The magistrates can deny players council positions ? That is very curious and I'm not sure it would be an appropriate punishment in any case.
Council positions are powerful and have more responsibility, thus they are subject to more rules than other people and if they can't follow them, then perhaps they shouldn't be a council member for a while so they can change their thinking on the matter. While not entirely explicitly said, it is from the Government rules page, which you should have read as you have a character being a banker. Page is
here.
