grennan, Partner, Laura Mulleady, Partner, Sinéad Lynch, Partner, Emma Martin, Of Counsel, Kerill O'Shaughnessy, Partner, Charlie Carroll, Partner, Gillian McDonald, Partner. Or your usual contact on the ALG SEAR team.

Date published: 23 June 2023.