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The new Individual Accountability Framework

The Central Bank of Ireland (CBI) is significantly increasing its focus on the accountability of individuals working in the financial service sector, in particular through the forthcoming introduction of a new Individual Accountability Framework.

 The CBI is increasingly using its existing powers, under the current Fitness & Probity and Administrative Sanctions Procedure (ASP) regimes to address individual accountability. For example, under the F&P regime, to date over 80 applications for senior positions have been withdrawn following challenge by the CBI.

The key elements of the proposed 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.

The Heads of a new Central Bank (Amendment) Bill, introducing this new Individual Accountability Framework, are expected to be published by the end of 2019 and the new legislation may be adopted sometime in 2020.

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

 We have the expertise to assist you with all aspects of preparations for the new regime. In particular we have extensive experience advising on the equivalent regime in the UK, the Senior Managers and Certification Regime (SMCR), which has been in place since 2016 and upon which the SEAR is largely based.

Konexo, our global consulting arm, has a full range of legal consulting services, supported by technology and smart systems.  We can provide you with a one stop shop in circumstances where you would otherwise have to instruct separate law and consulting firms. We will be able to bring you the latest thinking on the UK approach to SMCR, the strategies that worked and pitfalls to avoid, together with the processes and technology to support implementing the new Individual Accountability Regime.

 

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