Central Bank publishes Individual Accountability Framework Standards and Guidance

• Consultation on Individual Accountability Framework has concluded
• Guidance provides clarity to role-holders on responsibilities and accountability
• Industry engagement has been in-depth and constructive

Following a three month consultation process, the Central Bank has published a Feedback Statement (PDF 441.85KB) and issued Regulations (PDF 497.4KB) and Guidance (PDF 1.49MB) 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.

Upon publication, Derville Rowland, Deputy Governor of the Central Bank said “This piece of regulation is first and foremost about enhancing governance, performance and accountability in financial services. Today’s publications provide clarity to firms and individuals by setting out clearly the good practices expected of firms and role-holders, and their accountabilities. At its core, financial regulation is about supporting positive outcomes, protecting consumers and investors, and, ultimately, contributing to the economic well-being of the community as a whole. These regulations support this objective.”

Noting the outcome of the consultation process, she said “We’ve been pleased by the in-depth engagement with this consultation process, having received a high volume of submissions from industry, as well as engaging directly with many stakeholders at several Central Bank-hosted events.

“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.”

“The Conduct Standards and enhancements to the Fitness and Probity Regime are set out in legislation and will become applicable on 29 December 2023. Our consultation has confirmed that 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. This allow industry a transition period to meet their obligations.”

ENDS

Notes to Editors

The full consultation paper, Regulations and guidance are available on our website.

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.