The Central Bank is to commission an independent review of the system under which it approves the appointment of individuals to key roles in the financial institutions that it regulates.

The move follows a judgment published by the Irish Financial Services Appeals Tribunal (IFSAT) earlier this week on a decision by the Central Bank to refuse an individual’s application to a senior role under the fitness-and-probity regime.

The independent tribunal, which ensures an avenue of appeal for those affected by certain decisions made by the regulator, found several issues in how the Central Bank handled this application, and returned it to the regulator for re-assessment.

“We will immediately conduct a re-assessment of the application, in accordance with the tribunal’s directions,” a statement from the Central Bank said.

‘Denied fair procedures’

The IFSAT judgment concerned an unidentified individual who had applied for approval to become non-executive director and chairman of an investment fund.

The tribunal described the Central Bank’s decision-making process as “flawed”, and said that the appellant was denied fair procedures ”at each stage of the process”.

The statutory fitness-and-probity (FP) regime was introduced in 2011, and was designed to ensure that individuals in key decision-making and customer-facing positions within financial firms were competent, capable, honest, ethical, of integrity, and financially sound.

‘Effective’

The regulator said that, while it had approved more than 30,000 people to work in the financial sector since 2014, the regime had now been operating for more than a decade.

“The Central Bank has therefore decided to commission an independent review of the FP approval process to ensure that it remains effective into the future,” it stated, adding that the outcome of the review would be published.

It added that all the Central Bank’s gatekeeping functions – including the FP approval process – would continue to operate in the meantime.