High Court of Ireland refuses to confirm Central Bank Prohibition Notice issued against senior fund manager due to procedural unfairness

At a glance

• A recent judgment by the President of the High Court (Court) refused to ratify a Central Bank Prohibition Notice issued against a senior fund manager due to procedural unfairness.
• The judgment underlines the importance of process in managing fitness and probity investigations.

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The Respondent was a long‑standing senior executive within an Irish fund management company and held several pre‑approval-controlled functions, including Chief Executive Officer and Designated Person for Investment Management.

An investigation by the Central Bank arose from regulatory concerns relating to the management of a number of Irish-domiciled absolute return bond funds. A UK-based portfolio manager employed by a related group entity was subsequently dismissed and the dealings were scrutinised by the Central Bank of Ireland.

The Central Bank notified the Respondent of an intention to consider launching an investigation on the 31 July 2019 and the investigation officially commenced on 26 September 2019. The Respondent resigned from all restricted roles in February 2020. Despite the resignation, the Central Bank continued its fitness and probity investigation and issued a Prohibition Notice in February 2022, prohibiting the Respondent from performing any controlled function for a period of one year.

Proceedings were anonymised to protect the Respondent's reputation.

The Prohibition Notice

The Prohibition Notice was grounded on three core findings by the Central Bank investigation regarding:

• The Respondent's competence as a 'Designated Person'.
• The Respondent's concurrent responsibilities.
• The Respondent's alleged lack of openness and transparency with the Central Bank.

The Court must ratify a Prohibition Notice under section 45 of the Central Bank Reform Act 2010 in order for it to come into effect. The Court assesses whether a number of factors have been complied with prior to ratifying any Prohibition Notice.

Key legal issues

The Court was required to determine:

• Whether the investigation and Prohibition Notice were outside the powers of the Central Bank following the Respondent’s resignation.
• Whether the Central Bank complied with statutory and constitutional fair procedures.

Powers of the Central Bank

The Court rejected the argument that the Central Bank lacked jurisdiction to continue the investigation after the Respondent’s resignation. The investigation commenced while the Respondent occupied controlled functions. Nothing in the Central Bank Reform Act 2010 required the investigation to cease upon resignation and the investigation was therefore not outside the scope of the Central Bank's powers.

Serious procedural failings identified

The Court held that the investigation and decision‑making process was 'vitiated' by a series of significant and serious errors, including:

• The failure to interview the Respondent at the information gathering stage, despite him being characterised as the key and primary witness.
• The failure to have sufficient regard for the Respondent's medical condition in the information gathering stage
• The refusal to interview witnesses identified by the Respondent who were directly involved in the underlying events.
• The failure to convene an oral hearing which would allow the Respondent to answer to allegations.
• An inadequate meeting with the Decision‑Maker, which was described as a 'belated and ultimately futile' box‑ticking exercise intended to remedy the fact that the Respondent had not been interviewed at the investigation stage.

The Court stressed that fair procedures focus on whether the process was fair, not whether the Decision‑Maker believes additional evidence would have altered the outcome. While the Central Bank Reform Act 2010 acknowledges the Central Bank of Ireland possesses specialist regulatory expertise, the Court found no deference applied when analysing the fairness of procedures.

Findings

The Court refused to confirm and instead set aside the Prohibition Notice. It declined to remit the matter for reconsideration, emphasising the prolonged impact of the notice and the severe professional and personal consequences already suffered by the Respondent.

It is worth noting that the Court also stated that the more serious the issues involved are and the more serious the consequences for the subject of the investigation, the more extensive the procedures must be. In any event, the Respondent was entitled to established protections in case law.

Practical implications

Regulated entities, including those in the financial services and investment fund sectors should be aware of legislative and constitutional rights to fair procedures when conducting regulatory investigations. The Central Bank is currently conducting an overhaul of prohibition notice procedures under its Fitness & Probity regime, including recent publication of a consultation paper in January 2026 (CP166). The Taoiseach (Irish prime minister) has confirmed that the Central Bank will take this recent judgement into account when drafting guidance on prohibition notices in the coming months.