Central Bank to crack down on small firms breaking rules
The Central Bank plans to use disciplinary actions against smaller firms that get caught breaching finance rules to demonstrate its seriousness as a regulator.
The warning is contained in a statement setting out the bank’s enforcement priorities for the year.
It says resources have been specifically allocated for enforcement actions in relation to smaller firms, which have less day-to-day contact with the regulator.
“Where breaches by small firms are discovered, we will use enforcement as a reminder that the regulatory rule book is mandatory, and non-compliance is regarded as serious.
The approach “promotes compliance through deterrence”, the statement said.
The Probability Risk and Impact System (PRISM) regime used by the bank means most of its resources are focused on supervising the biggest and most systemically important finance firms – including the main banks.
As a result, smaller “low impact” firms are subject to less heavy touch control.
Last year, the Central Bank levied €6.348m of fines and settled 16 enforcement actions against regulated firms.
Yesterday, it set out enforcement priorities for this year.
They include compliance with money-laundering rules and so-called “fitness and probity” regulation setting out standards for staff in the finance sector.
For the banks and credit unions the focus includes compliance with prudential requirements and having adequate systems and controls in place.
Markets supervision will include a focus on large exposures to risk and compliance with international business rules.
On the consumer side the focus will include enforcing compliance with the Code of Conduct for Mortgage Arrears, standards for smaller entities such as debt management firms and a focus on professional indemnity insurance.
The Central Bank also published a programme of what it called “themed reviews and inspections” for the year.
It includes a focus on the fund administration sector, which is a large employer here, heavily focused on the Irish financial services sector (IFSC) in Dublin.
Reviews will also look at advertising of financial products, levels of compliance with rules for lending to small and medium enterprises (SMEs), and publication of information on fees and charges.