Individual Accountability Framework

Feedback Statement to CP153 published on 16 November 2023

Following a three month consultation process, the Central Bank has published a Feedback Statement and issued Regulations and Guidance to firms on the Individual Accountability Framework (IAF).

The Guidance provides clarity regarding the Central Bank’s expectations for the implementation of three aspects of the framework: the Senior Executive Accountability Framework (SEAR), the Conduct Standards and certain aspects of the enhancements to the Fitness & Probity regime.

The Conduct Standards and enhancements to the Fitness and Probity Regime are set out in legislation and will become applicable on 29 December 2023. The Feedback Statement confirms that the SEAR Regulations that describe responsibilities of specific roles and requirements of firms will apply to in-scope firms from 1 July 2024 and to (Independent) Non-Executive Directors at in-scope firms from 1 July 2025.

Public consultation launched on 22 June 2023

The Central Bank has launched a twelve week public consultation on proposed updates to certain aspects of its Administrative Sanctions Procedure (ASP).

The Central Bank (Individual Accountability Framework) Act 2023 (the IAF Act) was signed into law on 9 March 2023 and was partially commenced on 19 April 2023.

The IAF Act introduces a number of important changes to enhance the ASP. These changes will apply, subject to transitional arrangements, to the enforcement of any obligations under the ASP whether those matters are related to existing obligations under financial services legislation, new obligations introduced as part of the IAF or otherwise become subject to the ASP.

The enhanced ASP is designed to underpin and support the introduction of the IAF and in particular the Senior Executive Accountability Regime and the conduct standards for firms and individuals, which are more particularly detailed in Consultation Paper 153, issued on 13 March 2023 and titled “Enhanced governance, performance and accountability in financial services- Regulation and Guidance under the Central Bank (Individual Accountability Framework) Act 2023”.

While the overall structure of the process remains the same, various procedural amendments to the ASP have also been made to incorporate additional safeguards to further fortify our existing process and in recognition of the expanded population of individuals coming within the scope of the ASP under the IAF Act.

The Central Bank has reviewed the ASP with a view to updating its associated processes and procedures to reflect these changes and clarify our approach to them in addition to certain policy changes based on our experience of utilising the ASP. Accordingly, we have prepared draft composite guidelines which consolidate the existing published ASP Outline 2018, Inquiry Guidelines 2014 and ASP Sanctions Guidance 2019.

Stakeholders’ views are sought on our proposed approach with respect to the ASP as set out in Consultation Paper 154, Consolidated Guidelines in respect of the Central Bank’s Administrative Sanctions Procedure.

Public consultation launched on 13 March 2023

Following enactment of the Central Bank (Individual Accountability Framework) Bill 2022 on 9 March, we launched a three-month consultation on 13 March 2023 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: the Senior Executive Accountability Framework (SEAR), the Conduct Standards and certain aspects of the enhancements to the Fitness & Probity regime.

This consultation has now closed. We are currently reviewing the comments received and we will publish these comments and a Feedback Statement on the Bank’s website in due course.

The IAF includes the following key elements:

  • Senior Executive Accountability Regime (SEAR): This will require in-scope firms to set out clearly and fully where responsibility and decision-making lie within the firm’s senior management.
  • Conduct Standards: Common Conduct Standards are basic standards such as acting with honesty and integrity, with due skill, care and diligence, and in the best interest of customers, and will apply to individuals in all regulated firms. Senior executives will also have Additional Conduct Standards related to running the part of the business for which they are responsible.
  • Enhancements to the current Fitness & Probity (F&P) Regime:This will include clarifying firms’ obligations to proactively certify that individuals carrying out certain specified functions are fit and proper.
  • Amendments to the Administrative Sanctions Procedure (ASP): A key change will be the Central Bank’s ability to take enforcement action under the ASP directly against individuals for breaches of their obligations rather than only for their participation in breaches committed by a firm.

See the full IAF consultation paper, draft IAF regulations and guidance .

Fitness and Probity Enforcement Procedures

On 20 April 2023, we updated our procedures in relation to fitness and probity investigations, suspensions and prohibitions to align these with the IAF Act. See our fitness and probity enforcement page for further details.

Public consultation launched on 22 June 2023