The Central Bank has fined Merrion Stockbrokers € 200,000 for failings related to the regulator's fitness and probity regime. The fine marks the first time that the Central Bank has sanctioned a financial services firm for allowing employees to carry out specific functions without being satisfied that they comply with its fitness and probity requirements (F&P).
On Monday, the Central Bank said it first identified a breach of Section 21 of the Central Bank Reform Act 2010, back in 2016, whereby Merrion, which is wholly owned by Merrion Capital Holdings Limited, had failed to introduce adequate systems or controls to ensure that individuals perfoming specific roles, such as giving advice to a customer, known as "controlled functions" (CFs) and holding specific roles, known as "pre-approval controlled functions" (PCF), such as chief investment officer or head of compliance, complied with the fitness and probity standards.
Brenda O’Neill, head of enforcement investigations, said: “Until April 2015, there was an absence of any written procedures. In addition, Merrion failed to correctly categorise a number of employees performing controlled functions and failed to understand that its obligation to monitor the Fitness and Probity of individuals does not stop once initial due diligence has been completed. The fine must reflect the significance of these failings.”
According to the regulator, the breach occurred from the introduction of the F&P regime in December 2011, and persisted for over four years.
“During this period, Merrion failed to: Introduce adequate systems or procedures to ensure compliance with its obligations under section 21 of the 2010 Act; and take reasonable steps to satisfy itself that its CFs and PCFs complied with the standards,” the Central Bank said.
The regulator said that compliance improved following a management buy-out, and the appointment of a new board in late 2014. But, while written F&P policies and procedures were put in place in April 2015, these were “not adequate”, and therefore Merrion was unable to demonstrate how it satisfied itself that employees complied with F&P rules, the regulator said.
This is the Central Bank’s 115th settlement since 2006 under its Administrative Sanctions Procedure, bringing total fines imposed by the Central Bank to over € 61 million.
