One would reasonably expect that, under a system of governance that is guided by the fundamental principles of honesty and fair play set down within its Constitution, a System of Justice, whereby all men are equal under the Law, would prevail.
But, as we have shown, the Irish legislature has shown an exceptional and continued reluctance to explicitly codify the principles of Common Law Justice and Criminal Law Justice within its Financial Services legislation.
The ‘tentacles of influence’ of the Financial Services Industry on those with power over the Legislative and Regulatory process had been so extensive that they were able to ensure that the forces of Common Law Justice and Criminal Law Justice would never be brought to bear on Financial Services Institutions and their Management Personnel.
Following years of sustained pressure for statutory reform of the Financial Services Industry, largely (it must be said) from outside Ireland — by way of European Community Directives, the Irish legislature, on the 22nd April 2003, enacted the Central Bank and Financial Services Authority of Ireland Act 2003.
Under Section 4 of this Act, the body corporate, formerly called the ‘Central Bank’, was renamed the ‘Central Bank and Financial Services Authority of Ireland’ (CBFSAI) and, under Section 26, the Regulatory Authority was established within, and as a constituent part of, this body corporate. (See Section 2.6.7: A Stitch-Up in Time.)
The primary function of the Regulatory Authority was to perform the functions of the Central Bank and Financial Services Authority in relation to the regulation of financial services providers and in relation to the protection of consumers dealing with those providers.
In performance of its function, the Regulatory Authority was therefore charged with enforcing the various Codes, Conditions and Requirements, governing Financial Services matters, as had been previously issued under the statutory authority of the Central Bank, and, with imposing and enforcing new Rules and Regulations.
The repealed Section 33 provisions of the Central Bank Act 1942 (the Principal Act) were replaced by new Section 33 provisions under Section 26 of the Central Bank and Financial Services Authority of Ireland Act 2003.
Section 33AK of the Principal Act (the Central Bank Act 1942) now imposed a statutory obligation, subject to certain confidentiality gateways, on the Bank (Central Bank and Financial Services Authority) to report to the respective Statutory Bodies, i.e. the Garda Síochána, the Director of Corporate Enforcement, the Revenue Commissioners and other such Bodies, any information relevant to that Body that leads the Bank to suspect that:
| (a) | a criminal offence may have been committed by a ‘supervised entity’, or |
| (b) | a ‘supervised entity’ may have contravened a provision of the Companies Acts or the Competition Act. |
Note! A ‘supervised entity’ means any person or body in relation to which the Bank exercises functions under the designated enactments or the designated statutory instruments.
Following from the 2003 Act, the Irish legislature, finally, under the Central Bank and Financial Services Authority of Ireland Act 2004, gave statutory effect to the supplementary statutory provisions necessary to the functioning of the newly formed Authority.
These statutory provisions included:
| ♦ | provisions governing the operation of the new Financial Ombudsman Service, and |
| ♦ | provisions empowering the Financial Services Regulatory Authority to impose sanctions on Financial Services Institutions and their Management Personnel for prescribed contraventions. |
As already related in Section 2.6.7, A Stitch-Up in Time, the Financial Services Industry lobby succeeded in ensuring that the provisions of this 2004 Act stipulated that ‘a consumer is not entitled to make a complaint [to the Financial Services Ombudsman] if the conduct complained of occurred more than 6 years before the complaint is made’, this, notwithstanding the status, in Law, of such conduct, i.e. notwithstanding the presence of fraud or concealment by the Financial Services Institution.
Under the provisions of Section 10 of the 2004 Act, by insertion of new Section 33AQ into the Principal Act (the Central Bank Act 1942), the Regulatory Authority may impose a monetary penalty of up to €5,000,000 on a Regulated Financial Service Provider that has committed a prescribed contravention, and up to €500,000 on a person, concerned in the management of a Financial Services Provider, who has participated in its commission of a prescribed contravention.
These monetary penalties were presented with much fanfare by the Irish legislature and its ‘Central Bank and Financial Services Authority’, as proof that a System of Justice was being brought to bear on the Financial Services Institutions and their Management Personnel, and as a rebuttal to those who contended that a cosy relationship existed between the ‘Central Bank / Financial Services Regulatory Authority’ and the ‘Financial Services Institutions and their Management Personnel’.
