The Central Bank has launched a three-month consultation following enactment of the Central Bank (Individual Accountability Framework) Bill 2022 last week.

The regulator is canvassing opinion on key aspects of the implementation of the Individual Accountability Framework (IAF), including the publication of draft regulations and guidance. 

The draft regulations and guidance seek to provide clarity in terms of the Central Bank’s expectations for the implementation of three aspects of the framework:

• Senior Executive Accountability Framework (SEAR),
• Conduct Standards, and
• Certain aspects of enhancements to the fitness and probity regime.

Deputy Governor Derville Rowland said: “At its core, financial regulation is about supporting positive outcomes, the interests of consumers and, ultimately, the economic wellbeing of the community as a whole.

“The new framework will underpin sound governance across the financial sector. It will achieve this by setting out clearly the good practices expected of firms and role-holders and their accountability.

Proportionality

“The framework provides clarity as to standards that must be met by firms and individuals. These are the right standards to underpin the provision of financial services. As regulators, our approach to implementation of the framework will be founded on the principles of proportionality, predictability and reasonable expectations, underpinned by effective enforcement.

“We would like to hear from interested stakeholders, including the public, regulated firms, staff, representative bodies, consultancies, and service providers.

The framework also introduces changes to the Central Bank’s enforcement processes, Rowland explained.

“The enhancements to our fitness and probity investigation, suspension and prohibition processes will be the subject of separate regulations and guidance, which will be published once the underlying legal provisions have been brought into effect,” she said.

As part of a phased plan, a second consultation will be launched on those changes later this year.

The following implementation period is proposed:

• Conduct standards including accountability of senior individuals for running  their parts of the business effectively to apply from 31 December 2023,
• Fitness and probity regime – certification and inclusion of holding companies to apply from 31 December 2023,
• Regulations prescribing responsibilities of different roles and requirements on firms to clearly set out allocation of those responsibilities and decision making to apply to in-scope firms from 1 July 2024.