Eighteen executives who financial firms put to the Central Bank of Ireland for approval last year withdrew their names during the vetting process as supervisors pushed back.
Central Bank staff took part in 74 fitness and probity assessments last year of individuals nominated by banks, insurers and investment companies for senior positions that need approval from regulators, the bank said in its annual report, published last week.
“In 18 cases, the applicants withdrew their application during the process, typically before, during or after an interview,” it said.
A spokesman for the bank said the level of withdrawn applications last year marked a significant uptick from eight cases in 2017 and five in 2016.
The Central Bank’s frustration with the quality of some applications – and lapses by firms in making sure that their existing top staff are fit to do their jobs – prompted it to write a Dear CEO letter in April to financial firms warning of the responsibilities.
The letter highlighted a case where a person had a significant judgment against them and showed that the firm involved had "failed to take any steps to satisfy itself that the individual still complied with the requirements" under fitness and property rules. It was signed by Derville Rowland, director general for financial conduct, and Ed Sibley, deputy Central Bank governor.
The main reason behind the rules is to make sure people in senior positions in financial firms are competent, honest, ethical and financially sound.
“We have also observed a number of instances where individuals have not provided material information on their applications to the Central Bank for approval to senior roles,” said the letter, dated April 8th. “On occasions, applications have failed to disclose material facts which are either known to proposing firms, or would have been known if proper due diligence of their proposed candidates had been disclosed.”
The Central Bank also found cases where firms had suspended or dismissed individuals for wrongdoing but had failed to report the issue to the regulator, as required.
Additional powers
Minister for Finance Paschal Donohoe agreed last year to give the Central Bank additional powers it had been seeking to make senior financial figures more accountable individually for failings or wrongdoing under their watch.
However, the legislation paving the way for a so-called senior executive accountability regime has been delayed by Government preparations for Brexit.
Meanwhile, the Central Bank annual report said that the regulator had received 128 protective disclosures from potential whistleblowers on issues in regulated firms last year, up from 93 for the previous year. Each such report is thoroughly assessed, it said.
“Various actions followed the receipt of protected disclosure reports during 2018, including assisting an enforcement action, on-site inspections and risk-mitigation programmes,” it said.
A spokesman for the Central Bank said the reasons for the trend of increasing number of individuals making protected disclosures in recent years “may be varied”, without giving specifics.
“The receipt of protected disclosure reports is an important supervisory tool in allowing members of the public or staff members of regulated entities to provide such reports in a confidential form to the Central Bank,” he said. “Protected disclosure reports can provide information that might otherwise be unavailable to the Central Bank.”
