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The Individual Accountability Framework

On 27 July 2021, the Minister for Finance in Ireland, Paschal Donohoe, announced the publication of the new General Scheme of the Central Bank (Individual Accountability Framework) (“General Scheme”) to give effect to a new Individual Accountability Framework, including the Senior Executive Accountability Regime (SEAR).

This follows a July 2018 report by the Central Bank of Ireland (CBI) investigating culture in the retail banks of Ireland. At that time, the CBI stated that “without a strengthened Individual Accountability Framework, the likelihood of profound cultural change in the regulated financial services sector is reduced” and set out its recommendations for such a framework. The General Scheme aims to implement these recommendations.

The key elements of the new Individual Accountability Framework are:

Senior Executive Accountability Regime (SEAR): This will place obligations on in-scope firms and senior individuals within them to set out clearly where responsibility and decision-making lies, and hold senior individuals to account where failings arise in the firm. In the words of the CBI’s Director of Enforcement and Anti-Money Laundering, Seana Cunningham, “the days of individuals hiding behind the collective will be numbered”.

Conduct Standards for all regulated firms and individuals, with particular additional Conduct Standards for senior management.

Enhancing the current F&P regime, in particular to impose a positive obligation on firms to certify on an annual basis that persons in controlled function (CF) roles are fit and proper.

Enhancing the ASP regime, in particular to enable the CBI to take action against individuals without first having to establish that the individuals “participated” in a breach of regulatory requirements by their firm.

For further information on the General Scheme, see our client update here.

We can help you prepare effectively for the new Individual Accountability Framework

Firms will need to devote significant resources and time to ensure that they prepare effectively for the new regime. For more information on what firms should be doing now to prepare for the regime, see our brochure here.

We have the expertise to assist you with all aspects of preparations for the new regime. This includes assisting firms to review and revise all aspects of their governance framework, HR aspects and all relevant policies and procedures.

We work closely with our colleagues in our UK offices, who have extensive experience of advising on the equivalent UK regime since its introduction in 2016 and upon which SEAR is largely based.

Furthermore, we are supported by the financial services team within Konexo, the global alternative legal and compliance division of Eversheds Sutherland. Through Konexo, we are able to offer a ‘one stop shop’ team of financial services compliance specialists and programme management personnel, alongside our lawyers.

We regularly give presentations to the boards of regulated firms, to help them with their initial considerations of what needs to be done to prepare effectively for the new regime. Please contact us if you would like us to assist you with any aspect of preparations for the new regime.