Under the fitness and probity (F&P) regime the Central Bank of Ireland acts as a 'gatekeeper' for certain key roles in financial services. In our regulatory practice we have experienced an uptick in the frequency of PCF applicants being interviewed as part of this gatekeeping process. Previously such applications had been reviewed and approved by the Central Bank, in many instances without the requirement for a candidate to attend at interview. In addition, PCF interviews are becoming increasingly challenging and require the applicant to explain their experience relevant to the competencies required by a particular role. In some circumstances PCF applicants will be called upon to explain in detail, the nature of their involvement in any previous regulatory issues that have been disclosed in Individual Questionnaire (IQ) application forms.
The Central Bank of Ireland has recently published a Fitness and Probity Interview Guide (the Guide) which is essential reading for regulated financial services providers and any the individuals they propose for pre-approval controlled functions (PCFs).
The Guide outlines information in relation to both the standard-form assessment interview and the more intrusive interviews, described as 'Specific interviews'.
Assessment interviews are standard for assessing fitness and probity. Many PCF applicants will not be required to attend at interview although we are seeing such interviews becoming more common. It is routine for the Central Bank to interview the Chair and the CEO in higher impact firms.
Assessment interviews are short in duration and usually conclude in under two hours. The interviews are held in a panel format and are largely informal and not recorded, although a note-taker may take minutes. The panel will be comprised of members of the relevant supervisory division of the Central Bank. Notification of these interviews is by email and the statutory power of the Central Bank to request the attendance of the applicant is not often utilised at this stage, in our experience.
Questioning will focus on the PCF-applicant's professional experience, skill set and how the applicant proposes to discharge the responsibilities of the PCF role. It may be helpful for the applicant to review the 'IQ' submitted as part of the application by the proposing firm, along with any supporting documents such as a CV. There is no necessity for the applicant to bring reference materials or, for example, to prepare a formal opening statement.
In our experience, when assisting applicants in advance of these interviews, it is often useful for them to collate and/or receive an accessible digest of relevant materials covering their past experience or relevant disclosures made during the 'IQ' process, the business activities of the proposing firm, the candidate's understanding of the role, the risks facing the firm and the material aspects of the history of the firm's regulatory engagements. Discussing relevant governance, oversight and controls is common, as is a review of the regulatory framework relevant to the individual firm and how the candidate would deal with time commitments and potential conflicts of interest.
Specific interviews are becoming increasingly common, particularly where there are or have been regulatory issues at the proposing firm or, perhaps more pertinently, in a firm where the applicant has previously been employed in a relevant role.
Specific interviews can often take the best part of a day, are formal in nature and are recorded. The Central Bank usually arranges these interviews by email and this will outline the possible outcomes of the interview. Importantly, the Central Bank will inform the applicant that they are entitled to be accompanied by a legal representative. Where there are or have been regulatory issues, careful consideration should be given as to the appropriateness of being accompanied by a legal representative and, if so, who should accompany the individual.
The interview panel is comprised of a member of the Enforcement Division, often a lawyer, as well as members of the relevant supervisory division of the Central Bank. In our experience across a number of these situations, questioning may focus on matters which will have been outlined to the applicant in advance of the meeting but may well go beyond those issues. In some cases, the applicant will be provided with documents by the Central Bank in advance, which will form the basis for the questions at the interview.
Again, in our experience, when assisting applicants in advance of Specific Interviews, individuals can often find it useful to familiarise themselves with the facts and regulatory analysis of any compliance or other regulatory issues disclosed in their IQ and to review contemporaneous documents to which they may have had access at the time of the events that are the subject of any such disclosure.
When deciding if a legal representative should attend any particular interview, a number of factors should be considered, including whether there are ongoing regulatory supervisory engagements or enforcement investigations proceedings in relation to the matters the subject of the interview, whether legal privilege will be a key issue during the interview (including whether legally privileged material will be discussed or may, even if not disclosed, be relevant in some way to the issues identified by the regulator in advance).
Following a specific interview the Central Bank may approve the PCF applicant or seek further information, which may include a further interview. The Central Bank also may decide to issue a letter stating that they are minded to refuse the application. Submissions can be made in writing in response to this letter, focusing on either the factual points identified by the regulator as any basis for any preliminary view they may have reached, or potentially raising any observations regarding the process followed during any particular pre-approval application. It is notable that currently the Central Bank does not publish the names of individuals who have not been approved for PCF roles, however this is due to change under proposals for the Individual Accountability Framework and Senior Executive Accountability Regime, legislation for which is due to be published in coming weeks.