Settlement Procedure

The Central Bank Act 1942 (as amended) and the Securities Markets Regulations allow regulated financial service providers and persons presently or formerly concerned in their management who are subject to an investigation the option to enter into a settlement with the Central Bank.

The Central Bank's policy is to promote the option of early settlement however it must be satisfied that the basis for settlement is appropriate taking into account all relevant facts. These include the determination of the appropriate sanction, whether all concerns have been addressed to the Central Bank’s satisfaction and any other relevant considerations. The level of co-operation from the regulated entity/individual with the Central Bank during an investigation will also be relevant to settlement.

All settlements are voluntary.

Some frequently asked questions for regulated entities and individuals on the settlement procedure are set out below:

What are the benefits of settlement?

The settlement procedure offers both the Central Bank and the regulated entity/individual a means of achieving early resolution of the matter. Early settlement is an efficient use of the Central Bank’s resources and results in the avoidance of additional costs and the administrative burden of extended administrative sanctions proceedings or an Assessment for both the Central Bank and the regulated financial entity/individual.

How does the settlement process work?

During the investigation stage of each enforcement case, a regulated financial entity/individual under investigation will receive an Investigation Letter which identifies the suspected prescribed contraventions that the Central Bank suspects on reasonable grounds that the regulated financial service provider/individual is committing or has committed. The regulated entity/individual will be requested to respond in writing in respect of a number of issues, for example:

Confirmation, whether the regulated entity/individual admits or denies each of the suspected prescribed contraventions
Detailed explanations and/or submissions, supported by evidence, about each of the suspected prescribed contraventions
Specify, with respect to each suspected prescribed contravention, if the issue has been rectified and identify the date of the rectification
If rectified, a detailed description of the solution implemented
Any additional source documents and/or information relevant to this examination/investigation.

A regulated entity/individual may receive a Settlement Letter from the Central Bank at the same time as, or at any time after, it receives the Investigation Letter. The Settlement Letter, which is issued on a “without prejudice” basis, is a letter offering the possibility to resolve the suspected prescribed contraventions with the Central Bank by way of a settlement agreement.

At any stage, a regulated entity/individual who has received an Investigation Letter may write to the Central Bank requesting settlement negotiations in order to attempt to resolve the suspected prescribed contraventions. The Central Bank will, in appropriate cases, issue the regulated financial entity/individual with a Settlement Letter in response to a request to initiate the settlement process.

The settlement procedure runs in parallel with an investigation and it should be noted that an indication of willingness to enter into settlement discussions does not cause the suspension of an investigation.

How do I apply for settlement?

If the regulated entity/individual wishes to avail of the settlement option, they must respond separately to both the Investigation Letter and the Settlement Letter. The regulated entity/individual must indicate that they wish to avail of the settlement option in their response to the Settlement Letter. The Central Bank will then consider this request. The Central Bank expects full information in response to questions raised in any Investigation Letter(s) to be provided in open correspondence, and full co-operation from the regulated entity/individual generally, before it will consider scheduling a settlement meeting.

What happens next?

A settlement meeting will be arranged between the Central Bank and the regulated entity/individual to discuss settlement. This meeting will take place in a venue arranged by the Central Bank and can usually last up to one day.

Before the settlement meeting takes place, the regulated financial enitity/individual will be given an indication in writing of the sanction(s) (e.g. reprimand, disqualification, level of monetary penalty etc.) being sought by the Central Bank.

What happens at a settlement meeting?

The Central Bank will outline its case and the regulated financial service provider/individual will be given an opportunity to make representations. Agreement on sanctions may then be achieved and the regulated financial service provider/individual will be given an opportunity to comment on the Central Bank's public statement. The settlement agreement will then be signed.

The Central Bank does not engage in protracted settlement negotiations. If settlement negotiations are not successful on the day, the case may proceed to the Inquiry or Assessment stage.

What is contained in a Settlement Agreement?

The Settlement Agreement is a signed written document that is legally binding on the Central Bank and the regulated entity/individual. A settlement agreement will generally contain the following:

admissions by reference to the prescribed contraventions
details of the prescribed contraventions
a statement that the prescribed contraventions have ceased or are being addressed
a statement from the regulated entity that it has disclosed all relevant information in its possession
imposed sanctions
any discount for early settlement
a detailed public statement
other relevant terms.

What discount can I expect for early settlement?

Where a regulated entity/individual settles a matter at an early stage with the Central Bank, a discount may be applied to the sanction (the “Early Settlement Discount Scheme”). Under the Early Settlement Discount Scheme, the Central Bank may allow a discount up to a set maximum to be applied to a sanction that it would otherwise expect to be imposed on a regulated entity after considering relevant sanctioning factors (see below). The Central Bank has identified two stages of the Administrative Sanctions Procedure for the purposes of the Early Settlement Discount Scheme:

from the issuance of the Settlement Letter for such period as the Central Bank indicates in the Settlement Letter (“Stage 1”); and
from the end of Stage 1 until the date on which a Notice of Inquiry is issued (“Stage 2”).

The maximum percentage discount for sanctions is up to 30% during Stage 1 and up to 10% during Stage 2.

What kind of sanction can be imposed?

The Central Bank may impose one or more of the following sanctions under a settlement agreement:

Caution or reprimand.
Direction to refund or withhold all or part of money charged or paid, or to be charged or paid, for the provision of a financial service by a regulated financial service provider.
Direction to pay to the Central Bank a monetary penalty (not exceeding the greater of €10,000,000 or 10% of turnover where the regulated financial service provider is a body corporate or an unincorporated body and not exceeding €1,000,000 where the regulated financial service provider is a natural person and for persons concerned in the management of a regulated financial service provider).
In the case of a regulated financial service provider which is not authorised by the European Central Bank under the Single Supervisory Mechanism Regulations, suspension or revocation of the authorisation of that regulated financial service provider.
In the case of a regulated financial service provider which is authorised by the European Central Bank under the Single Supervisory Mechanism Regulations, the submission of a proposal to the European Central Bank to suspend or revoke the authorisation of that regulated financial service provider.
In the case of a natural person, a direction disqualifying the person from being concerned in the management of a regulated financial service provider for a prescribed period of time.
Direction to cease a contravention, if it is found the contravention is continuing.
Direction to pay the Central Bank all or part of its costs incurred by the Central Bank in holding an Inquiry and in investigating the matter to which the Inquiry relates.

What factors are taken into account in deciding the appropriate sanctions?

The Central Bank will consider all of the circumstances of the case in determining sanctions and, in doing so, regard may be had to the following factors:

the nature, seriousness and impact of the contravention
the conduct of the regulated financial service provider/individual after the contravention has occurred
the previous record of the regulated entity/individual
any other relevant considerations.

What will be published?

As part of the settlement agreement between the regulated entity/individual and the Central Bank, a public statement will be issued providing a detailed account of the admitted suspected prescribed contraventions. Such publications are in accordance with the Central Bank’s principle of working with transparency and serves to inform and advise the financial services sector and consumers of expected standards and behaviours.

Will the Settlement Agreement affect my compliance record?

The Settlement Agreement will form part of the compliance record for the regulated entity/individual.

For further information in respect of the settlement procedure, reference should be made to Chapter Four of the Outline of the Administrative Sanctions Procedure 2018.