The Central Bank has published details of two new settlements under its administrative sanctions procedure. In the first settlement, Ulster Bank was fined €1,960,000 for five liquidity and capital requirements contraventions. In the second, ICON Plc. was fined €10,000 for its failure to make market announcements within the timelines prescribed by the Market Abuse Rules.
The Central Bank has extensive powers under the administrative sanctions procedure to conduct an examination, and, if necessary, a formal inquiry, into a regulated entity, and its management, where it believes a breach of legislation or other regulatory requirement has occurred. The Central Bank may enter into a binding settlement agreement with the regulated entity at any time during the examination and up to the conclusion of the formal inquiry.
A total of 56 settlements have been reached under the administrative sanctions procedure since its inception in 2006. The latest settlements bring to twelve the number of settlements reached so far this year, the highest number in any given year. The fine imposed on Ulster Bank is the sixth largest fine levied.
In February, the Central Bank published its Enforcement Priorities for 2012 identifying 10 enforcement priority areas and a significant number of the twelve settlements reached this year relate to these priority areas.
Mitigating factors which may impact on the level of the fine/sanction imposed by the Central Bank include:
- Voluntary notification and full and timely disclosure of the breach
- A thorough examination, by the firm being investigated, of the circumstances giving rise to the breach
- Timely corrective action
- Full co-operation with the Central Bank and settlement at an early stage
- Implementing effective procedures to minimise the likelihood of re-occurrence
- Taking appropriate action to ensure accountability
Factors which may exacerbate the fine/sanction imposed include:
- Breaches of the Central Bank’s 10 priority enforcement areas
- Breaches over extended periods of time
- A negative impact on clients
- A high volume of breaches
The settlement with Ulster Bank is particularly noteworthy in that the Central Bank, in deciding the appropriate penalty, took into account that Ulster Bank took appropriate action to ensure accountability, resulting in individual performance reviews and compensation packages being impacted. This is the first time that a firm fined under the administrative sanctions procedure has publicised that the compensation of staff involved has been affected and that the Central Bank has identified this as an influencing factor.
It is clear that the Central Bank is continuing to focus significant resources and attention on the area of enforcement. Where serious breaches occur, regulated entities, and the personnel deemed responsible for the breaches, can expect vigorous investigation together with significant fines and sanctions.