Under interpretation of Section 10 of the Central Bank and Financial Services Authority of Ireland Act 2004, a prescribed contravention includes a contravention of –
(a) a provision of a designated enactment or designated statutory instrument, or
(b) a code made, or a direction given, under such a provision, or
(c)any condition or requirement imposed under a provision of a designated enactment, designated statutory instrument, code or direction.
BUT, once again, the Irish legislature, under the guidance of its Competent Authority, The Central Bank and Financial Services Authority, chose continuance of its protectionist policy with respect to the interests of the Financial Services Institutions and, more particularly, with respect to the interests of the Management Personnel of those Institutions, in preference to empowering and protecting the wronged party / consumer to the equivalent extent of U.K. Legislation. (See Section 2.5.5.)
Once again, it ensured that a breach of a Code, Condition or Requirement, as previously issued by the Central Bank or as subsequently issued by the Regulatory Authority, was not codified under statute as a cause of action for damages by the wronged party / consumer against the offending Financial Services Institutions, as has been the case in the U.K. (to the full knowledge of the Irish Legislature and its Competent Authority) since as far back as April 1988.
But, again, the greater denial that an equitable System of Justice operates in Ireland is evidenced by the Irish legislature’s continuance with the omission of provisions from its Financial Services Legislation that give statutory effect to an offence for FRAUD perpetrated against another person by a Financial Services Institution or its Management Personnel.
The extent to which such omission mocks Justice must be seen in light of the fact that a contravention, of the most substantive overriding principles codified within the Central Bank’s and Financial Services Regulatory Authority’s Codes, Conditions and Requirements, constitutes FRAUD, and in light of the fact that the Irish legislature and, most particularly, its Competent Authority, The Central Bank and Financial Services Authority, had full knowledge of the fact that similarly worded contraventions have consistently given rise to a criminal offence under U.K. Statute Law governing Financial Services.
(See Section 2.5.1, U.K. Financial Services Act 1986, and the boxed NOTE! at the end of Section 2.6.3.)
If you’re now beginning to get a somewhat uneasy feeling that all men are not equal under the Law in Ireland ─ Read on!
Consider first the following core principles of the more recent, and again much trumpeted, Consumer Protection Code issued by the Irish Financial Services Regulatory Authority in July 2006.
A regulated financial service provider must ensure that
—— in all its dealings with customers, and
—— within the context of its authorisation
| Principle 1 | it acts honestly, fairly and professionally in the best interest of its customers and the integrity of the market. |
| Principle 3 | it does not recklessly, negligently or deliberately mislead a customer as to the real or perceived advantages of any product or service. |
| Principle 6 | it makes full disclosure of all relevant material information, including all charges, in a way that seeks to inform the customer. |
Note the similarity between Principles 1 and 3 and the Requirements previously issued by the Central Bank, both in its June 1996 Code of Conduct and in its November 2000 Code of Conduct, under power of the Investment Intermediaries Act 1995. (Again, see the boxed NOTE! at the end of Section 2.6.3.)
Again, a breach of the highlighted elements of Principles 1 and 3 clearly constitutes Fraud.
Also, a breach of Principle 6 would, in most instances, constitute Fraud. Such failure to disclose by the regulated entity would, beyond any reasonable doubt, be a deliberate silence with respect to the material information concerned; it would therefore have equivalence to an active concealment of that relevant material information from the customer. Such silence would constitute Fraud.
Remember that a contravention of the above highlighted core principles from the Consumer Protection Code would constitute a prescribed contravention under the Central Bank and the Financial Services Authority of Ireland Act 2004!
The corollary is, therefore, that — such a prescribed contravention would constitute Fraud, both at Common Law and Criminal Fraud.
The Central Bank and Financial Services Authority SHOULD BE reporting such Fraud to the relevant Statutory Bodies, i.e. the Garda Síochána, the Director of Corporate Enforcement (see the extract elements of Section 33AK of the Central Bank and Financial Services Authority of Ireland Act 2003 above), and NOT allowing such conduct by those within the Financial Services Sector to be, cosily, categorised and dealt with, as merely being a breach of one of its 1996 or 2000 Codes, or of the similar provisions within any of the versions of its Regulatory Authority’s Consumer Protection Codes.
Now! Consider the following Section 10 provisions within the Central Bank and Financial Services Authority of Ireland Act 2004!
