Central Bank publishes Individual Accountability Framework Standards and Guidance

The Central Bank has released a Feedback Statement and accompanying Regulations and Guidance in relation to Consultation Paper 153 on Enhanced governance, performance and accountability in financial services in the context of the IAF, following a three-month consultation period.
As a reminder, the IAF introduces several pivotal elements aimed at enhancing regulatory oversight within financial institutions. First, the SEAR will require that firms delineate the responsibilities and decision-making authority of their senior management with precision. Second, Common Conduct Standards will be implemented, which are principles that all regulated firms must adhere to, including acting with integrity, diligence, and in the best interests of customers. Senior executives will be held to Additional Conduct Standards that are specific to their role in managing the firm’s operations. Third, the F&P Regime will be enhanced to clarify the obligations of firms to certify the suitability of individuals performing certain functions. Fourth, amendments to the ASP will empower the Central Bank to take enforcement actions directly against individuals for breaches of their obligations, rather than solely for their role in firm-committed breaches.
The Feedback Statement provides a summary of the responses to the 18 questions posed in CP153, as well as general feedback received and the Central Bank’s response to the most material and/or consistently raised aspects of the consultation responses. The document should be read in conjunction with CP153. A total of 26 responses were received, including 12 from representative bodies, 11 from industry, 2 from legal firms/bodies, and 1 from an individual. The Central Bank carefully considered all submissions and made changes in key areas to assist firms in implementing the framework. Technical comments were addressed, and additional clarity was provided to firms throughout the draft Regulations and Guidance on the IAF.
The set of three draft regulations in Annex 1 of the Feedback Statement aim to improve accountability, governance, and oversight in Ireland’s financial services sector. The SEAR Regulations establish a framework for senior executive accountability, while the Certification Regulations require regulated firms to issue compliance certificates for individuals performing controlled functions. The Holding Companies Regulations set out governance and oversight requirements for holding companies.
The final version of the IAF Guidance, set out as Annex 2 to the Feedback Statement, offers a clear understanding of the Central Bank’s expectations for the implementation of SEAR, Conduct Standards, and certain enhancements to the Fitness & Probity regime. The guidance is part of the IAF and describes the CBI’s expectations with respect to the Conduct Standards and provides non-exhaustive examples of measure individuals can take to ensure compliance with the Conduct Standards.
The Conduct Standards and F&P enhancements will become effective on 29 December 2023, while the SEAR Regulations will apply to relevant firms from 1 July 2024 and to Independent Non-Executive Directors from 1 July 2025, providing an implementation transition period.