The Central Bank of Ireland’s Director General, Financial Conduct today set out her priorities for the recently created financial conduct pillar of the Central Bank. Speaking in UCD, Derville Rowland highlighted the vital importance of trust and confidence in financial services and the system of regulation, and added that the accountability of senior personnel in regulated entities should be strengthened.
She outlined her vision for the financial services sector as a system “underpinned by a strong culture of compliance, with firms and the people working in those firms acting in the best interests of their customers, backed up by comprehensive and enforceable legislation, rigorous supervision, and a credible threat of enforcement including powers of redress when consumers have suffered detriment.”
Noting that financial misconduct issues are to be found in all countries, she discussed the challenge facing regulators to shift cultural norms in regulated entities: “We continue to challenge the effectiveness of the underlying culture in banks. Starting in April, the Central Bank will undertake behaviour and culture assessments at each of the five main lenders – AIB, Bank of Ireland, Ulster Bank, PTSB and KBC – and will report our findings to the Minister for Finance later this year.”
She added: “I am optimistic. There are other compelling examples which demonstrate how culture and attitudes can be changed for the better when strong leadership is provided. I am thinking, for instance, of how Ireland led the way with the introduction of the workplace smoking ban in 2004 which was subsequently widely adopted elsewhere. You only have to look around you to see how culture can be shifted and how regulation can improve lives.”
She also discussed the Central Bank’s recent response to the Law Reform Commission paper “Regulatory Enforcement and Corporate Offences”. She said: “In our recent response to a Law Reform Commission paper, the Central Bank recommended that reforms strengthening the accountability of senior personnel in regulated entities be adopted in this jurisdiction. This would help assign responsibility to individuals in a regulatory context and decrease their ability to claim that the blame for wrongdoing lay elsewhere.”
She concluded: “The vast majority of those working in the financial services sector are people who want to do the right thing by their customers, their shareholders, their communities and the economy in which they and their families work and live. I am confident that with the right leadership in financial services firms, they can build a financial services industry that will deliver better outcomes for consumers and investors.”