IFSRA will be obliged to name and shame

From reading Bill 2, this is what will happen if there is a suspected breach of the Acts or codes by a financial institution.

IFSRA will investigate it. If the investigators think that there has been a breach of the codes, then, instead of bringing them to court, they will bring the case to a Regulatory Authority Sanctions Board

This board will be comprised of three members of a 9 member Regulatory Authority Sanctions Panel. These members will be mainly employees of IFSRA and the Central Bank,but may have specialist outsiders as well.

The Board will hear the case in public, although without the formality of a court hearing. For reasons of confidentiality, the board may hold the hearing in private.

The Board may impose the following sanctions:
• Caution or reprimand
• Order to refund a charge
• Fine of up to €5 million
• Order to pay the costs of the investigation


IFSRA will confirm or reject the findings and must publish the decision.

The Institution will have a right of appeal to an Appeals Tribunal or to the High Court.

Brendan

This does give IFSRA huge powers. I would love to see BCP defend its Quadruple Growth Bond in front of such a board in public.

However, I suspect it would be rarely used. But I suppose IFSRA would refer someone to the board quicker that it would refer them to a court. And the board would be a lot quicker and better informed than the court.

And the threat of such action by IFSRA will give them real power to change things.

IFSRA does not have any option - it must publish its findings. It must name and shame. That's great.

Brendan

IFSRA

Hi Brendan,

What act or code do you think BCP's Quadruple Growth Bond breaches ? I know you don't care for it as a product, but surely BCP would only have to "defend" it before IFSRA if it was in breach of its regulation.

Hi Dogbert

They are in clear breach of many aspects of the [broken link removed] of the Handbook for Investment and Stockbroking firms.

The most serious breach is:

1.3 Advertisers must ensure that the advert is fair and not misleading

If the product does not do what it says on the tin, then it is unfair and misleading.

Read the brochure and you will find other breaches of the Guidelines.

Brendan

IFSRA

It's been said that the the real test for IFSRA will be whether it is truly ready to take on their old friends publically.

There will be plenty of opportunities to do so including the awful practice of big banks selling Managed Funds to elderly depositors, but Brendan's run in with IFSRA where it sidestepped taking action about the Tracker bond ad doesn't instil confidence.

On the bigger picture its pretty clear that Anglo Irish and Irish Nationwide as well as others have been engaged in wholesale movement of capital out of the country to the IOM. Once again IFSRA has made no public comment, nor has the Revenue (though I think they mightn't be able to).

It's shameful to see small firms (rightly) hammered by Regulators, but relatively speaking bigger firms do much more damage and a big firm has never been hammered by any regulator in Ireland,ever. The reaction of the Regulator is not even handed in these instances I think.

Re: IFSRA

Hi Cindy

I don't think that there should be any objection to a bank moving large amounts of money out of Ireland, as long as the money is clean and subject to income tax.

The Revenue certainly is investigating such overseas deposits to make sure that they are clean. If it is found that a bank is still actively encouraging tax evasion, then IFSRA should and would get involved.

A perception problem has arisen that all money offshore is dirty money. As a result, some Irish banks have moved to close all offshore accounts. So the innocent holders of offshore accounts are being tarnished.

Brendan

In Breach ?

Hi Brendan,

Without going into too much analysis (a weak defence, I know) I'm not sure I'd agree with your comment above.

You can argue that the BCP description may not conform with the spirit of any "honesty" clauses, but it probably does conform with the letter.

The Bond does pay quadruple amounts in some limited circumstances. Are they clear about the limitedness of the circumstances ? No, but they probably don't have to be, as things are currently framed.

Anyway, if the brochure is truly non-compliant, wouldn't IFSRA be challenging them about it now, notwithstanding that the new "name and shame" provisions wouldn't apply ?

Re: In Breach ?

Dogbert

It never, ever pays quadruple the growth and it's called the "Quadruple Growth Bond".

There is a remote technical possibility that it might quadruple the losses though.

Brendan

Quadruple

Hi Brendan,

Sorry, may not have been paying enough attention. You said on a previous thread:

"The Quad Bond provides a multiple of the growth in a very narrow range - probably somewhere between 0% and 10%. "

I assumed that at some point that multiple was four times. Is that not correct ?

Addendum

And if they are indeed in breach of current regulations, shouldn't IFSRA be pursuing BCP with the current range of sanctions available to them, even if it doesn't as yet include swingeing fines or naming and shaming.

Re: Addendum

Hi Dogbert

I missed those last two points. The Quadruple Bond is very complex and I have discussed its complexities in the other thread. This thread is more about the how IFSRA will enforce the regulations.

I am firmly of the opinion that BCP is in breach of the regulations. This is so blindingly obvious to me that I just referred the product to IFSRA without making a detailed complaint. To my astonishment, they wrote back saying that it complied. I have since made a detailed line by line submission to IFSRA on the product and they are looking at it again. They are also looking at the marketing of Tracker Bonds generally.

But you raise a valid point. If IFSRA disagrees with my submission, that's the end of the matter as far as I am concerned. We must agree to differ. Of course, a customer could make a complaint to the proposed Ombudsman about BCP or about the intermediary who sold them the product. But all these things are down to the competence of IFSRA or the Ombudsman or the court.

Brendan