Executive Summary

  • The Tribunal's Decision in this matter represents a detailed consideration of fundamental procedural and substantive questions regarding the Fitness and Probity process.
  • It sets out the basis for the application of various tenets of procedural and Constitutional fairness, which must be afforded to an applicant in a Fitness and Probity Application, including the necessity for fair notice decision-making by an independent decision maker, the duty to give reasons and the observance of the principle of audi alterem partem (hear the other side).
  • It confirms the position that, "quasi-judicial bodies exercising limited powers, or extensive powers, must be independent, impartial, dispassionate, apply the law and observe fair procedures."
  • Further, it provides that, when carrying out their role, "PCF or other interviewers and decision-makers have a duty of fairness and compliance with the standards laid down in the Constitution itself and the case law as enunciated by the Courts established under that Constitution."
  • In particular, the Decision stresses the importance of an applicant being given fair notice of the questions before them, having access to relevant information and materials, to which reference may need to be made in order to answer the questions that the Central Bank may (rightly) pose. In addition, submissions made by any Applicant must be given demonstrable consideration and where a decision to refuse an applicant is made, reasons why a refusal has been decided upon, need to be provided to an Applicant.

The Decision also considers a number of important questions regarding:

  • Clarity on what the standard of fitness expected of an applicant is and the application (consistent or otherwise) of such fitness standards. In particular, where such matters are not prescribed by the relevant substantive legislation.
  • The nature and extent of regulatory/ legal knowledge and expertise an applicant needs to be able to demonstrate.
  • Whether such knowledge and expertise are assessed singularly for each individual candidate or collectively with considerations of the total mix of skills on the relevant Board and/or a regulated financial service provider or specialist advice and skills made available to said Board and/or a regulated financial service provider.
  • The consequences to an applicant's right to earn a living as a result of no response, extended consideration of an application without requisite communication and/or no decision by the Central Bank, especially in the asset management sector where the fund launch which is the catalyst for the application often occurs over a short timeframe.
  • That the statutory functions of investigator, regulator, and decision-maker fulfilled by the Central Bank, and its officials are difficult, and these roles are "not always easy to reconcile".
  • Maintaining the integrity of the [investment funds] market must be seen as a high national priority. The duty of the Central Bank is to ensure that there is rigorous implementation of the regulations and codes.
  • Where impaired investments or risks to investors are at issue "the Central Bank should be made aware at an early stage" and where this is not the case the Central Bank is correct to have concerns.

While the Tribunal did not make determinations on all or each of these issues, the Decision does advance the consideration of these important issues, which is of particular interest in the context of the forthcoming application by the Central Bank of all of the requirements detailed in the Individual Accountability Framework Act.

