EN ECB-PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 9 September 2011  
on new measures strengthening supervision and enforcement in financial regulation 
(CON/2011/69) 
 
Introduction and legal basis  
On 1 August 2011, the European Central Bank (ECB) received a request from the Irish Ministry of 
Finance for an opinion on the Central Bank (Supervis ion and Enforcement) Bill 2011 (hereinafter the 
‘draft law’).  
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third and sixth indents of Article 2(1) of Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Ce ntral Bank by national authorities 
regarding draft legislative provisions
1, as the draft law relates to the Central Bank of Ireland (CBI) and 
contains rules applicable to financial institutions in sofar as they materially influence the stability of 
financial institutions and markets. In accordance with  the first sentence of Article 17.5 of the Rules of 
Procedure of the European Central Bank, the Governing Council has adopted this opinion.  
 1. Purpose of the draft law  
The draft law is intended to enhance the CBI’s pow ers to (a) supervise regulated financial service 
providers, and (b) enforce financial services legislati on. The introduction of this legislation is one 
of the financial sector reform actions unde r the EU/IMF Programme of financial support  for 
Ireland
2.  
1.1 The draft law is intended to empower the CBI to require a financial service provider or a related 
undertaking to provide the CBI with an independent expert report paid for by the financial service 
provider or a related undertaking. The report may be required for the proper and effective 
regulation of financial service providers and ma y relate to any matter on which the CBI may 
require information or documents unde r financial services legislation.   
                                                      
1  OJ L 189, 3.7.1998, p. 42. 
2  See the Memorandum of Understanding on Specific Economic  Policy Conditionality (First Update) of 17 May 2011, 
page 28, and the Memorandum of U nderstanding on Specific Economic Policy Conditionality (Second Update) of 
28 July 2011, page 8, available on the Departme nt of Finance’s website  at www.finance.gov.ie. 
ECB-PUBLIC  
2 1.2 The draft law will - with limited exceptions - re place the CBI’s powers to appoint investigative 
officers with a single consolidated ‘authorised officer’ regime which the CBI may use to obtain 
information from all regulated financial service pr oviders and various other categories or persons3. 
An authorised officer may be an officer or empl oyee of the CBI or other suitably qualified person 
and may be appointed by the CBI for the purpose of obtaining any information necessary for the 
CBI’s performance of its functions under financia l services legislation relating to the proper and 
effective regulation of financial service providers.   
1.3 The draft law will introduce whistleblowing protecti on in the financial services area. Persons who 
make good faith disclosures regarding the possible or actual contravention of financial services 
legislation to the CBI, or an officer or employ ee of the CBI or an authorised officer, will be 
protected from civil liability and penalisation (as defined in section 32 of the draft law) by their employer. The draft law will also require persons  who perform a pre-appr oval controlled function 
within regulated financial service providers, i.e. a senior role or a role related to regulatory 
compliance, to disclose to the CBI such possibl e or actual contraventions of financial services 
legislation which they believe or  know might be of material assi stance to the CBI. Additionally, to 
protect the whistleblower’s personal data, Section 34(5) of the draft law provides that the CBI may 
not divulge the whistleblower’s identity except (i) with the whistleblower’s consent, or (ii) if this is 
necessary to ensure proper investigation of th e matters to which the disclosure relates. 
1.4 The draft law extends the CBI’s powers  to give directions to all regulated service providers or 
related undertakings, in particular where they are acting or failing to act in a particular manner. 
1.5 The draft law will empower the CBI to ma ke wide-ranging regulations, following prior 
consultation with the Ministry, for the proper and effective regulati on of financial service 
providers. It will also provide additional powers to  the CBI to enforce financial services legislation 
and will increase the maximum levels of financia l sanctions which can be imposed on regulated 
financial service providers by the CBI for contra ventions of financial services legislation.   
 2.  General observations 2.1 The ECB understands that this draft law is the s econd step in the legislative reform of the Irish 
central banking and financial regulatory regime
4. In particular, it will provide the CBI with powers, 
such as powers related to third party reports, authorised officers and directions, which would 
extend beyond the regulated financial service pr ovider to include related undertakings. These 
powers therefore will enhance the ability of the CBI  to have a complete understanding of the whole 
group of which the regulated entity is a member when assessing the risks to which the regulated 
                                                      
3  See section 21 of the draft law for the list of persons to  whom the powers of an aut horised officer can apply. 
4  The first was the Central Bank Reform Act 2010, renaming the Central Bank and Financial Serv ices Authority of Ireland 
the Central Bank of Ireland, that became a single fully-integrat ed structure with a unitary board to replace the two-pillar 
structure of the previous Central Bank and Financial Services Authority of Ireland. 
ECB-PUBLIC  
3 business is subject. In this regard, the ECB welc omes the draft law as enhancing the supervisory 
and enforcement tools available to the CBI5. 
2.2 The ECB understands that further legislation w ill be introduced to consolidate all legislation 
relating to the CBI. The ECB reaffirms its previous opinions6 on the consolidation of Ireland’s 
Central Bank Acts and notes that such further cons olidating legislation should be the subject of a 
separate consultation of the ECB.   
 
