Michael McGrath

A commencement order was signed by finance minister Michael McGrath yesterday to bring into effect Parts 1, 3 (other than section 10), 4, 5, 6 and 7 of the Central Bank (Individual Accountability Framework) Act 2023.

The remaining provisions, including those providing for a new senior executive accountability regime (SEAR), will be commenced later in the year following the completion of a public consultation.

The sections commenced yesterday provide for enhancements to the operation of the Central Bank’s fitness and probity (F&P) regime, in particular to the Central Bank’s enforcement powers, as well as extending the F&P regime to certain categories of holding companies.

There are also changes to the Central Bank’s administrative sanctions procedure (ASP), including new powers to take take enforcement action directly against individuals for breaches of their obligations rather than only for their participation in breaches committed by a firm.

The additional powers that will be provided to the Central Bank “are significant and care has been taken to adopt the correct balance between these powers and the protection of individuals’ constitutional rights”, the Department of Finance said.

Mr McGrath said: “Today, as a large part of the Central Bank (Individual Accountability Framework) Act comes into operation, marks an important further step in work to transform the culture of the financial services industry in Ireland.”

He added: “I look forward to commencing the remainder of the Act later this year, giving the Central Bank of Ireland the regulatory tools necessary to ensure that consumers dealing with financial service providers in this country can be confident that their best interests will be protected.

“I would ask the financial services sector to engage with the consultation process put in place by the Central Bank so that their views can be taken into account by the Central Bank as it progresses work on the senior executive accountability regime, the certification of individuals’ fitness and probity, and the various guidance documents covering the individual accountability framework, including the guidance on the conduct standards.

“Ultimately a key challenge is to continue to rebuild trust in the financial sector following the global financial crisis. This will require ongoing cultural and practical change in the banking sector and throughout the financial services industry building on the progress that has been made to date.

“The Central Bank (Individual Accountability Framework) Act 2023 should make a significant contribution to bringing about this needed cultural change. This is the ultimate aim of this legislation.”