New Legislation
SEAR - IAR - Central Bank -
SEAR - IAR - Central Bank -
New Legislation
As the Central Bank (Individual Accountability Framework) Bill 2022 ("Bill") moves quickly through the Irish parliamentary process, the implementation of an Irish Individual Accountability Framework, including a Senior Executive Accountability Regime ("SEAR"), has picked up speed.
The Central Bank of Ireland ("Central Bank") identified issues with the culture and governance frameworks in financial institutions, which ultimately led to the creation of the Bill.
According to the Bill, the Central Bank will have the authority to enact regulations that specify the behaviour that Firms must adhere to, including a legal requirement that they act in the best interests of their clients and the market's integrity; honestly, fairly, and professionally; and with the necessary skill, care, and diligence.
These individuals must take reasonable measures to ensure that the business of the firm for which they are responsible is controlled effectively and complies with relevant regulatory requirements. They must also take reasonable measures to ensure that any delegation of tasks for which they are responsible is to an appropriate person and that they oversee the discharge of delegated tasks. Additional conduct standards will apply to those performing control and senior executive functions.
Firms will be obliged to not only adhere by these requirements but also to include them as necessary in their internal policies, as well as to have systems, controls, and procedures in place to guarantee compliance.
A policy is put in place; and
A procedure and operational framework is implemented.
Such policies, procedures and operational frameworks should be updated where necessary to ensure they are aligned with the Central Bank's expectations and best practices on conduct, risk culture and individual accountability.