In a recent interview with the Financial Times, Director of Enforcement at the Central Bank of Ireland, Derville Rowland, has said that Ireland is “a long way down the road” in cleaning up the worst excesses of the Celtic Tiger lending boom that ended in collapse and near-bankruptcy eight years ago. Part of this process of restoring Ireland’s reputation for effective financial regulation has involved a significant increase in the level of fines to €12 million in 2016, up from €6.5 million in 2015.

For Ms Rowland, the fines are particularly effective when employed in combination with public disclosure of findings of wrongdoing. “Fines alone are not sufficient,” she says, “it’s the detailed information about the case that tells the story of what happened.” What she calls the “signalling” effect of such public disclosure “can often be the most uncomfortable for firms and individuals. It is the key to successful enforcement.”

This is especially important, Ms Rowland believes, in cases involving mortgage lending where banks and other financial institutions manipulated interest rates in an effort to boost profitability, particularly in the case of “tracker” mortgages, where interest rates follow those of the European Central Bank. The Central Bank of Ireland estimates that up to 15,000 tracker mortgages may be affected by mispricing.

In line with this, Springboard Mortgages, a defunct sub-prime lender, was reprimanded and fined €4.5 million in November for mispricing mortgages that resulted in some customers repaying tens of thousands of euros that they did not owe. It was the largest fine ever imposed by the Central Bank for business conduct or operational failures by a financial institution. In addition to the fine and reprimand, the Central Bank also required the firm to implement a major redress and compensation programme under which the it has provided redress and compensation to customers impacted by the breaches in the amount of approximately €5.8 million to date.

As part of a press release notifying of the settlement reached between Springboard and the regulator, Ms Rowland said the following:

“The imposition of the fine and reprimand, in addition to the redress and compensation programme, demonstrates the Central Bank’s determination to take all necessary action in order to protect customers’ best interests, and serves as a clear and timely warning to all regulated firms of their obligations to customers.”

Notwithstanding the significant increase in fines levied, limits on public sector pay brought in during the country’s years of austerity have led to difficulties in finding and keeping key staff going forward. That puts the regulator at a crucial disadvantage, Ms Rowland says: “When we bring cases [to court] the banks always field their best teams. We must do the same.”