For the first time ever, the Central Bank has exercised its powers of prohibition under the Central Bank Reform Act 2010 (the “2010 Act”). Mr Darren Gleeson, Tipperary hurler and formerly a director of a retail intermediary firm, has been barred from carrying out any senior management function in any regulated financial service provider for an indefinite period.
The prohibition framework is a separate, and parallel, system to the more commonly used administrative sanctions regime. Under the framework, an individual may be prohibited from carrying out a senior management function where the Central Bank has formed the opinion that they do not meet the appropriate standards of fitness and probity. In this regard, a prohibition can be absolute in prohibiting the individual from carrying out controlled functions in any circumstances, or simply attach conditions to their performance. The prohibition can also apply for a specific period, or indefinitely. In Mr Gleeson’s case, the penalty was both absolute and indefinite, and was the first ever occasion in which the Central Bank has chosen to avail of its power of prohibition.
The Central Bank refused to disclose the reasons for issuing the prohibition notice. The Central Bank can form the opinion that a person is not of the appropriate fitness and probity standard where: (a) the individual does not have the experience or qualifications necessary to fulfil the controlled function; (b) the person does not meet specific standards prescribed by the fitness and probity Code; (c) the individual has participated in serious misconduct in relation to a financial institution’s business; (d) the individual has provided false or misleading information to the Central Bank; (e) the individual has been convicted of money laundering, or an offence involving fraud or dishonesty.
The prohibition notice applied to Mr Gleeson confirms an emerging tendency on the part of the Central Bank to use the full extent of the regulatory toolkit provided to it in the aftermath of the financial crisis. Following the immediate enactment of the Central Bank Reform Act in 2010, the use of the separate administrative sanction and settlement procedure was the regulatory instrument of choice. However, the sanctions imposed on individuals under this procedure were relatively minor, usually in the form of reprimands, or monetary fines below €1,000. Now, with the use of the separate prohibition notice procedure, we see the Central Bank becoming ever more active.