The Financial Regulator is preparing to take legal cases in the coming months against miscreant bankers and overcharging banks, senior legislators have told the Sunday Tribune, after receiving new information and dossiers about new overcharging abuses of €100m at five of the country's banks.
Regulator Matthew Elderfield, who last week made a plea for more staffing at his enforcement unit, has signaled that prosecutions will now be brought against individual bankers and banks at an early stage. Legislators say Elderfield, who has only been in the country six months, is shocked by the level of abuses he has learned about from new whistleblowers still working in the banks.
Law-makers have told this newspaper that Elderfield's comments were a code that showed his office's determination to prosecute banks and financial industry executives over a new range of overcharging allegations.
He told Michael Moynihan's Economic and Regulatory Affairs Committee last week that there had been few enforcement actions taken by his office in the last decade despite the excesses of the boom years because the regulatory office effectively had no staff to prosecute actions.
Elderfield last week spoke frankly about the need to boost the number of enforcers in his office, which, legislators say, shows his determination to lift the effective immunity that the financial services industry here has enjoyed against legal action for decades.
Hinting that the banks will for the first time face early legal actions, Elderfield said that though enforcement cases took time, it was anticipated that the cases would end up in court "rather than ending up in a press release".
The banks here have long been allowed to deal with serious overcharging controversies by settling with the Financial Regulator and then announcing the settlements to the public by press release. In an infamous case, AIB linked rogue trader John Rusnak's trading losses in a press release in 2002 with the departure of its former chief auditor Eugene McErlean, who had exposed wrongdoing at the bank.
Elderfield last week spoke warmly about McErlean, Ireland's best-known whistleblower. He said he was "grateful" to McErlean and significantly added he was receiving assistance in his inquiries from new whistleblowers in the banks.
"I am also grateful to other whistleblowers," he told the committee.
The new €100m in overcharging uncovered is separate to an admission by Anglo Irish Bank earlier this year that it had found that its customers were overcharged by up to €100m, but that the bank hoped the bill would come in at between €30m and €50m.
Fergus O'Dowd, a senior member of the Regulatory Affairs Committee, said last week that no overcharging cases over the last decade had so far been sent to the gardaí or any other authority.
"The old order must go. We need an absolute sea change," O'Dowd said about continuing abuses in the banks.
The regulator acknowledged that the "pipeline" in dealing with enforcement cases was taking time.