3. Additional CBI powers in supervisory and enforcement matters 
As regards the financing of the additional and enhanced CBI powers in supervisory and 
enforcement matters introduced by the draft law,  the ECB refers to the principle of financial 
independence under which a national central bank must  have sufficient means to perform its tasks 
related to the European System of Cent ral Banks (ESCB) and its national tasks7. The CBI should, 
therefore, dispose of sufficient human and financia l resources to efficiently perform any additional 
tasks introduced by the draft law, as well as its curr ent tasks, and should not be adversely affected 
in carrying out its ESCB-related tasks, from an opera tional or financial point of view, as a result of 
any additional tasks introduced by the draft law.  
3.1 Independent expert report 
Part 2 of the draft law will empower the CBI in ce rtain circumstances to require a financial service 
provider or a related undertaking to report to it. Wh ile section 9 of the draft law provides (i) that the 
substance of such report may relate to any matter  on which the CBI could require information or 
documents under financial services legislation, an d (ii) that the report may be required for the 
proper and effective regulation of financial service  providers, section 10 provides that the CBI must 
have regard to certain matters before reques ting a report under section 9. For example, the CBI 
must have regard to whether it might use other more appropriate powers instead of requesting a 
report and to the degree of relevant knowledge a nd expertise available to the financial service 
provider or related undertaking, as well as the cost implications of providing such report. Although 
the draft law does not specify precisely when a report may be requested, the ECB acknowledges the need for flexibility in this regard and unders tands that the scope of section 9 should be read 
against the provisions in section 10.   
Section 11(1) of the draft law provides that th e person appointed to report (hereinafter the 
‘reviewer’) will be either (i) nominated by the financial service provide r or related undertaking 
being reviewed (hereinafter the ‘reviewee’) and a pproved by the CBI, or (ii) nominated by the CBI 
if the reviewee makes no nominati on. Section 11(2) provides that th e reviewer may be employed or 
                                                      
5  See also paragraph 2.1 of Opinion CON/2009/50. 
6  See, for example, paragraph 17 of Opinion CON/2002/16,  paragraph 9 of Opinion CON/2003/24, paragraph 2.1 of 
Opinion CON/2010/30 and paragraph 2 of Opinion CON/2010/48.  
7  See the ECB’s Convergence Report, May 2010, p. 21, and pa ragraph 3.1.5 of Opinion C ON/2009/93 and paragraph 3.2.1 
of CON/2011/46. 
ECB-PUBLIC  
4 otherwise engaged by the reviewee. The ECB welc omes the provisions of section 11(3) aimed at 
ensuring the independence and impartiality of the reviewer vis-à-vis the reviewee as a precondition 
for its appointment and for drafting the report. The ECB stresses the importance of the adequate 
application of such provisions by the reviewee and by the CBI, through thorough scrutiny of the 
absence of conflict of interests and fulfilment of all the other conditions set forth by the draft law. 
3.2 Authorised officers 
Part 3 of the draft law provides for the appointme nt in certain circumstances by the CBI of an 
authorised officer in respect of a regulated fi nancial service provider or  related undertaking and 
various other categories or persons8, for the purposes of obtaining information necessary for the 
CBI’s performance of its regulator y and supervisory functions. Acco rding to section 25 of the draft 
law, an authorised officer is provided with a wide range of powers including in relation to 
inspections, interviews, searches and documen t production. Section 30 provides that where a 
person subject to an authorised officer’s powers fa ils or refuses to comply with that authorised 
officer in the exercise of their powers, the authori sed officer may certify the failure or refusal to the 
High Court. The High Court may then make an order or direction as it sees fit, following hearings of any witnesses against or on behalf of the pers on concerned and any statement in defence.   
The ECB notes that the draft law does not address the question of possible interplay between the 
function of a reviewer appointed under Part 2 to repo rt to the CBI, and that of an authorised officer 
appointed under Part 3 to obtain information for the CBI. The draft law does not provide in what circumstances a reviewer as opposed to an authorised officer, and vice versa, would be appointed. 
Similarly, there are no provisions in the draft law to deal with the potential situation where both a reviewer and an authorised officer are performi ng tasks for the CBI in relation to a regulated 
financial service provider or related undertaking at the same time. The ECB appreciates that the reviewer and the authorised officer have different  functions, with the reviewer performing specific, 
stipulated tasks for the CBI, whilst the authorised  officer will be largely gathering information for 
the CBI. Although it could be helpful to clarify the respective positions of each as regards the other 
in such circumstances, the ECB understands the difficulty in providing precise dividing lines in the draft law between the use and position of authorised  officers and reviewers, respectively, and that 
the choice of measure will depend on the circum stances in each case, and therefore suggests that 
this point is addressed by the CBI when implementing the draft law.  
3.3 Whistleblowing   
Part 4 of the draft law introduces whistleblow ing protection for persons who make good faith 
disclosures to the CBI or a CBI officer or employee or an authorised officer regarding the possible 
or actual contravention of financial services legislation
9. The ECB understands that this 
                                                      
