Minister for Finance Michael McGrath (pictured) has signed an order bringing into effect much of the bill that sets up a new framework for individual accountability in financial firms.

He said that he would bring the remaining parts of the Central Bank (Individual Accountability Framework) Act 2023 into effect before the end of the year, after the completion of a Central Bank consultation process.

The act was signed into law by President Higgins on 9 March.

Sanctions procedure

Many of the sections of the act that commenced from yesterday (19 April) provide additional enforcement powers for the Central Bank. They include:

• Enhancements to the operation of the Central Bank’s fitness-and-probity (F&P) regime, giving the regulator more enforcement powers in this area,
• Extension of the F&P regime to certain categories of holding companies,
• Amendments to the Central Bank Act 1942 that make changes to the bank’s Administrative Sanctions Procedure (ASP) to clarify the processes involved, ensure that its procedures are fair, and adapt it to the new rules on individual accountability,
• Enhancements to the ASP will give the Central Bank the power to take enforcement action directly against individuals for breaches of their obligations, rather than only for their participation in breaches committed by a firm.

Minister McGrath said that the new law would give the Central Bank the regulatory tools necessary to ensure that consumers dealing with financial-service providers could be confident that their best interests would be protected.

SEAR consultation

He urged the sector to engage with the consultation process currently being carried out by the regulator on how it plans to implement the Senior Executive Accountability Regime (SEAR), and other aspects of the legislation.

SEAR places obligations on firms, and senior individuals within them, to set out clearly where responsibility and decision-making lies, and sets conduct standards for individuals and firms.

Earlier this week, Central Bank Deputy Governor Derville Rowland told a Law Society briefing that the regulator wanted a mature industry operating to high standards, which would be good for business, for investors, and for the economy.