(Again, these provisions were given effect by amendments to the new Section 33 of the Principal Act, the Central Bank Act 1942. For convenience, the reference numbers used below direct you to Section 10 of the Central Bank and Financial Services Authority of Ireland Act 2004, with the relevant Section 33 amendment to the Principal Act noted alongside.)
Under Section 10/33AR of the Act:
If, in a case where the Regulatory Authority suspects on reasonable grounds that a regulated financial service provider is committing or has committed a prescribed contravention, the financial service provider acknowledges that the financial service provider is committing or has committed the contravention, the Regulatory Authority may —
with the consent of the financial service provider, dispense with an inquiry and impose on the financial service provider any sanction that it is empowered to impose.
Similarly, with a person concerned in the management of a regulated financial service provider, the Regulatory Authority may dispense with an inquiry and impose on that person any sanction that it is empowered to impose.
Under Section 10/33AV of the Act:
If the Regulatory Authority suspects on reasonable grounds that—
(a) a regulated financial service provider is committing or has committed a prescribed contravention,
(b) or a person concerned in the management of the financial service provider is participating or has participated in such a contravention,
It may enter into an agreement in writing with the financial service provider or person to resolve the matter.
The Regulatory Authority may enter into an agreement under this section — without having held an inquiry into the matter, or, after beginning (but not after completing) such an inquiry.
Under Section 10/33AS of the Act:
If conduct engaged in —
(a) by a regulated financial service provider constitutes two or more prescribed contraventions, or
(b) by a person concerned in the management of such a financial service provider constitutes participation in two or more prescribed contraventions by such a financial service provider,
an inquiry may be held in relation to one or more of the contraventions, but only one monetary penalty may be imposed in respect of the same conduct.
Under Section 10/33AT of the Act:
MARK THIS WELL !
If the Regulatory Authority imposes a monetary penalty and the prescribed contravention in respect of which the sanction is imposed is an offence under a law of the State, the financial service provider or other person concerned is not liable to be prosecuted or punished for the offence under that law.
Under Section 10/33AZ of the Act:
MARK THIS WELL !
- Except as provided by subsection (2) below, the Regulatory Authority shall hold its inquiries in public.
- The Regulatory Authority and the financial service provider or other person to whom an inquiry relates may agree that the inquiry should be held in private, but even if they do not agree, that Authority may nevertheless decide to hold an inquiry in private if it is satisfied that—
(a)evidence may be given, or a matter may arise, during the inquiry that is of a confidential nature or relates to the commission, or to the alleged or suspected commission, of an offence against a law of the State, or
(b)a person’s reputation would be unfairly prejudiced unless that Authority exercises its powers under this section
Under Section 10/33BC of the Act:
If the Regulatory Authority has held an inquiry and has found that—
(a) a regulated financial service provider is committing or has committed a prescribed contravention, or
(b) a person concerned in the management of the financial service provider is participating or has participated in such a contravention,
it shall publish the finding, and details of any sanction imposed in consequence of the finding, in such form as it thinks appropriate.
Similarly, where the Regulatory Authority has dispensed with an inquiry and imposed a sanction, it shall publish details of the Sanctions imposed.
BUT, and MARK THIS WELL !
The above compulsions to publish do not apply to findings or details that the Regulatory Authority determines —
(a) to be of a confidential nature or to relate to the commission of an offence against a law of the State, or
(b) would unfairly prejudice a person’s reputation.
In light of the above extracted provisions, we will now consider the situation where a ‘financial service provider’ or a ‘person concerned with the management of a financial service provider’ commits a contravention of one of the Central Bank’s or Financial Services Regulatory Authority’s Codes, where such a contravention constitutes Fraud, as highlighted above with respect to the Consumer Protection Code’s Principles 1, 3 and 6, or as highlighted previously (in the boxed NOTE! at the end of Section 2.6.3) with respect to both the Central Bank’s 1996 and 2000 Code of Conduct Requirements.
Note! Refer to the above extracted provisions from the Central Bank and Financial Services Authority of Ireland Act 2004 to follow the conclusive logic of what is set out below.Under Section 10/33 AR of the Central Bank and Financial Services Authority of Ireland Act 2004, the Regulatory Authority may dispense with an inquiry and impose a sanction.
