On 3 March 2020, the Central Bank of Ireland (the Central Bank) reprimanded and fined Ulster Bank (Ireland) DAC (the Firm) €4,600,000 for governance failings relating to regulatory returns that were required under the Mortgage Arrears Resolution Targets (MART) Framework. The Firm has admitted to these breaches, which took place from 2013 until 2015.
The Central Bank determined that the appropriate fine was €6,572,000. It has been reduced by 30% to €4,600,000 in accordance with the settlement discount scheme provided for in the Central Bank’s Administrative Sanctions Procedure.
The Central Bank’s investigation found that the Firm fell far short of the governance standards applicable to the preparation of regulatory returns, finding serious failings in the Firm’s approach to the compilation and submission of its MART returns. These included:
- Failure to implement effective oversight of the MART return process; and
- Failure to have in place and maintain procedures, internal controls and reporting arrangements.
In keeping with its mission, the Central Bank implemented measures to resolve the high volume of mortgage arrears that developed in the wake of the financial crises. With this in mind, the Central Bank introduced the MART Framework in 2013. Banks were required under the MART Framework to report details on the level of mortgage arrears to the Central Bank on a regular basis. Essential to this requirement was ensuring the integrity of the data submitted to the Central Bank. By the end of 2015, reporting under the MART Framework was no longer required.
The Central Bank informed the Firm of governance failings around the compilation of its MART returns in 2013, and the Firm committed to taking action. However, it was not until 2015 that the Firm acted to address the issues. This inaction and delay by the Firm is unacceptable and the Central Bank is treating such failure by the Firm as an aggravating factor in this case. A further aggravating factor is the Firm’s previous enforcement record, which has repeatedly identified poor governance practices at the Firm.
Seána Cunningham, the Central Bank’s Director of Enforcement and Anti-Money Laundering, said: “Accurate and reliable data is vital to the Central Bank’s ability to monitor risk and supervise firms effectively, and to ensure the ongoing stability of the financial system. Effective governance is a fundamental part of ensuring data quality. Firms must satisfy themselves that they have robust, effective and tested governance in place to ensure the quality of the data they manage and disseminate. If we cannot trust the data supplied by firms, we cannot do our job.
Under the MART Framework, the Central Bank required accurate and reliable data in respect of mortgage arrears. The Firm in this case failed to have the necessary governance measures in place to ensure the quality of the data it was submitting to the Central Bank. Of particular concern in this case is the Firm’s failure to take prompt action, despite knowledge of the issues.
Data quality is, and will continue to be, an area of particular focus for the Central Bank. We have previously taken action against firms for data governance issues. We will continue to use our powers to sanction failures by firms in order to drive better compliance”.