Measures setting out standards of conduct for top financial executives in a new individual-accountability framework have been signed into law by the President.

The new legislation is aimed at giving the Central Bank powers to pursue individuals in the financial-services sector directly for any misconduct.

An Eversheds Sutherland lawyers has said that the Central Bank (Individual Accountability Framework) Bill 2022 (IAF bill) is likely to require “considerable work” by firms to ensure that they embed the required processes and standards

Standards ‘reasonable’

“There will be an increased onus on firms to ensure the conduct standards are met,” commented Ciaran Walker, a consultant in financial-services regulation with the law firm.

“It will also concentrate the minds of senior individuals on the potential implications for them personally of acting unethically or turning a blind eye to misconduct by others,” he added.

The Central Bank’s deputy governor Sharon Donnery defended the measures last year, saying that, while the regulator’s sanctioning and enforcement measures received a lot of headlines, in the end they were designed to encourage positive outcomes.

“The IAF bill prescribes standards of conduct which I believe are reasonable – for your customers, for your investors, for the Central Bank, and for society as a whole,” she told Financial Services Ireland at an event in November.

Consultation

The Central Bank is expected to publish draft regulations and guidance after the enactment of the legislation, and will also conduct a public consultation on how it plans to implement the measures.

Patricia Callan (director of Financial Services Ireland) told RTÉ this morning (10 March) that the organisation was calling for 12-month timeframe for implementation.

She said that a previous target indicated by the Government, to have the new rules in operation by the end of 2023, was “no longer realistic”.