High Court Approves Administrative Sanctions Regime Against Former Officer

The High Court on 4 January 2016 refused a judicial review of the administrative sanctions procedure (the "ASP") commenced by the Central Bank of Ireland (the "CBI") against Michael P Fingleton, a former director and chief executive of the Irish Nationwide Building Society ("INBS") (Fingleton v The Central Bank of Ireland [2016] IEHC 1).

This decision is the first judicial analysis of CBI's powers under the ASP. The ASP allows CBI to investigate regulatory breaches by a regulated institution. An ASP can lead to a caution, reprimand, a fine of up to €5 million and/or disqualification. The regulated institution and those concerned in its management, e.g. directors and other officers, can be the subject of an ASP. The applicant's challenge centred on the interpretation of CBI's statutory powers to pursue the ASP against a person who is no longer an officer of the regulated institution. The challenge failed.

Background

The applicant was a director of INBS from 1971 until January 2008. He was then chief executive officer until April 2009. INBS collapsed in 2008. CBI presented evidence that the collapse of INBS resulted in a cost to the Irish taxpayer of €8 billion (albeit that this figure was disputed by the applicant). In February 2011 all of INBS' deposits were transferred to Permanent tsb and in July 2011 all of INBS' remaining assets and liabilities were transferred to IBRC at which point INBS ceased to carry on business.

In January 2012 CBI informed the applicant that it was embarking on an examination of suspected contraventions of financial services law by INBS. In March 2012 the applicant confirmed, through his then solicitors, that he would assist and co-operate with the CBI. However, he subsequently changed his position and, in May 2012, he informed CBI that he would not participate. On 9 July 2015 CBI served a notice of inquiry concerning INBS on the applicant, INBS and others. On 15 July 2015 CBI entered into a settlement agreement with INBS under the ASP whereby INBS admitted "multiple breaches" of regulatory provisions and consented to a fine of €5 million (the statutory maximum). In the light of INBS' insolvency CBI said that it did not intend to pursue recovery of the fine.

The decision

The applicant's challenge focussed on a point of statutory interpretation. He contended that the legislation establishing the ASP meant that CBI could not begin an ASP against a person who was no longer an officer of a regulated institution. This...