Bill will protect whistleblowers and double fines for financial institutions

PROTECTION FOR whistleblowers and a doubling in the maximum level of fines for financial institutions are among the new powers granted to the Central Bank under legislation published yesterday.

Minister for Finance Michael Noonan said the Central Bank (Supervision and Enforcement) Bill 2011 was a response to the regulatory failures of the financial crisis and would draw on the lessons of the recent past in Ireland and abroad. “The changes introduced by the Bill will underpin an assertive, risk-based model of regulation supported by a credible threat of enforcement,” he said.

Under part four of the Bill, whistleblowers who disclose information they believe is evidence of an offence will be granted protection from civil liability, meaning they will not be liable to pay damages to another person solely as a result of the disclosure they make.

The Central Bank is not permitted to identify whistleblowers without their agreement unless it is necessary to do so to ensure the matter is properly investigated.

The Bill also contains measures designed to prevent employers from victimising whistleblowers. The legislation states employers will not be permitted to penalise or threaten to penalise employees making disclosures to the Central Bank, unless the employee knowingly makes a false or misleading disclosure.

The definition of penalisation under the Bill includes suspension, layoff or dismissal; demotion or loss of promotional opportunity; transfer of duties; change of place of work; pay cuts; and intimidation and reprisal.

The Bill also beefs up the range of sanctions available to the Central Bank, including an increase in the maximum fine it can levy on financial services firms from €5 million to €10 million or a sum equivalent to 10 per cent of the firm’s turnover. The maximum fine for an individual found guilty of an offence will increase from €500,000 to €1 million.

Individuals or firms found guilty of offences will also be required to pay the costs of the Central Bank’s investigation. The Department of Finance said this would help mitigate against firms complying with the rules having to bear costs of enforcing the law against non-compliant firms.

The publication of the new legislation was a requirement of the EU-IMF bailout agreement and follows criticism of regulators for being too soft on financial institutions during the boom. The Bill is expected to progress to the second stage of the Dáil after it returns from its summer break.

The Central Bank also said yesterday that it would publish on September 1st a new set of regulations and standards relating to the fitness and probity of senior financial sector employees. The regulations will include a list of positions from which individuals can be removed or prohibited by the Central Bank, as well as the senior positions which must be approved in advance by the regulator.