Yesterday, the Central Bank (Individual Accountability Framework) Bill 2022 (IAF Bill) was passed by the Dáil. The passing of the IAF Bill, and the introduction of the Individual Accountability Framework, is one of the most impactful regulatory changes of recent years.
The provisions setting out the Senior Executive Accountability Regime (SEAR) and the different broadly applicable conduct standards remain as they were in recent versions of the IAF Bill.
The only substantive change to the IAF Bill at this late stage related to enforcement procedures and, in particular, the conduct of any public inquiries which are currently being conducted under the 'administrative sanctions procedure'. Prior to being passed, the Dáil agreed two Seanad amendments which were necessary to ensure that inquiry decisions made post-commencement of the IAF Bill, but relating to inquiry processes that had progressed before commencement of the IAF Bill, are subject to the new, 'Zalewski informed', appeal and court confirmation processes.
The Minister for Justice, Deputy Michael McGrath, clarified that all sections of the IAF Bill will be commenced as soon as possible following enactment, with the exception of sections 3 – 6 and section 10 of the IAF Bill, which address SEAR, the conduct standards and the fitness and probity 'certification requirement', respectively.
The Minister for Justice further clarified that these sections will commence following completion of the Central Bank of Ireland's (CBI) public consultation on these matters, which will inform the regulations and guidance that will underpin the provisions of the IAF Bill.
The Minister for Justice also outlined his expectation that the IAF Bill, as enacted, will be fully implemented in the current year.
The IAF Bill has now passed all stages of the legislative process and goes to the President for signature, with expected enactment within the next two weeks. We expect Commencement Orders in respect of the then IAF Act to follow shortly after enactment, together with the CBI's public consultation on SEAR, the conduct standards and the fitness and probity certification requirement.
With enactment imminent, it is essential that all regulated firms take steps now to assess the impact of the Individual Accountability Framework on their compliance and governance arrangements and business, together with steps to implement these wide-reaching reforms. Whilst SEAR will only apply to certain firms initially, all regulated firms should assess the implications of, and be preparing for, the introduction of the various conduct standards and the broader Individual Accountability Framework.
A&L Goodbody has been preparing for, and assisting clients in respect of their implementation of, the Individual Accountability Framework and SEAR for some time. We have now updated our comprehensive IAF and SEAR Guide to reflect the IAF Bill as passed by both the Dáil and the Seanad, and will continue to publish insights as the CBI guidance and consultation process develops.
As part of ALG's Regulatory Series, we will be holding a webinar on 30 March to update you on the latest expectations under SEAR and the IAF from the final legislation. Register your interest to attend HERE.