Ethics and governance in the European Financial centers

In October 2005 statutory guidelines to the Administrative Sanctions Procedure were issued. These guidelines were issued by the Authority pursuant to a power in the 2004 Act and expand for staff of the Financial Regulator on the detail in the 2004 Act on how the Administrative Sanctions Procedure is to be operated. In addition, a non-statutory “Outline of the Administrative Sanctions Procedure” was also published. This is a high level explanation for regulated financial service providers of the process and procedure involved in the Administrative Sanctions Procedure and will be updated fromtime to time in light of experience
The following sanctions may be imposed:

Caution or reprimand;
Direction to refund or withhold all or part of an amount of money charged or paid, or to be
charged or paid, for the provision of a financial service;
Monetary penalty (not exceeding €5,000,000 in the case of a corporate and unincorporated
body, not exceeding €500,000 in the case of a person);
Direction disqualifying a person from being concerned in the management of a regulated
financial service provider;
Direction to cease the contravention if it is found the contravention is continuing;
Direction to pay all or part of the costs of the investigation and inquiry.

The Irish Financial Services Regulatory Authority (‘Financial Services Regulator’) does not communicate the cases. The information that is provided is less detailed than the information that is provided in Luxembourg by the regulator (CSSF) in the annual reports.

But the Irish Financial Services Regulatory Authority publishes warning notices naming firms, which operate, as investment business firms in Ireland without appropriate authorisation. Under the Investment Intermediaries Act, 1995, it is a criminal offence for an investment firm to operate in Ireland unless it has appropriate authorisation from the Financial Services Regulator. Clients of firms, which are not authorised, are not eligible for compensation from the Investor Compensation scheme.
In August 1998 the Central Bank of Ireland obtained legal powers to warn publicly about firms, which are not authorised. On 1 May 2003 these powers were transferred to the Financial Services Regulator.

Sources

Administrative Sanctions Guidelines

Outline of Administrative Sanctions Procedure

CP8 Consultation paper on administrative sanctions

Financial Regulator Response to CP8 Feedback

Response by Irish Bankers Federation (‘IBF’)

Warning Notices

Press release : 25/07/06

Financial Regulator publishes Annual Report 2005

During 2005, the Financial Regulator continued its work to foster a sound regulatory system to provide a safe and fair market for consumers of financial services and to develop sound prudential standards for the well-being and future expansion of credit unions. According to its Annual report, published today, (25 July 2006), by the end of 2005 it was responsible for the supervision of 9,638 firms and funds. The Financial Regulator has also identified a total of €118 million which is being refunded to thousands of customers for charging errors across 36 firms since 2004. Almost 1 million copies of its consumer publications were distributed and 23,000 consumer contacts were handled.

The Financial Regulator also presented the financial services industry with the new competency standards for those who provide advice on or sell retail financial products and the final version of the new Consumer Protection Code. Both were developed following extensive consultation with the industry and will be implemented over the coming months.

Speaking at the publication of the Annual Report, Chairman of the Financial Regulator, Brian Patterson said ‘Our duty as a single regulator reflects the need for a consistent approach across all sectors of the financial services industry where appropriate, something which until now has been missing. We spent much of 2005 preparing the groundwork for new unified requirements in the areas of competency for those dealing with consumers, the consumer protection code and revising fitness and probity procedures. The development and implementation of these requirements will go a long way to bringing this about.’

Patrick Neary, Chief Executive, said that sound financial institutions who put their customers interests first and which operated in a competitive market were a prerequisite for a vibrant and respected financial services industry.

“Today we have published new competency requirements designed to establish minimum standards for financial services providers, with particular emphasis on individuals dealing with consumers and who undertake certain specified activities. The requirements will come into effect from January 2007. We have also released the final consumer protection code which sets out to firms how we expect them to conduct their business dealings with consumers. The hard work now begins for firms as we begin the rollout of the code. Over the next few months as the code is put in place, firms will have to make the significant and necessary changes to systems, procedures and documents and conduct staff training in line with provisions of the code”.

“Building consumer confidence is an ongoing task, while much of the groundwork has taken place in 2005 and into this year, we have now set out our expectations and standards to the financial services industry. In 2007, we will also begin a campaign for consumers to educate them about their rights. We hope that this, combined with our supervisory efforts, will further strengthen the consumer’s hand when dealing with regulated firms.” he added.

During 2005 a total of 584 prudential, consumer focused and credit union inspections and reviews were carried out. As part of its role to monitor the safety and soundness of financial services firms, the Financial Regulator analysed over 57,000 returns and authorised 2,178 financial services providers and 582 funds. In the first six months of operation of the new prospectus regulations for the sale of securities, 861 documents were approved and there were a total of 39 enquiries, suspicious transaction reports and occasions when assistance was rendered to other competent authorities as part of the Financial Regulator’s new market abuse monitoring role. 33 reports of suspected criminal offences or breaches of company or competition legislation were also made to relevant agencies and the Financial Regulator acted on 115 advertising issues.

The Registrar of Credit Unions met with over 500 credit union volunteers as part of a series of 8 consultative roadshows and over half of all credit unions were visited. The provision of mortgage products was approved for 13 credit unions and 179 onsite visits to credit unions took place during the rollout of the new web based prudential return.

Staff from the Financial Regulator also attended 196 EU and international meetings as part of working on technical advice on EU directives and other regulatory policy development at international fora. A total of 161 responses were received to 9 consultations carried out during the year, including a review of fitness and probity requirements and on measures for the extension of regulation of reinsurance.


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The reduction of financial crime is one of the FSA's four statutory objectives: section 6 of the Financial Services and Markets Act 2000 requires FSA to aim to reduce the extent to which regulated persons and unauthorised businesses can be 'used for a purpose connected with financial crime'. Financial crime includes any offence involving money laundering, fraud or dishonesty, or market abuse. The objective interacts with the three other objectives – protecting consumers; market confidence; and public awareness.

The role of the FSA’s financial crime sector team is to co-ordinate and support the work of the whole organisation as part of the financial crime objective. Internally, this involves supporting colleagues around the organisation in identifying financial crime risks and how they can be mitigated.

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