SEAR Hub has produced a marked up copy of the Bill based on the most recently agreed amendments.
Copy of Bill as passed by both Dáil Éireann and Seanad Éireann HERE   

The SEAR is HERE (almost)!

The only amendments to the Central Bank (Individual Accountability Framework) Bill 2022 (Bill 75 of 2022) agreed by Seanad Éireann (i.e. section 94 x 2 amendments) were agreed by Dáil Éireann on Wednesday 1st March 2023.  

The amendments are:

Amendment No. 1:
Section 94: In page 74, to delete lines 20 to 23 and substitute the following:
“(3) In relation to an inquiry, notice of which was given by the Bank before the commencement of section 53, the Act of 1942, as amended by sections 53 and 55 and Chapter 3 of Part 4, applies in relation to the following:

(a) an inquiry decision made before the commencement of section 53 if the decision has not, before that commencement, been notified by the Bank to the regulated financial service provider or person concerned;
(b) an inquiry decision made after the commencement of section 53.”.

 Amendment No. 2:
Section 94: In page 74, to delete lines 29 to 32.

What happens next?

Michael McGrath, Minister of Finance informed Dáil Éireann: In terms of commencement, I inform the House that all sections of the Bill will be commenced as soon as possible following enactment, with the exception of sections 3 to 6, inclusive, and section 10 that deal with the senior executive accountability regime, conducts standards and certification, respectively. These sections will be commenced following the completion of the Central Bank's public consultation that I urge all interested parties to engage with to inform the regulations and guidance that will underpin the provisions of the Bill. It is expected that the Bill, as enacted, will be fully implemented in the current year.

Copy of Bill as passed by both Dáil Éireann and Seanad Éireann HERE  ​

Hi all - hoping that these blogs keep you updated on the progress through the Oireachtas of the Central Bank (Individual Accountability Framework) Bill 2022 (Bill 75 of 2022).  On 16 February 2023 the Bill completed Senead Éireann's Third Stage known as the Committee Stage having commenced there on 8 February 2023.  On the last day of the Committee Stage, following amendments to the Bill, the Report Stage was ordered for Tuesday 21 February 2023 at 230pm.

The Report Stage is #9 in the above image. During the Report Stage amendments arising from the Committee Stage are considered.  Those of you wishing to learn more about the newly appointed (December 2022) Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Jennifer Carroll MacNeill might wish to spend a bit of time reading through the debate in Senead Éireann of 16 February 2023

There was a good debate on the Bill during the Committee Stage. During the Committee Stage an amendment moved by Michael McDowell (Amendment #1) was defeated or otherwise referred to as 'amendment declaration lost'.  The defeated amendment intended that the Central Bank would be subject to a duty of full disclosure during any proceedings or investigation in respect of any natural person (including any appeal or application to the High Court) where that person may become liable to any prohibition or penalty under the provisions of the Act of 1942, the Act of 2010 or the Act of 2013.

​The definition of “a duty of full disclosure”, had the amendment been accepted, would have meant that the Central Bank of Ireland would have a duty to draw to the attention of and make available to any such person all information and documentation to which the Central Bank has reasonable access or has in its possession, power or procurement that might reasonably be of assistance to that person in his or her participation in the course of and for the purposes of such proceedings or investigation including opposition to the imposition of a prohibition or penalty or in relation to the mitigation of any such penalty.

Accordingly, Amendment #2, also moved by Senator Michael McDowell, being consequential on amendment Amendment #1 was not moved.

Another amendments moved but lost was for the business standards which the Central Bank has the power to prescribe would include ensuring that a regulated financial service provider ... acts in the best interests of customers, society and of the integrity of the market. [i.e. 'society' added after 'customers'].  The amendment having been put was declared lost. 

​If you wish to see all the amendments and how they were concluded, simply go to the debate of 16 February 2023 and search on the words 'lost', 'withdrawn' and 'declared lost' at the link in the 2nd paragraph of this blog.

7 December 2022: The Central Bank (Individual Accountability Framework) Bill 2022 was amended in Committee/Select Committee (Dáil Eireann).  You can obtain a copy of the amended Bill on S.E.A.R Hub's SEAR & IA Framework page under the Bill Tracker.

On 19 October 2022, the Central Bank (Individual Accountability Framework) Bill 2022 ("Bill") commenced its journey to the Third Stage after being referred to the Select Committee on Finance, Public Expenditure and Reform, and Taoiseach pursuant to Standing Orders 95 and 181.

The Bill passed through the Second Stage on 18th and 19th October. On 18th October Minister for State at the Department of Finance (Deputy Sean Fleming) moved that the Bill be now read a Second Time.

Much of the detail of the individual accountability framework, including the initial scope of the SEAR, will be included in future Central Bank regulations. You will not find that detail in the current draft of the Bill.  Ahead of making such regulations, the Central Bank intends to conduct a comprehensive consultation exercise. The Minister said "I strongly urge all industry participants to engage constructively with this consultation process. Before the main provisions of the Bill are outlined, I will take this opportunity to flag the Minister's intention to propose a number of minor amendments on Committee Stage."