Under Section 10/33 AV of the Act, the Regulatory Authority may enter into an agreement in writing with the Financial Service Provider, or person concerned in its management, to resolve the matter.
While, by Section 10/33 AZ of the Act, the Regulatory Authority is under statutory obligation to hold its inquiries in public, and while, by Section 10/33 BC of the Act, the Regulatory Authority is under statutory obligation to publish its findings following from an inquiry and also the details of any sanction imposed, the Catch 22 clauses within these respective Sections of the Act preclude the possibility of any such transparency in the application of Justice.
In a nutshell, if a financial service provider or a person concerned in its management commits a prescribed contravention that, in effect, constitutes Fraud, the Regulatory Authority is empowered to stifle all details on the matter.
This cosy set-up, not only protects the Financial Services Institutions and their Management Personnel from the forces of Statute Law to which the rest of us mere mortals, the ordinary people, are subject, it also ensures that those among the ordinary people, who are the victims of the fraudulent practices of the Financial Services Institutions and their Management Personnel, are, deliberately, kept ignorant of their just causes of action for damages under Common Law.
It is clear from the foregoing, and from the preceding Sections on ‘The Irish Position’, that, in Ireland, legislation specific to the Financial Services Industry, if enforced at all, is enforced behind closed doors, through a covert process whose foremost consideration is the protection of the Financial Services Institutions and their Management Personnel.
The Financial Institutions and, more particularly, their Management Personnel, are fully aware that such is the case. They, therefore, have little fear that the specifics of fraudulent practices perpetrated by them against others (be they consumers, customers or clients) will ever come into the public domain, even if they do come to the knowledge of the Regulatory Authority.
Add to this the fact that, under Section 10/33 AS of the Act, no matter how many times a Financial Services Institution or its Management Personnel engages in a particular course of conduct that constitutes a fraud against the consumer / customer / client, they know that, if their conduct ever comes to the attention of the Regulatory Authority, (a) they can only be penalised once, and (b) a limit is already set, under Statute, to the amount of that penalty. This is the situation no matter how much, or how often, the Management Personnel may have benefited, or have expected to benefit, by way of direct payment, commission, or apportionment to their salary as bonus, as a result of the fraud.
Add to this again the fact that, under Section 10/33 AT of the Act, IF the Regulatory Authority imposes a fine on a Financial Institution or its Management Personnel for a prescribed contravention, and such a prescribed contravention constitutes Fraud as described above, THEN, even if knowledge of such fraud does, somehow, come into the public domain, no criminal prosecution can be taken against either the Financial Institution or its Management Personnel for that offence.
Add to this again, a further impediment to Justice: the prevalence of an exclusive and totally self-serving attitude to what constitutes ‘a potential conflict of interest’.
Within the Financial Services Regulatory Regime in Ireland, the situation has been allowed to prevail, whereby the Senior decision-making Personnel within the Department of Finance and within the Central Bank and Financial Services Authority (formerly, The Central Bank), while carrying out their Legislative and Regulatory functions, do so with the historical expectation that a sinecure-type position may be made available to them within an Irish Financial Services Institution when they retire from, or choose to leave, the respective Department or Authority.
Note! We have already highlighted where, within the letter of the Code of Conduct for Insurance Intermediaries, the intermediary was expressly required to disclose ‘any potential conflicts of interest’ , and the laissez faire attitude of those within the Financial Services Sector to this express requirement. (See Section 2.6.1.)
For the ordinary people,
Dishonesty in dealings with others
———— constitutes Fraud.
The penalty for such Fraud, under Irish legislation, can be imprisonment for up to five, seven or ten years, depending on the time-phase in which the fraud was perpetrated. (This is discussed in Section 2.3.6: Fraud and the Conman —— U.K. Law and Irish Law.)
Yet, the Irish legislature, under the guidance of its Competent Authority, the Central Bank and Financial Services Authority, has not only seen fit to, deliberately, omit an offence for dishonesty (fraud) from legislation specific to the Financial Services Industry, it has contrived, within its legislation, mechanisms by which the Management Personnel of Financial Institutions can be covertly protected from the just penalties for Fraud, penalties to which the rest of Irish citizens (the ordinary people) are subject.
This is the ultimate prostitution of Justice within Financial Services legislation in Ireland.