No fair procedures applied by the Central Bank of Ireland

Since the implementation of the fitness and probity regime in 2011, the Central Bank of Ireland (the "Central Bank") has discharged its roles under the regime according to its own procedures. However, the direction of travel from recent legal decisions is that there is a lack of the application of fair procedures by the Central Bank when it comes to fitness and probity.

In the Central Bank of Ireland v CD [2026] IEHC 203 ("CD") the High Court refused to confirm a Prohibition Notice issued by the Central Bank against a senior executive of an Irish fund management company (the "Irish ManCo") under section 45 of the Central Bank Reform Act 2010 (the "2010 Act"). The High Court held that the process adopted by the Central Bank did not adhere to principles of natural and constitutional justice nor did the Central Bank afford CD basic fair procedures.

While the decision turned on procedural fairness, the underlying facts highlight key risk areas for directors and senior individuals in international organisations, and who hold multiple roles across different group entities, including:

• Managing parallel roles across group entities during internal investigations
• Navigating disclosure obligations to regulators where information is incomplete or evolving
• Balancing confidentiality constraints, whistleblowing considerations, and regulatory expectations
• Ensuring robust governance and oversight during periods of stress (including fund suspensions and investigations)

Background to CD

CD performed the pre-approved controlled functions ("PCFs") of CEO, Executive Director, and Designated Person for Investment Management in the Irish ManCo. The Irish ManCo managed various funds, including an Irish UCITS fund and its sub-funds (the "Sub-Funds"), with investment management delegated to a group asset manager in the UK (the "UK ManCo”), authorised by the Financial Conduct Authority (the “FCA”).

In 2018, an internal investigation was commenced by the UK ManCo in relation to certain risk management procedures and record-keeping practices adopted by an investment director business unit head of the UK ManCo ("GH"). Notwithstanding the roles held by CD in the Irish ManCo, CD was appointed as part of this internal investigation carried out by the UK ManCo. 

On 24 July 2018 CD had a PRISM interview with the Central Bank as part of ongoing supervision of the Irish ManCo and, relying upon external advice, did not disclose the internal investigation process to the Central Bank as no report or determination had been made, and to make such disclosure would be "speculative".

On 30 July 2018 GH was suspended and ultimately dismissed for gross misconduct in February 2019. On 31 July 2018, the Central Bank was informed of GH's suspension by the Irish ManCo, and the announcement was also made to the media. The Central Bank subsequently discovered that on 16 March 2018, the FCA had received a disclosure from an internal whistle-blower at the UK ManCo. In August 2018, redemptions were temporarily suspended in relation to four of the Irish Sub-Funds, meaning investors in those sub-funds were temporarily denied access to their investments.

In the latter part of 2019, under section 25 of the 2010 Act, the Central Bank commenced an investigation into CD's fitness and probity. Following this investigation, the Central Bank issued a Prohibition Notice against CD in February 2022 which prevented CD from performing any controlled function in any entity regulated by the Central Bank for a period of one year. In taking the decision to issue the Prohibition Notice, the Central Bank found that CD did not competently discharge his role as designated person, his concurrent responsibilities prevented him from discharging his duties in relation to the Irish ManCo, and he was not "candid and truthful" in his dealings with the Central Bank.

There is no right of appeal to the issue of a Prohibition Notice, however as CD challenged the Prohibition Notice, under section 45 of the 2010 Act, the High Court must confirm the Prohibition Notice where it satisfied that there is a "reasonable basis" for the opinion of the Bank contained within the Prohibition Notice.

Key findings

The High Court did not confirm the Prohibition Notice on the basis that it was not satisfied there was a "reasonable basis" for the Central Bank's opinion that the Respondent was not of such fitness and probity as is appropriate to perform the relevant "controlled functions". The High Court found that the Prohibition was vitiated by "a series of significant and serious issues being the many breaches of the Respondent's [CD's] right to natural and constitutional justice and basic fairness of procedures during the entirely of the process".

The Judge focused on one aspect of the CD’s conduct referred into the Prohibition Notice namely the lack of truthfulness. The Judge stated that this was a serious allegation and the consequences of such allegations if upheld would be extremely serious in terms of his credibility and good name and potentially catastrophic for his ability to continue to work in the financial services area. Where credibility, honesty and truthfulness were in issue from the start of the process the Respondent was entitled to the full range of rights identified in Re Haughey¹ which were far more extensive than the rights granted by the Central Bank to him.

