Another step closer: CBI's Individual Accountability Framework
The Government has published the Central Bank (Individual Accountability Framework) Bill 2022 - almost exactly one year on since the date of the publication of the General Scheme of the Bill. The provisions of this Bill are by far the most vaunted, eagerly awaited reforms directed at the financial services sector in quite some time.
The newly published Bill runs to 95 sections over 76 pages, making it significantly longer than the General Scheme (42 sections over 37 pages) which was considered by an Oireachtas Committee as part of the Pre-Legislative Scrutiny process last Spring.
As the drafters have sought to knit the provisions of the Bill into the existing legislative framework, much of the Bill is drafted as a series of textual amendments to pre-existing Acts, principally the Central Bank (Supervision and Enforcement) Act 2013, the Central Bank Reform Act 2010, and the Central Bank Act 1942.
Spurred on by what they viewed as deficits in customer-centred decision making within firms, driving cultural change within the financial services sector has been a major priority of the Central Bank of Ireland (CBI). In that context, this Bill is viewed as being a crucial piece of the cultural change jigsaw.
DLA Piper’s guide to Central Bank (Individual Accountability Framework) Bill 2022
The four main pillars of the Central Bank (Individual Accountability Framework) Bill 2022 (“the Bill”) are:
- Senior Executive Accountability Regime
- Conduct Standards
- Enhanced Fitness and Probity Regime
- Enhanced Administrative Sanctions Procedure
We have reviewed the Bill and have prepared a summary of the key provisions, which you can find below.
Bill to be Supplemented by Regulations and Guidelines
In spite of the extensive nature of the Bill, we know that its provisions will be supplemented and expanded upon by regulations which will be made by the CBI – one such key area relates to the requirement on firms to prepare management responsibility maps and statements of responsibility (section 3).
Several aspects of the Bill also envisage that the CBI will be publishing guidelines and practical guidance for firms. Once the Bill is enacted, it is expected that the CBI will proceed relatively quickly with the publication of the necessary draft regulations and draft guidance.
Preparing for Implementation
While the Bill is largely reflective of the General Scheme, it does however contain a number of additional and substantive changes which set it apart from the General Scheme, particularly in respect of the enhancements to be made to the fitness and probity regime, and also the administrative sanctions procedure.
Recognising that the legislation is not yet in its final form, it is advisable that firms begin to take steps now in preparation for the implementation of the changes which will flow from this legislation.
Board members and senior management within firms ought to be considering what changes are needed to systems, controls and processes in order to ensure that their firm, and they as individuals, are adequately prepared and are well positioned to discharge their responsibilities under the legislation.
Firms which had already begun to take steps in preparation for the implementation of the Bill, in reliance upon the 2021 General Scheme of the Bill, should re-visit their past analyses and adjust their plans to reflect the requirements of the most recent version of the Bill, while remaining ready to make further re-assessments and adaptations (if necessary) as the Bill progresses through the Dáil and Seanad.
Timeframe for Enactment
The publication of the Central Bank (Individual Accountability Framework) Bill 2022 marks the first formal stage in the legislative process which this Bill is required to undergo in the Houses of the Oireachtas. The speed with which this Bill becomes law will be wholly dependent upon the level of priority which is afforded to it by the sponsoring Minister and the Government Chief Whip in the busy parliamentary schedule.
The fact that the Bill has undergone Pre-Legislative Scrutiny and has already been in gestation for a considerable period of time suggests that the Minister is unlikely to table or accept extensive amendments in the Dáil or Seanad.
With so many variables in play, making an accurate prediction is fraught with uncertainty - however it is expected that the new regime will not be implemented before the latter half of 2023.