Fact summary

  • On 14 February 2024, a decision was published by IFSAT on procedural aspects of the Fitness and Probity process under the Central Bank Reform Act 2010. The Tribunal focused its decision on the issues as framed by the parties and determined that it was content to resolve the matter on the basis of the facts as actually presented to it.
  • The decision arose from appeal proceedings before IFSAT, which concerned with a decision issued by the Central Bank on 5th December 2022, ("the impugned decision") refusing applications brought on behalf of the Appellant to be approved for the two positions of Non-Executive Director and Chairman of a regulated financial service provider named Redhedge UCITS ICAV ("Redhedge"), which was authorised by the Central Bank in December 2020. In order for an appeal of any impugned decision to be successful, the IFSAT must find that said decision was incorrect in law. Such a determination results in the matter being remitted to the Central Bank for re-consideration.
  • The impugned decision came at the conclusion of a Central Bank Fitness and Probity assessment process in respect of applications that were made by Redhedge proposing the appointment of the Appellant as two "controlled functions" as defined in Chapter 2 of the Central Bank Reform Act, 2010, namely that of Non-Executive Director ("PCF2") and the position of a Chairman ("PCF3"), which were made in June 2021 ("the June 2021 Application").
  • Between the June 2021 Application and the impugned decision, the Appellant was called to a Fitness and Probity "assessment interview" (8 September 2021) and then a "specific interview" (28 September 2021). These interviews made adverse findings against the Appellant. There then followed a "minded to refuse" letter and the appointment for the decision of the matter of an ultimate decision-maker. The impugned decision by the ultimate decision maker was largely a confirmation of the adverse findings adduced in the interviews and the application was refused.
  • In its refusal, the Central Bank concluded that, in its "opinion", the Appellant was "unfit" to hold the two positions in question. This opinion was formed on the basis of s.23(5)(a) of the Central Bank Reform Act, 2010 (the 2010 Act). The Fitness and Probity Assessment process and the IFSAT appeal, were solely concerned with the question of fitness. The matter of the Appellant's probity was not at issue.
  • It should be noted that, in addition to the Redhedge Applications, applications were made on behalf of the Appellant in 2020. No decision was made by the Central Bank on these applications. In the course of its decision, the IFSAT places some emphasis on a number of unexplained questions, including on the question of 'no decision', the absence of any response in evidence by the Central Bank to the Appellant's applications from 2019 onwards as well as the lapse of time in dealing with the Redhedge application.
  • Further, the Appellant was involved1 with an Alternative Investment Fund, the Ruvercap ICAV, its Fund Management Company, Quayside Fund Management Limited and a regulated fund administrator based in Waterford. In 2019, events transpired in respect of this ICAV which resulted in certain bond investments made by that fund becoming seriously impaired. While the evidence to the Tribunal was to the effect that it was unclear what had precisely occurred, it was understood that losses to all investors may have amounted to approximately €230 million. There was no evidence that an adverse determination has been made by either the Ruvercap investors or indeed by the Central Bank against the Appellant in respect of this matter. However, these 2019 events were examined in the course of the Redhedge application interviews. While there is no direct link or association between the Ruvercap ICAV and Redhedge, questions in respect of Ruvercap, the Tribunal determined, were markedly and materially present throughout the Fitness and Probity Assessment, in particular in both the assessment and specific interviews.
  • The Tribunal found, for the reasons set out below, that it was "unable to conclude that the decision reached was the correct and preferable decision" and consequently ordered (with accompanying directions, outlined below) that this matter be remitted to the Central Bank for reconsideration.2

Tribunal Findings

The following are the key findings and determinations of the Tribunal; namely that:

The Order

  • The IFSAT was unable to conclude that the decision reached by the Central Bank was the correct and preferable decision. Rather, the Tribunal was satisfied that the Central Bank fell into errors of law, which were "such as to vitiate the impugned decision".
  • These errors of law took the form of "fundamental procedural flaws which were to be found at all three stages of the process." Whether these flaws are considered separately or together, the Tribunal was satisfied that, "the various procedures adopted by the Central Bank did not comply with the requirements of Constitutional and natural justice; including the necessity for fair notice; the duty to give reasons; and the observance of the principle of audi alterem partem." (hear the other side).
  • In particular, the Tribunal found that the Central Bank's decision-making process was flawed, and that the Appellant was denied fair procedures at each stage of the process. The Tribunal also found that this was "not a situation where minor deviations from procedure can be ignored or where, in reply, the Central Bank can simply point to the substance of the interviews [conducted]."
  • The Central Bank was ordered to notify the Appellant of the procedures that will apply in reconsidering the applications that were remitted to it as a result of the appeal, within 21 days of the Order. The 21-day timeframe was imposed as a result of the "inordinate time lapse in the case."
  • The reassessment period should be completed within 90 days of the Order, by persons at the Central Bank who were not directly involved with the process to date.

Procedural Flaws

The following points were provided in support of the Tribunal's identified and determined procedural flaws, that:

  • "When carrying out their role, PCF or other interviewers and decision-makers [at the Central Bank] have a duty of fairness and compliance with the standards laid down in the Constitution itself and the case law as enunciated by the Courts established under that Constitution".
  • More broadly, noting that the "Central Bank and its officials have to fulfil the difficult statutory functions of investigator, regulator, and decision-maker". The Central Bank and its officials have to "be neutral, objective and independent." The IFSAT further concluded that "Quasi-judicial bodies exercising limited powers, or extensive powers, must be independent, impartial, dispassionate, apply the law and observe fair procedures."
  • "Persons who are to be the subject matter of decisions which potentially have an effect on livelihood are entitled to fair procedures, including fair notice, decision-making by an independent decision maker, and observance of the principle of audi alterem partem."
  • "Constitutional statutory compliance requires more than apparent adherence to statutory procedures. Actual compliance requires those procedures be applied fairly. Frequently this process is carried out by people with legal knowledge and experience."
  • The precise case made by the Central Bank regarding the standard [of fitness] to be met by this Appellant [in this case] was never made clear. The course of evidence in this case also posed a more general challenge, in that the standard of fitness for any applicant under fitness and probity was unclear.
  • "A statutory "opinion" derived from s.23(5) of the 2010 Act must be based on discernible, objective and fair criteria."


