On 9 March 2023, the Central Bank (Individual Accountability Framework) Act 2023 (IAF Act 2023) was signed into law.
This legislation provides a substantial change in the governance of financial firms by the Central Bank of Ireland arising from the global financial crisis, when cultures of responsibility in financial institution sectors were found to fall short. The IAF Act 2023 (here) is designed to ensure clear management structures are in place, holding individuals in senior management and the financial firms in which they work accountable for the effective running of financial firms.
This is a framework piece of legislation, the detail of which is to be implemented by the Central Bank through Regulations and guidelines.
The Central Bank has announced a three-month consultation process with industry stakeholders on these implementing measures, which are to take effect as follows:
- New Senior Executive Accountability Regime (SEAR) and Conduct Standards – to apply from 31 December 2023.
- An amended Fitness and Probity Regime including certification of roles and extension to certain holding companies – to apply from 31 December 2023.
- New Controlled Functions responsibilities and a map of management responsibility - to apply from 1 July 2024.
As previously outlined in our Insights series, these are substantial changes to the current governance requirements for financial service providers and need to be reviewed and implemented with sufficient time across Regulated Financial Services Providers (RFSPs).
This consultation process gives us an opportunity to engage with the Central Bank to devise a workable regime and make representations on behalf of our clients. It will run from 13 March 2023 to 13 June 2023.
