The Central Bank (Individual Accountability Framework) Bill 2022 Is Published

• Published date: 18 August 2022
• Subject Matter: Finance and Banking, Insurance, Financial Services, Insurance Laws and Products
• Law Firm: Dillon Eustace
• Author: Mr John O'Riordan, Peter Bredin and Rachel Turner

On 28 July 2022 the Central Bank (Individual Accountability Framework) Bill 2022 (the "Bill") was published by the Department of Finance.

According to the Explanatory Memorandum to the Bill, its principal purpose is to confer powers on the Central Bank of Ireland (the "Central Bank") to strengthen and enhance individual accountability in the financial services industry.

The Bill follows the outline set by the General Scheme of the Bill which was published in July 2021 (further details here), and has provided greater detail on the four pillars of the individual accountability framework ("IAF"), namely:

• The Senior Executive Accountability Regime ("SEAR");
• The Conduct Standards;
• The Fitness and Probity Regime; and
• The Administrative Sanctions Procedure ("ASP").

For the most part, the Bill follows the General Scheme relating to SEAR and the Conduct Standards. However, there are some substantial changes in relation to the Fitness and Probity Regime and ASP.

This article outlines some of the key points of the Bill relating to the four pillars of the IAF as outlined above.

SEAR

Extension of Regulation-Making Power for the Central Bank

The Bill proposes to extend the regulation-making power of the Central Bank regarding regulated financial service providers ("RFSPs") to give effect to SEAR.

This will enable the Central Bank to make regulations in relation to inherent responsibilities and prescribed responsibilities, which relate to a pre-approval controlled function ("PCF") holder. There is little detail in the Bill in relation to statements of responsibilities or management responsibility maps. This detail is expected to be set out in regulations to be issued by the Central Bank.

As mentioned in our previous briefing in relation to the General Scheme, it is expected that SEAR will be rolled out on a phased basis, with the initial scope extending only to credit institutions, insurance undertakings (except reinsurance, captive (re)insurance and insurance special purpose vehicles), certain investment firms and any third country branches of those companies.

Duty of Responsibility

The Bill includes a new legal 'duty of responsibility' on individuals in a PCF role who fall within the scope of SEAR. It requires these individuals to take "any steps that it is reasonable in the circumstances for the person to take" to ensure that the RFSP does not breach its obligations under financial services legislation.

When considering whether a relevant individual has discharged their 'duty of responsibility', the Central Bank will be required to consider all relevant circumstances. Examples of relevant circumstances are set out in the Bill. These include, among others, the function of the person and the level of...