  • The IFSAT was satisfied that what was at issue in this case was more than, "simply the right to the Appellant's good name. Rather, what is in question was a binding decision in relation to his right or interest to earn a living."
  • The Tribunal recognised in particular that:
    • Approvals or authorisations in relation to PCF applications are linked to the ability to comply with deadlines for the launch of a fund.
    • The asset management/ financial services market was a "relatively confined segment in a market where reputation and standing with the Central Bank would truly matter."
    • In the instant case, "the Appellant's evidence of his inability to obtain other approvals or authorisations in relation to other PCF applications went uncontroverted."

Application v. Investigation Distinction and Fair Notice of Issues to be covered at Interviews.

  • Under the Central Bank reform Act 2010, "the Central Bank has broad powers to carry out an 'investigation' into the activities of an individual or an entity subject to regulation. A person subject to an investigation would undoubtedly be entitled to the range of procedural rights set out in the case law. These would include the right to fair notice of the issues to be covered or the allegations made; notice of the evidence to be relied on; the right to examine and cross-examine accusers; the right to legal representation; and the right to an independent decision maker, free from bias or prior involvement".
  • "A person making a PCF application may not enjoy the same range of rights. He or she is nonetheless entitled to fair notice of the issues to be covered at interview(s) and interviewers who consider all relevant matters in a fair and impartial manner. This is not to set an artificial standard. An interviewer is entitled to ask important questions; but there must be fair notice of them."

The Assessment Interview: Questions of Fair Notice and Fair Questioning

  • The Tribunal determined that a question before it was whether the interviewer fell below "the standards of fair procedures which should apply in giving fair notice of the issues to be covered at the assessment interview". The IFSAT determined that, "This was the first step in a highly important regulatory process touching on the Appellant's right to earn a living."

The IFSAT's findings in respect of Fair Notice, are summarised as follows:

  • IFSAT determined that it was abundantly clear that "the notification the Appellant received did not cover the type and depth of issue which was so graphically – if not fully accurately- set out in the "minutes" thereafter."
  • That "the issues as recorded in the minutes were at variance from the generic description of what was purported to be the subjects covered at the interview." This, the Tribunal concluded, needed to be understood in the context advanced by the Appellant, that had such prior notice been provided to him, that he would have would have had the opportunity of presenting other material in response to the detailed questions put to him at that stage. The Tribunal further notes that Appellant's evidence in this regard was uncontroverted.
  • While the Appellant was put on notice that the interview would involve an examination of his knowledge of the relevant regulatory environment, "some of the questions asked of him were unnecessarily granular and sometimes unclear."

The Tribunal's findings in respect of Fair Questioning, are namely that:

  • A person subject to an interview is entitled to be questioned fairly. In the instant case, the Tribunal determined that some "of the questions recorded were extraordinarily complex, with many sub-clauses."
  • "At a minimum, there was confusion in relation to the nature of the bonds in which Redhedge was going to trade." It was the Tribunal's finding that this confusion went to the substantive question of potential issues relating to the "very legality of the fund's intended operation." The Tribunal noted further that the confusion was not resolved during the assessment interview.

Taken together, the Tribunal concluded, in accordance with the case law, that:

  • "All these issues, in themselves, are sufficient for a finding that, at the assessment interview, there was an absence of fair notice sufficient to conclude that this part of the process fell below the standard of constitutional fairness."
  • "The questions [posed] clearly demonstrated an intense preoccupation with the Ruvercap/ Quayside events. These specific motivations and concerns should have been made evident and clear in advance". Further, it was "clear that the decision-makers had 'matters on their mind' which were not set out in the invitation and should have been".
  • The Tribunal further noted that the fact that a Central Bank Official [Official X], whose questioning centred around Ruvercap and Quayside, "used a blank screen throughout the interview, without explanation either then or later, is very striking".

The Specific Interview:

As noted above, the Specific Interview was conducted on the 28th of September, 2021. The Tribunal noted "the previous afternoon, the Appellant received a book which was later called a "white folder". Apparently, he received this by email. In evidence, he had no recollection of what was in the book. Notwithstanding that, by that time, his solicitor was on record as representing him, the solicitor did not receive a copy of this email. Clearly, it contained material to which reference was intended to be made during the course of the interview." This was noted as 'surprising' by the Tribunal.

