Fitness and Probity for Regulated Financial Service Providers  

Introduction

A new Fitness and Probity Regime came into effect on 1 December 2011 for all regulated financial service providers (RFSPs) other than credit unions.  This new regime was fully implemented by 1 December 2012. 

41 senior positions are prescribed as Pre-Approval Controlled Functions (PCFs) for RFSPs other than credit unions.  The prior approval of the Central Bank of Ireland is required before an individual can be appointed to a PCF.  The individual must complete an online Individual Questionnaire which is endorsed by the proposing entity and then submitted electronically to the Central Bank of Ireland for assessment.

RFSPs must not offer to appoint an individual to perform a PCF until the Central Bank of Ireland has approved the appointment in writing.

 List of Pre-Approval Controlled Functions

The regulations also prescribe specific functions as Controlled Functions (CFs).  These include individuals who exercise a significant influence on the conduct of the affairs of the financial service provider, monitor compliance or perform functions in a customer-facing role.  RFSPs are not required to seek the prior approval of an individual before their appointment to a CF.

 List of Controlled Functions

Fitness and Probity Standards

The Fitness and Probity Standards provide that an individual performing a PCF or CF is required to be:

  • competent and capable; 
  • honest, ethical and to act with integrity; and 
  • financially sound

  Fitness and Probity Standards

An RFSP must not permit an individual to perform a PCF unless it is satisfied on reasonable grounds that the individual complies with the Fitness and Probity Standards and has obtained confirmation that the individual has agreed to abide by those standards. 

RFSPs are responsible for ensuring that individuals performing CFs, including PCFs, meet the Fitness and Probity Standards, both prior to appointment and on an on-going basis.

The Fitness and Probity Standards were implemented on a phased basis: 

  • The Standards apply to individuals performing PCFs from 1 December 2011, whether the individual was already performing such functions prior to 1 December 2011 or is proposed to perform such functions. 
  • The Standards apply to individuals appointed after 1 March 2012 to perform CFs (other than PCFs).  This includes new offers of employment and internal transfers/promotions. 
  • The Standards apply to all individuals performing CFs from 1 December 2012.

Guidance on Fitness and Probity Standards

The Central Bank of Ireland has published non-statutory guidance to assist regulated financial service providers in complying with their obligations under Section 21 of the Central Bank Reform Act 2010 in relation to the Fitness and Probity Standards.  The guidance outlines the steps which the Central Bank of Ireland expects regulated financial service providers to take in order to satisfy themselves on reasonable grounds that individuals performing CFs, including PCFs, are in compliance with the Fitness and Probity Standards. 

 Guidance on Fitness and Probity Standards

Frequently Asked Questions on Fitness and Probity

The Central Bank of Ireland has also published a Frequently Asked Questions (FAQ) document in relation to the operation of the Fitness and Probity Regime under Part 3 of the Central Bank Reform Act 2010.  The FAQ document is updated regularly so please refer to the Fitness and Probity News section of this site for updates. 

 Fitness and Probity - Frequently Asked Questions

Functions not covered by the Fitness and Probity Standards

The Fitness and Probity Standards do not apply to: 

  • Call Centre staff – an individual whose function is solely concerned with acting in accordance with a written set of instructions. However, the Minimum Competency Code 2011 does apply. 
  • Inward branches / cross border service providers – individuals performing PCFs and / or CFs on behalf of a financial service provider authorised, licensed or registered by the competent authority of another EEA country, and which provides services in the State on a cross border or branch basis. 
  • Individuals who have functional responsibility at group level and who may be able to exert a significant influence over the performance of CFs or PCFs in the Irish entity.        
  • Outsourcing arrangements - individuals performing functions on behalf of a financial service provider, where that individual is regulated by the Central Bank of Ireland or a similar authority in another country, and a written agreement is in place between the regulated financial service provider and the other person for the carrying on of that function.

Refer to section 1.5 of the Fitness and Probity Standards for more information on these exclusions