Sometimes it is best to take a breath and look underneath the headlines. Why? Because the detail matters.

On Wednesday, the Central Bank fined a company, BNY Mellon Fund Services (Ireland) DAC, €10.78 million and reprimanded the company for a prolonged series of regulatory breaches. The fine related to its outsourcing of fund administration activities.

It is the largest monetary penalty imposed on a fund service provider in Ireland to date and one of the largest fines ever issued by the Central Bank overall.

BNY Mellon has a low-profile presence in Ireland – it is largely a fund administrator within the wider BNY group. But that group is a global financial heavyweight. The US-listed investment bank has a $42 billion market capitalisation. By way of comparison, the market cap of Bank of Ireland is $6.5 billion.

The chronology of the Central Bank’s probe into BNY Mellon is both fascinating and disturbing. Fascinating because it shows the level of engagement between the bank and the regulator over a multi-year period. Disturbing because it shows how little BNY Mellon actually cared.

In 2014, the Central Bank identified instances in which BNY failed to notify it in advance of outsourcing servicing and activities. According to the regulator, this was because of inadequacies in BNY outsourcing controls, and it told the bank to review its outsourcing controls and ensure that clearance was sought from the Central Bank for all outsourced activities in the future.

The same year, BNY confirmed to the Central Bank that its inventory of outsourcing arrangements had been updated.

And that should have been the end of the matter. Except, of course, it wasn’t.

In 2015, despite confirming to the Central Bank just a year before that its outsourcing inventory was accurate, BNY told the regulator about several other unapproved outsourcing arrangements that had been in operation for up to three years.

Further engagement between the two sides followed over the next two years. In May 2017 the Central Bank issued BNY’s Irish operation with notice of the commencement of an enforcement investigation arising out of suspected breaches of its regulatory obligations with respect to outsourcing.

BNY promptly told the Central Bank that an enhanced oversight package had been developed and rolled out. It later transpired that this was not fully implemented until July 2018.

This was not the end of the matter; far from it. In May and October 2019, BNY notified the Central Bank of several additional breaches relating to its outsourcing arrangements.

According to the Central Bank, these notifications “minimised the nature of some of the breaches, failed to identify the number of occasions on which some breaches occurred and stated that remediation was complete when it was not”.

In addition, BNY delayed reporting three breaches to the Central Bank once they were identified in February, May and October in 2019. On three separate occasions the same year, the Central Bank required BNY to address issues with respect to its governance and operational risks; outsourcing governance model and controls; and the annual outsourcing returns.

Last year, the bank finally confirmed that it had completed all the “remediation required by the Central Bank in 2014, 2017 and 2019”.

Essentially, over a seven-year period, BNY sought to downplay its deficiencies and on several occasions told the regulator it had implemented solutions – when in fact it had not done so.

As I read through the Central Bank report, I could not help but think of the regulator’s report from one year ago into the Anglo bond scandal. The fine against Davy was significantly smaller and the circumstances leading to the fine vastly different. But in both instances, both had sought to downplay the issues to the regulator, and it took the authorities many years to determine what exactly had occurred.

Shortly after I read the report, I stumbled across a Workplace Relations Commission determination in relation to Davy. The action was taken by Gemma Kiernan, who joined the broker as an administrator in the Private Client Department on July 1, 2019.

The Irish Times reported on the case, but its genesis is as follows. Ten days after Kiernan was diagnosed with epilepsy, Davy’s HR manager suggested that she resign her position or face likely disciplinary action, following which Kiernan resigned.

While working from home in March 2020, Kiernan had suffered a seizure and was hospitalised. After that, she learned that she had epilepsy and she was prescribed anti-epileptic medicine.

She contacted her line manager by phone to tell her what had happened, and she then went on a period of certified sick leave which lasted until May 2020.

When she returned to work, she was sent to an occupational health assessor, who was asked to determine whether her seizure in March 2020 was likely to be an explanation for her poor work performance in the period of time prior to her seizure. Medmark said there was nothing in her condition that would prevent her doing the tasks for which she was employed.

Shortly after, Davy’s HR manager told Kiernan her performance improvement plan had not brought the improvement hoped, and, according to Kiernan, the manager suggested she resign because she was “unable to do the tasks for which she had been employed”.

In the hearing, Davy argued that their suggestion that Kiernan resign arose from performance issues in her work that pre-dated her diagnosis with epilepsy and out of a concern that, given her health problems, continuing with the performance improvement plan (PIP) might have impacted her more than resigning.

The commission was clear about its own view, stating: “I find that this detriment was that the Respondent gave the Complainant an ultimatum of two options, leave voluntarily or face disciplinary action and both constituted a detriment. I am satisfied that but for the Complainant’s medical condition, the PIP would have continued and allowed to take its usual course.”

The commission added: “I am satisfied that the Complainant would not have been asked to consider resigning her position on 10 August 2020 other than this was connected to the confirmation of her epilepsy condition, ten days earlier.”

Kiernan was awarded €20,000.

We hear a lot about cultural reform within financial institutions. However, sometimes, it is really hard to believe it.

*****

Elsewhere last week, we published a two-part investigation by Sean entitled “The rail theory of everything”. It was based around a simple question: Can we ease the housing crisis through transport-orientated development, where we take advantage of trains’ extraordinary people-carrying abilities by strategically placing as many people as possible near to train stations? The issues involved are highly complex, as Sean detailed.

Tom obtained a copy of a report by the liquidator of Brendan Investments, plus an audio recording of this week’s AGM. They raise significant questions about the collapse of the Eddie Hobbs-fronted fund, which lost most of the €12 million it raised from 800 investors.

How do we ensure there is no corporate profiteering from inflation? That is the question Stephen sought to answer in his column. “We can often mistake inflation for what is, in reality, profiteering. And with the ERSI forecasting an 8.5 per cent spike in inflation, the government must tackle those who use it as an opportunity to gouge on prices,” he wrote.

The Ward cinema empire is no stranger to legal friction. Now stakeholder Paul Ward is on the hook for millions to his siblings over a €31 million share deal that went wrong. Francesca had the story.

Thérapie Medical Group has been expanding aggressively across Ireland and the UK. It has now moved into fertility care and is intent on growing the market by targeting women in their twenties for testing and egg freezing. CEO Philip McGlade talked to Rosanna about price, strategy and expansion.