powerfully incentivised to avoid enforcement action by being more diligent in respect of regulatory compliance. this raises standards generally in the financial services sector. it shows that there are consequences for non - compliance. and it is an efficient use of resources. rather than trying to individually mark all the firms that we supervise, the risk of enforcement action has a multiplier effect across the regulatory population in terms of encouraging compliance and good practice. it is, for example, particularly useful for the large population of smaller, low impact, firms where we cannot have a routine supervisory interaction. the benefits of enforcement are therefore very clear in terms of raising standards. these benefits are not only recognised in ireland but, of course, across many other jurisdictions in europe and more generally internationally elsewhere. enforcement actions are taken by supervisors in ireland, in the uk and the us, and also across the european union including france, germany, sweden, malta and luxembourg for example. so, i think concerns over the competitiveness impact of taking enforcement actions, which is a point sometimes put to me, is somewhat overstated. bis central bankers ’ speeches and to be clear, i don ’ t think it makes sense to somehow ring fence international firms from the scope of potential enforcement action. we see weaknesses in governance, systems and controls and other breaches amongst international firms, just as we do for domestic ones. protecting ireland ’ s reputation as an international financial centre is important and means that both firms and the central bank need to be vigilant about standards in this sector. what about the argument that it ’ s not fair to take enforcement action for mistakes? or that when a management team self - reports a breach they should get an exemption from enforcement? these are, frankly, well - trodden and somewhat hackneyed arguments. these are certainly relevant factors to consider during the enforcement process, and typically would be given consideration when assessing the correct sanctions. but the clear international practice is that enforcement still takes place in such circumstances. it is important that the deterrent effect still applies to inadvertent breaches and to self - reported ones as well. to do otherwise, would be to effectively turn a blind eye to the requirements which we are required to uphold and would encourage a culture of slackness that would sow the seeds of significant detriment to consumers and damage the financial stability. so, let me be clear, enforcement in the financial sector in ireland is here to stay. we aim to be transparent about

matthew elderfield : effective enforcement – encouraging compliance and good practice opening remarks by mr matthew elderfield, deputy governor of the central bank of ireland, to the central bank enforcement conference, dublin, 11 december 2012. * * * i would like to welcome you to the first conference on enforcement that we are hosting at the central bank of ireland. we are very glad to be hosting this event and that you are able to join us here today. enforcement is an important element of our regulatory strategy at the central bank. our approach of assertive, risk - based supervision is underpinned by having a credible enforcement deterrent in place. effective enforcement certainly has a corrective element that is designed to ensure accountability for non - compliance with regulatory requirements, both by firms and – as i would like to talk about briefly in a moment – ideally also for individuals. but effective enforcement is much more powerful than simply being about bringing a particular firm or its management to account. the broader benefit, which supports supervision, is the deterrent effect of enforcement. if firms think there is a credible risk that their own non - compliance with regulatory standards would lead to sanctions from the central bank, then that provides a very powerful motivation to boards of directors and senior management teams to ensure a high standard of conduct. the fact that the central bank has sanctioned firms and has published details of these sanctions has made some in the industry uncomfortable and leads to pleas to ease up on the use of the enforcement tool. we do not apologise for taking enforcement actions or publicising them. there is no deterrence value unless firms, investors, consumers and the public are aware that we will respond with enforcement action where behaviour and practices fall short. i am firm in my belief that this is a necessary and best practice element in the regulatory toolkit of the central bank. and, unless these sanctions are published with enough detail about what occurred and the sanctions imposed the deterrent effect will be diluted. we have purposefully made an effort to be more explicit and detailed in the publicity statements involving enforcement sanctions. the purpose of this is to provide greater transparency to industry, the markets and the public about the nature of breaches that have been committed. the publication of the enforcement action has a reputational impact on the firm and management concerned. a consequence of this approach is that the impact of our enforcement efforts is greater because, frankly, the message is clearly communicated to industry and the public that breaches will not be tolerated. consequently all firms are