8  See section 21 of the draft law for the list of persons to  whom the powers of an aut horised officer can apply. 
9  The proposal for a Directive of the European Parliament and of the Council on the access to the activity of credit 
institutions and the prudential supervisi on of credit institutions and investment firms and amending Directive 2002/87/EC 
of the European Parliament and of the Council on the suppl ementary supervision of credit institutions, insurance 
undertakings and investment firms in  a financial conglomerate, COM(2011) 453 final also introduces a provision 
ECB-PUBLIC  
5 introduction of specific protection for whistleblowers in  the financial services sector is to address a 
recognised lack of protection for good faith disclos ures in respect of a potential or actual offence 
under or contravention of financial services legisl ation. The ECB understands that the CBI could 
use any of the information disclosed to it under Part  4 to more efficiently avail of its other powers 
under the draft law and under other relevant laws to contribute to the more effective application of 
the financial services legislation10. On this basis, the ECB welcomes the introduction of such 
protection for whistleblowers. 
3.4 Directions 
The ECB understands that the CBI’s power to give di rections is not new and that the intention of 
the draft law11 is rather to clarify and consolidate its precise scope12 by providing for a new power 
which applies to all regulated financial service pr oviders and their related undertakings. In this 
regard, the ECB welcomes the intention of  clarification and consolidation.   
3.5 Regulations  
Part 6 of the draft law will empower the CBI to  make wide-ranging regulations, following prior 
consultation with the Ministry, for the proper and effective regulati on of financial service 
providers. Such regulations would allow the CBI  to effectively perform the new supervisory 
responsibilities related to all financial services provide rs and financial markets. As pointed out on 
previous occasions13, and without prejudice to the Governi ng Council’s powers under Article 14.4 
of the Statute of the European System of Central Banks (hereinafter the ‘Statute of the ESCB’), the 
ECB does not consider that this new task woul d interfere with the ESCB’s objectives and tasks. 
Nonetheless, pursuant to the last sentence of Article  14.4 of the Statute of the ESCB, this new task 
would have to be performed on the responsibilit y and liability of the CBI and would not be 
regarded as being part of ESCB functions.   
Section 41 of the draft law provides that, prior to making any such regulations, the CBI must 
(i) consult with the Ministry, and (ii) provide the Ministry with a draft of the proposed regulations. 
The ECB would welcome elaboration in the draft law of the precise procedural rules for such consultation, for example in terms of timing. Such  procedural rules should not impact on the CBI’s 
independence of decision-making or action or its need  to act quickly in times of crisis. In this 
regard, it should be clear that, by giving the Ministry the opportunity to comment on a draft regulation, the CBI will have fulfilled ipso facto  its obligation to consult the Ministry under 
section 41, and that there is no obligation to obtain  the Ministry’s consent before making any such 
regulation.  
                                                                                                                                                                           
regarding whistleblowing (Article 70). 
10   See in this respect the Commission Communication on reinforci ng sanctioning regimes in the financial services sector 
(COM (2010) 716 final), 8 December 2010, page 15. 
11  Part 5 of the draft law. 
12  For example under section 21 of the Central Bank Ac t 1971 and under section 18 of the Insurance Act 1989. 
13  See for example Opinion  CON/2006/38, Opinion CON/2006/47, Opini on CON/2007/8 and Opinion CON/2007/29. 
ECB-PUBLIC  
6 3.6 Cooperation with foreign authorities  
The ECB welcomes the provision in section 53 on c ooperation with foreign authorities to enhance 
the effectiveness of international supervision. Th e ECB notes, however, that a reference to Member 
State and third country authorities would be more  consistent with Uni on language and for this 
reason preferable to ‘overseas regulator’. In this regard, the provision should address 
(i) cooperation with Member State authorities and th e duty to cooperate to comply with any Treaty 
obligation and the Union banking directives, and (ii)  cooperation with third country authorities, by 
setting out the conditions for such international c ooperation which are not applicable in the Union 
context.   
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 9  September  2011. 
 
[signed] 
 
The Vice-President of the ECB 
Vítor CONSTÂNCIO