The Central Bank has reached a settlement with Quinn Insurance over breaches committed by the firm, waiving a fine of €5 million "in the public interest".
The bank said there was a number of breaches by the firm that merited such a fine, including a lack of adequate procedures or controls to manage assets representing its technical reserves, and failing to maintain adequate solvency margins.
However, because the firm is under administration and is reliant on the Insurance Compensation Fund, any fine imposed would have to be financed from the fund and ultimately paid by contributions made by non-life insurers and the levy imposed on Irish motor and home policyholders.
The “wholly exceptional circumstances” thus warranted waiving the penalty entirely, the Central Bank said.
This is the second time Quinn Insurance has had enforcement action taken against it, with a monetary penalty of €3.25 million imposed in October 2008 for similar breaches.
“This is a repeat offence, which is a significant aggravating factor,” the Central Bank’s director of enforcement Derville Rowland said. “We know from recent experience that weak controls can cause firms to fail and result in systemic harm. For this reason, the Central Bank will not tolerate weak controls or governance within a firm and will take enforcement action against the firm.”
The family of Seán Quinn declined to make a comment on yesterday's settlement agreement. Yesterday the family withdrew their application to join the Department of Finance and Central Bank, in their capacity as regulators, to their action against Irish Bank Resolution Corporation, formerly Anglo, on which they allege they are not liable for unlawful loans of €2.34 billion.
Separate proceedings
The Quinns will now issue separate proceedings against the Department and Central Bank and will apply to the Commercial Court to have that case fast-tracked. The move means the actions of the regulators relating to the loans will now be subject to court scrutiny.
An Anglo report is among documents relied on by the Quinns to support their claims the regulatory authorities were aware Anglo was advancing unlawful loans to Quinn companies from late 2007 to prop up its share price.
The 2009 report claims the financial regulator was told by Anglo in September 2007 about that stake, was regularly updated on the bank’s efforts during 2008 to dilute it and had put pressure on the bank to do so.
