IAF update: Report and final stages of the IAF Bill
As previously highlighted, the Central Bank (Individual Accountability Framework) Bill 2022 (IAF Bill) was published in July of last year, with a series of amendments to the Bill published in December. The IAF Bill is continuing to progress through the legislative process and, at yesterday's report and final stage before the Dáil, consideration was given to four typographical amendments, all of which were agreed.
Dáil debate commentary
In moving the amendments, the Minister for Finance, Deputy Michael McGrath, emphasised that the transformation of culture in financial services organisations has recently been a key focus of financial regulators, and that the IAF Bill will place the Central Bank of Ireland (CBI) among the most forward looking of these regulators. He further highlighted that the IAF Bill will play a key role in ensuring a financial services sector that prioritises customers and in which honest, ethical and professional behavior is second nature to those working in the industry.
Culture, and conduct generally, is an ongoing area of focus for the CBI, and its consistent messaging is that the Individual Accountability Framework (IAF) is fundamentally about underpinning good conduct and high quality governance and culture within firms. The CBI has emphasised that culture is a matter for each individual firm, with the role of prescribing culture falling to the board and senior leadership teams. The CBI's expectation is that the board and senior leadership teams should define a set of values and guidelines for desired behaviour and lead by example with regular re-enforcement to ensure the culture is actively shared.
The Minister for Finance also emphasised that the IAF Bill will ensure the CBI's enforcements processes meet the standards of fairness and transparency required by the Constitution, as interpreted by the Supreme Court in Zalewski v Adjudication Officer.
Whilst welcoming the IAF Bill, Deputy Pearse Doherty criticised the length of time it has taken to come before the Dáil, commenting that it is long overdue. Deputy Doherty acknowledged that the CBI will set out the scope of the Senior Executive Accountability Regime (SEAR) in regulations and flagged an expectation that its scope will be expansive, and kept under constant review.
Deputy Doherty also requested a commitment from the Minister for Finance to consider the following issues, which he had previously raised at Committee Stage:
- clarity on the training that will be required by firms, to ensure the effective implementation of their responsibilities under the IAF Bill
- the six-year look back period, during which time an individual will remain subject to a CBI investigation after leaving a controlled function, and whether this may pose a problem for ensuring accountability after the fact, particularly where issues/contraventions may not come to light within this timeframe
- the CBI's power to discontinue an investigation for reasons of lack of resources, which, in the Deputy's view, is an unacceptable reason for discontinuance
The IAF Bill now progresses to the Seanad for consideration, with expected enactment in or about March 2023.
As regards implementation of the IAF Bill, many provisions may be subject to delayed commencement orders, particularly those requiring consultation/stakeholder engagement, such as the SEAR framework. However, others such as provisions concerning procedural amendments to the CBI's administrative sanctions procedure and fitness and probity regime may commence upon enactment.
The CBI has indicated that, once the IAF Bill is enacted, it will move quickly to consult and engage with stakeholders on the 'operationalisation' of the IAF. This consultation is expected to include draft regulations and accompanying guidance.
A&L Goodbody has been preparing for, and assisting clients in respect of their implementation of, the IAF and SEAR for some time. We will continue to publish insights as the legislation, guidance and CBI consultation process develops.
Visit our Individual Accountability Framework website for further materials, practical guides and thought leadership on this important topic.
For further information on the IAF and SEAR, and how ALG can assist your business, please contact Dario Dagostino, Partner, Mark Devane, Partner, Patrick Brandt, Partner, Christopher Martin, Of Counsel, Sian Langley, Knowledge Lawyer, Duncan Inverarity, Partner, Noeleen Meehan, Partner, Michael Doyle, Partner, James Grennan, Partner, Laura Mulleady, Partner, Sinéad Lynch, Partner, Emma Martin, Of Counsel, Kerill O'Shaughnessy, Partner, Charlie Carroll, Partner, Gillian McDonald, Partner. Or your usual contact on the ALG SEAR team.
Date published: 2 February 2022
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