Central Bank of Ireland Update

6th December 2023

Central Bank of Ireland – Implementation of the Individual Accountability Framework (IAF) and Senior Executive Accountability Regime (SEAR)

The Central Bank of Ireland (CBI) has concluded its consultation phase, leading to the release of a Feedback Statement along with new Regulations and Guidelines on the IAF. This initiative aims to reinforce governance, performance, and accountability in the financial services sector.

Key Elements of the IAF:

  • Senior Executive Accountability Regime (SEAR): Defines the accountabilities of senior executives – Note: this is not applicable to Insurance Intermediaries/MGA’s
  • Conduct Standards: Enforced for all employees in regulated entities.
  • Improved Fitness & Probity Standards: Emphasising the competence of individuals in pivotal roles.

Important Timelines:

  • 29 December 2023: Activation of the Conduct Standards and the improved Fitness and Probity Standards.
  • 1 July 2024: SEAR Regulations become effective for targeted firms.
  • 1 July 2025: Expansion of SEAR Regulations to encompass Non-Executive Directors (INEDs/NEDs) at targeted firms.

Revisions and Insights:

  • Prescribed Responsibilities (PR): Adjustments following feedback, including consolidation and redistribution of certain PRs.
  • Role Sharing: Specific PCF roles, like Head of Underwriting and Head of Investment, can be co-held, with detailed documentation required.
  • Documentation Obligations: Firms must maintain up-to-date Statements of Responsibilities and Management Responsibility Maps, with a 10-year retention policy.

The CBI will offer additional guidance on adhering to SEAR and Conduct Standards.

Interim appointments in PCF roles are included under this framework, with particular considerations.

Outsourcing and Certification Processes:

  • A designated PCF role holder is required for overseeing outsourcing.
  • Updated certification criteria for various positions, focusing on comprehensive due diligence for PCF and CF1-2 roles.

Disciplinary Reporting Adjustments:

  • Modified reporting standards for disciplinary actions linked to Conduct Standards breaches.

SEAR Applicability:

Relevant to banks (excluding credit unions), insurance companies, selected investment firms, and incoming third-country branches.

Full compliance required for incoming third-country branches and significant application to outgoing branches of relevant firms.

Immediate Actions: Members are encouraged to familiarise themselves with the new Guidelines, revise internal policies, and ensure adherence to the specified deadlines and stipulations. Special focus should be on the Conduct Standards, and the enhanced Fitness & Probity standards.

Note: Insurance intermediaries, including MGAs, are categorised as retail intermediaries by the Central Bank and are thus exempt from SEAR. This regime does apply to insurance companies, including life and general insurers (targeted firms).

If you would like to know more about the IAF and SEAR, please be sure to register for the MGAA’s Compliance Insights Meeting on Tuesday 12th December at 11am.

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  • Author : Jenna Foster
  • 6th December 2023