The High Court's decision focused on four main deficiencies in the process adopted by the Central Bank:

1. Failure to interview CD

Although the Central Bank Investigator repeatedly described CD as the "key witness" and "primary witness", CD was never interviewed.

2. Failure to interview witnesses identified by CD

Despite being provided with the names of persons to be interviewed and the reasons why they should be interviewed, the Central Bank did not interview these people prior to the conclusion of the information gathering stage or at any point during the whole process.

3. Absence of an oral hearing

The High Court held that the Investigator acted wrongly and unfairly in failing to arrange an oral hearing, contrary to CD's entitlement under the 2010 Act and as a matter of basic fairness in the circumstances of the case.

4. Belated attempts to remedy defects

CD was invited to give oral evidence by the Central Bank at the end of the investigation process, but this was a box-ticking exercise in a belated and ultimately futile attempt to remedy the failure to afford CD with an oral hearing at the investigation stage.

Evolution of the fitness and probity regime

This is not the first occasion that a finding regarding an absence of fair procedures has been made in relation to the conduct of the Central Bank in the exercise of its powers under the fitness and probity regime. The Irish Financial Services Appeals Tribunal ("IFSAT") made similar findings in the context of the Central Bank's gatekeeper role under the fitness and probity regime in AB v Central Bank of Ireland (15 March 2024). That case concerned a refusal to approve AB for appointment to two PCFs on the board of an Irish fund. IFSAT found that there was an absence of natural and constitutional justice and fair procedures in assessing AB's application.

Following the AB decision, the Central Bank commissioned an independent review of its processes. The Fitness and Probity Review² published in July 2024 (the "Enria Review") acknowledged the impact that decisions of the Central Bank can have on individuals and recognised that the highest standards of fairness should be adhered to. However, the Enria Review does not discuss in any detail the types of procedures that should be adopted by the Central Bank, as contemplated by Re Haughey, or how these could be embedded into the fitness and probity regime. While the Central Bank's report on the implementation of the recommendations contained in the Enria Review demonstrated significant improvements to the fitness and probity regime, it arguably does not go far enough, and the gatekeeping process should incorporate the full range of rights identified in Re Haughey.

Since the investigation into CD began, the Central Bank has published revised guidance and regulations on its investigation and enforcement procedures under the fitness and probity regime, which seek to ensure a more procedurally fair proces.³. The Central Bank has also recently launched a consultation on prohibition notices ⁴. These revised guidelines contain additional guidelines in relation to fair procedures, such as an oral hearing.

Given the implications for a person's good name and livelihood arising from a decision of the Central Bank in discharging its functions under the fitness and probity regime, whether this be in the exercise of its gatekeeper role or its investigation and enforcement powers, the case law would suggest that the Central Bank will need to tread carefully and ensure that fair procedures are now properly adhered to throughout the fitness and probity process. This will certainly result in a change of practice going forward and a greater requirement for due process by the Central Bank. This is almost akin to serious misconduct investigations in employment cases in Ireland where it is settled law that where an investigation results in binding, adverse and permanent findings - as with the CD case, that the individual has a right to a fair hearing, a right to understand the allegations and respond in full before any determination is made regarding their employment. This is a high bar and one which the Central Bank will be required to follow.

Where the Central Bank engages in the process of an investigation (whether in relation to the appointment of a person to a controlled function or the performance by a person in the exercise of a controlled function) and the person contests such process, while the High Court's decision in CD relates to the serious allegation of credibility, an allegation of incompetence is just as serious an attack on a person's good name and reputation, with potential consequences of being unable to work in the financial services sector. In those circumstances, the Central Bank should be very careful before refusing a request for an oral hearing.

^{1 In Re Haughey [1971] IR 217, the court held that where a person is on risk of having his good name jeopardised in administrative proceedings the State must outlaw any procedures which restrict or prevent that person vindicating these rights. These are rights are rooted in Article 40.3 of the Irish Constitution. These panoply of rights include: (i) a right to be furnished with a copy of the evidence; (ii) a right to an oral hearing; (iii) a right to cross-examine;(iv) a right to give rebuttal evidence; and (v) a right to address the relevant body.}

^{2 Fitness and Probity Review Report on Implementation of Recommendations (April 2025).}

^{3 Fitness and Probity Investigations, Suspensions and Prohibitions Guidance (April 2023); Central Bank Reform Act 2010 (Procedures Governing the Conduct of Investigations) Regulations 2023.}

^{4 Consultation Paper 166 Prohibition Notices under the Fitness and Probity Regime (January 2026).}