On 27 July 2021, the Irish Department of Finance advised that the Minister for Finance had obtained agreement from his Cabinet colleagues to move forward with long-awaited legislation relating to an individual accountability framework and published the general scheme of the Central Bank (Individual Accountability Framework) Bill 2021 (the "General Scheme").
The four key features of the General Scheme come as little surprise to industry as these reflect the Central Bank proposals in this area. By way of reminder, these are:
1. the introduction of a Senior Executive Accountability Regime ("SEAR") that will impose obligations on regulated financial service providers to set out clearly where responsibility and decision-making lies. The General Scheme notes that the sectors subject to this regime will not be set out in the legislation but that it will apply initially to the following types of entities:
- credit institutions (excluding credit unions);
- insurance undertakings (excluding reinsurance undertakings, captive (re)insurance undertakings and Insurance Special Purpose Vehicles);
- investment firms which underwrite on a firm commitment basis and/or deal on own account and/or are authorised to hold client monies/assets; and
- third country branches of the above.
However, it also states that other sectors may be brought within the scope of SEAR in the future after this legislation has been enacted.
2. the adoption of conduct standards. Three separate sets of standards are proposed:
- common conduct standards for all staff in controlled function ("CF") roles in regulated financial service providers to provide clarity as to the standards of behaviour the Central Bank expects of individuals working in the financial services industry;
- additional conduct standards for individuals in senior positions; and
- business conduct standards for all regulated firms in the financial sector.
3. enhancements to the Central Bank's fitness and probity regime, in particular in relation to the assessment of the fitness and probity of individuals in CF roles; and
4. the strengthening of the Central Bank's Administrative Sanctions Procedure to provide the Central Bank with the ability to pursue individuals for their misconduct separately to action being taken by regulated financial service providers.
In anticipation of the publication of this draft legislation, earlier this year we held a webinar, Getting SEARious – Planning for the incoming Individual Accountability Regime, which provides insights on the key aspects of the proposed framework. A recording of this webinar is available here.
As this bill progresses through the Irish legislative process, we will provide further updates on any developments in relation to this individual accountability framework.