Following the publication of the Central Bank’s draft Guidance on the Individual Accountability Framework (IAF) in March 2023 and the consultation process which closed in June 2023, it appears that publication of the final Guidance and the feedback statement on the Consultation is imminent and will be published next week.
In his opening speech at yesterday’s Financial System Conference 2023 organised by the Central Bank (CBI), the Governor of the CBI, Gabriel Makhlouf, discussed the IAF and the Senior Executive Accountability Regime (SEAR).
In this context, the Governor announced that it will defer, by one year, the application of elements of the new framework to non-executive directors (NEDs) and independent non-executive directors (INEDs).
The Governor’s speech is not clear on what specific aspects of the IAF are being deferred, for example, whether or not the deferral is limited to SEAR only or is wider than that, encompassing the IAF’s Conduct Standards. Legislative amendments would be required to effect any deferral of the Conduct Standards. This is in light of the fact that the Conduct Standards are set out in the Central Bank (Individual Accountability Framework) Act 2023, the relevant Commencement Order has already been signed and the Standards’ scope includes application to NEDs and INEDs as controlled functions.
The Governor stated that the CBI's decision was intended to enable both the CBI and regulated firms to learn from the introduction of the new framework to executives, in the first instance, as well as how the CBI will use the framework to inform its supervision.
The Governor also indicated that the CBI's feedback statement on its public consultation on the IAF (CP153) and related guidance will be published during the course of next week and we hope that the documents will provide clarity on the scope and application of the deferral.
It was also announced that the CBI intends to review and reduce the number of prescribed responsibilities in response to concerns raised at industry level regarding the number and scope of those prescribed responsibilities.
A&L Goodbody has been at the forefront of feedback on the scope and content of the Individual Accountability Framework since it was first proposed. We continue to assist clients in implementing the IAF, including by way of training, briefings, policy updates and enhancements. We also work with clients on developing a framework of individual accountability including Statements of Responsibilities, Management Responsibilities Maps and supporting infrastructure to ensure embedding of accountability.
We will continue to provide updates on developments on the IAF, in particular when the final Guidance is published.