The transcript of the actual interview amounts to 224 pages, of which, "almost one-half of the whole interview consisted of questions and answers regarding Quayside, Ruvercap, and what was said to have occurred there." In particular, the Tribunal noted that the "Ruvercap section" of the day-long interview takes up some 90 to 100 pages of the transcript of that interview. The absence of an early phone call [to the Central Bank in respect of the issues that arose in respect of Ruvercap] in February/March 2019 occupied some 15 pages of the transcript.

The Tribunal's findings in respect of the Specific Interview, are namely that:

  • "The flaws from the Assessment interview fed into and were reflected in this interview."
  • "While there was the appearance of fair procedure, there was an absence of its substance."
  • "The invitation to the specific interview was broad and unspecific in its terms."
  • "The Appellant was not given full notice of the issues which were going to be explored."
  • In respect of the delivery of the "white folder", the Tribunal notes that the "absence of notice regarding the white folder requires little repetition." Further, "[t]he Appellant testified he was not given any opportunity to refer to the white folder, even though he was being asked detailed questions regarding the regulations, which may or may not have been contained in the folder."
  • This finding was contextualised by the statement that "[s]ome of the questions were exceedingly granular and detailed and would require considerable expertise. The folder was taken back at the end of the interview."
  • The Central Bank Official [Official X], who was involved in the 2019 investigation into Ruvercap and Quayside, "carried out the main questioning at the assessment interview. He played a major role in the specific interview."
  • "While the Central Bank had received some documentation in relation to the Appellant's background and experience, it received little attention in the "minded to refuse" letter."

The Impugned Decision

  • The Tribunal found that while the ultimate decision-maker "was not directly involved in the interview process. She had no prior involvement with the Appellant, Quayside or Ruvercap." She acted on foot of the "minded to refuse" opinion and was " reliant on the information which emerged from a previously flawed interview process." Accordingly, the Tribunal determined that the identified procedural flaws, " fed into the impugned decision".
  • The conclusions reached as to the " inadequacy of the Appellant's answers" to questions at interview by the relevant Central Bank Official, it was determined, " came in response to questions raised at the Assessment Interview and the Specific Interview where the Appellant had not been given fair notice of the issues to be raised." The Tribunal determined that the " effect of these procedural flaws cannot be readily expunged".

Audi Alterem Partem (hear the other side)

  • The Tribunal found that at the ultimate decision maker had in the evidence before her, both the 'internal material' and a "substantial body of material from the Appellant, which addressed in considerable detail the conclusions reached in the assessment, and particularly in the specific interview." This material, it was determined, contained 'high significant material' as to both the procedural and substantive questions at issue in this process. The Tribunal concluded that, the " decision-maker did not adequately engage with this [the Appellant's] material" and rather was " unduly focused on the Appellant's knowledge of the regulations and his performance at the two interviews."
  • The Tribunal's view was that the "impugned decision was one which had serious legal consequences, where fundamental legal and constitutional principles had to be applied in the course of performing the statutory functions."

Fair Consideration

The audi alterem partem question was linked to that of fair consideration, where the Tribunal state that "it is a basic principle that a decision-maker must be made aware of, and really entertain, an applicant's arguments, so that they are fully and fairly considered".

  • On this basis, the Tribunal found that, " [t]he absence of a determination in relation to this significant, countervailing and rebuttal evidence is more significant in light of the fact that there was, for that reason, a failure on the part of the decision-maker to give reasons for her decision."
  • Citing the Supreme Court Decision in NECI v. The Labour Court, Minister for Business Enterprise & Innovation, Ireland & Attorney General3, the Tribunal stated that " What is required rather is for a decision-makers to engage with an objector's submissions and give reasons on which those submissions were rejected. This would not require a lengthy discursive description of every point raised, but rather a sufficient analysis of the main arguments and submissions and a clear statement of why these were rejected There is a fundamental difference between mentioning issues which were "raised", or submissions put in by colleagues, and actually addressing the matters contained there substantively by a response, giving reasons why they are rejected. The impugned decision was flawed as it was based on a flawed preliminary process, because it did not observe the principle of audi alterem partem, and because it did not give reasons, so as to comply with what was required in law."


1. From 2014

2. Section 57Z(2)(d) of the Act of 2010

3. [2021] IESC 36; [2022] 3 IR 515.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.