# The factors the Central Bank consider in determining what fine to impose on lenders



## Brendan Burgess (24 Sep 2020)

This is from the KBC decision. 

*Penalty Decision Factors*
In deciding the appropriate penalty to impose, the Central Bank considered the ASP Sanctions Guidance issued in November 2019. The following particular factors are highlighted in this case:

*The Nature, Seriousness and Impact of the Contraventions*
1. KBC proactively devised and implemented a strategy to permanently convert customers off their tracker rate resulting in KBC’s financial interests being prioritised over the best interests of customers;
2. The duration and frequency of the breaches, with 3,741 impacted customer accounts identified during the course of the investigation, the earliest breach having commenced on 1 June 2008 and the latest breach being 2 October 2019, resulting in customers being overcharged interest for extended periods. The duration is particularly serious given the historic intervention by the Regulator, a pattern of intervention which was repeated throughout the TME;
3. 66 properties were lost as a direct result of KBC failing their customers, which is particularly serious when 39 of those losses arose from KBC’s failures to Stop the Harm to its customers during the conduct of the TME;
4. The contraventions represent a serious departure from required standards under the Consumer Protection Codes and the Principles of the TME;
5. The failure by KBC to include all impacted customer accounts in the TME quickly and without intervention by the Central Bank, leaving over 3,600 customer accounts without redress and compensation and to have their account balance adjusted for a period of up to 2 years;
6. The negative impact on consumer confidence in the market as a result of KBC’s failings; and
7. The operational and system weaknesses that led to failures to protect customers.

*Aggravating factors*
1. The failure to take adequate remedial steps after the breaches were identified, including a failure to adequately identify whether customers were impacted and attempting to exclude potentially impacted customers from the protections of the TME;
2. KBC provided incorrect information to the Regulator with the result that sustained harm was suffered by certain customers. If KBC had provided correct information that customers had in fact lost their trackers, harm could have been stopped in 2009 and customers remediated then rather than 8 years later when KBC’s failure was discovered;
3. KBC’s failure to meet the Central Bank’s expectations of adequate cooperation in the context of the investigation by failing to adequately respond to a number of statutory requests for information in a comprehensive and timely manner, necessitating significant challenge and intervention by the Central Bank, which wasted investigatory resources and caused delay in the Central Bank’s ability to progress the investigation;
4. The Previous Record of the Regulated Entity*: *KBC has been subject to one prior Enforcement Action; and
5. The need for a credible deterrent in respect of these serious regulatory failings on KBC and other regulated entities.


----------



## TomTron (3 Jan 2021)

It makes you wonder what has to be done in this country to be at risk of losing your banking license.

I picked this comment from the Central Bank Enforcement Action Notice on KBC:

"In addition, the investigation found that KBC had inadequate mortgage systems and/or operational controls in place to enable them to meet their regulatory and contractual obligations to certain customers."


----------



## NoRegretsCoyote (3 Jan 2021)

TomTron said:


> to be at risk of losing your banking license.


Supervisors will almost never withdraw a license as it means resolution of the bank which has huge implications for shareholders, depositors, counterparties, etc.


----------