The Minister also stated that the Bill:

• "is a further step in enhancing existing regulatory powers" and that it will "play a key role in driving the positive cultural change in financial services organisations". 
• "will make individuals in financial services firms more responsive and responsible by enhancing individual accountability in decision-making at all levels, particularly at senior levels in financial institutions."
• "introduces the individual accountability framework, comprising the senior executive accountability regime, SEAR, conduct standards for firms and for individuals performing controlled functions and the duty of responsibility. By ensuring that there is clarity about who is responsible for what, the senior executive accountability regime will ensure that, in the event that there is wrongdoing in a firm regulated by the Central Bank, the resulting investigation can be focused and effective."
• "serves as a clear declaration of the standards of behaviour expected of those working in the financial services industry, providing conduct standards for regulated financial services providers, RFSPs, and individuals performing related functions and providing for the sanctioning of individuals who breach these responsibilities. The conduct standards are, in and of themselves, unremarkable. They outline the expectations of financial sector executives to act with honesty and integrity, due skill, care and diligence, to co-operate with the regulator, to treat customers fairly and to comply with standards of market conduct."
• will be "an additional enforcement tool for the Central Bank.  While the enforcement and penalty decisions of the bank will continue to be guided by considerations of fairness and proportionality, the Bill will introduce enhancements to the Central Bank's existing supervisory and enforcement frameworks. There will be changes to the administrative sanctions procedure under Part IIIC of the Central Bank Act 1942 and to the fitness and probity regime under Part 3 of the Central Bank Reform Act 2010. The fitness and probity regime will be extended to cover various categories of financial holding companies. To facilitate holding individuals accountable for their actions, the Bill will break the existing participation link which requires wrongdoing by a firm to be demonstrated before enforcement action can be taken against an individual person in the management of that particular firm."
• "provides an opportunity to review the Central Bank's processes in light of the Supreme Court's decision in the case of Zalewski v. Adjudication Officers and others (Link 1 / Link 2 / Link 3 / Link 4). The changes included in the Bill will ensure these processes conform to the standards of fairness required by the Constitution in the administration of justice and provide for enhanced oversight by the High Court. Given that the Central Bank's enforcement powers will be extended to a wider cohort, including more junior members of staff, due regard has to be given to the constitutional rights of all concerned in preparing the Bill for publication. The complexity of certain elements of the Bill is necessary to achieve this important objective and to include appropriate safeguards.and will introduce enhancements to the Central Bank's existing supervisory and enforcement frameworks. There will be changes to the ASP and to the F&P regime including extending the fitness and probity regime to cover various categories of financial holding companies and breaking the existing participation link which currently requires wrongdoing by a firm to be demonstrated before enforcement action can be taken against an individual involved in the management of the firm." [Note - The Central Bank Act 1942 was amended in 2004 to provide for administrative fines in the financial sector. This was found constitutional in Purcell v Central Bank of Ireland [2016] IEHC 514 , but that case may have to be reconsidered in the light of Zalewski.]

Central Bank Consultation Process (as noted above): The Minister said "Much of the detail of the individual accountability framework, including the initial scope of the SEAR, will be included in the Central Bank regulations. Ahead of making these regulations, the Central Bank intends to conduct a comprehensive consultation exercise. I strongly urge all industry participants to engage constructively with this consultation process. 

Amendments Proposed at Committee Stage (as noted above): The Minister said "Before the main provisions of the Bill are outlined, I will take this opportunity to flag the Minister's intention to propose a number of minor amendments on Committee Stage."

Locate a copy of the Bill as initiated on 28 July 2022 and the accompanying Explanatory Memorandum here.

Posted by: Peter Oakes, Founder of CompliReg a leading specialist governance, regulatory and compliance strategy firm.  Peter established and led the Enforcement and AML/Supervision Directorate of the Central Bank of Ireland as its inaugural Assistant-Director General, then later Director of Enforcement and AML/CFT Supervision. ​

About the Central Bank (Individual Accountability Framework) Bill 2022 (Bill 75 of 2022)

It is a Bill to:

• amend the Central Bank Act 1942
• to extend the application of the administrative sanctions procedure to persons performing controlled functions and to certain holding companies
• to provide for the appointment of a panel from which appointments may be made for the purposes of certain decisions
• to provide for the admissibility of business records at an inquiry
• to provide for disclosure agreements
• to provide for an application for confirmation by the High Court of a decision of an inquiry under Part IIIC and a decision of the Irish Financial Services Appeals Tribunal under Part VIIA of that Act
• to amend the Central Bank Reform Act 2010 to extend the regulation and supervision of financial service providers and persons performing controlled functions and pre-approval controlled functions through the introduction of business standards, conduct standards and the duty of responsibility
• to provide for the independence of persons carrying out an investigation in the performance of their functions
• to provide for the independence of persons to whom a function of the Head of Financial Regulation, the Central Bank or the Governor is delegated in the performance of their functions
• to provide for a right of appeal to the Irish Financial Services Appeals Tribunal of a decision of the Head of Financial Regulation to confirm a suspension notice
• to increase the period for which the High Court may extend the duration of a suspension notice, and
• to provide for an application for confirmation by the High Court of a decision of the Central Bank or Governor to issue a prohibition notice
• to amend the Central Bank (Supervision and Enforcement) Act 2013 to extend the regulation making power of the Central Bank to provide for arrangements that financial service providers shall adopt in relation to the allocation of responsibilities and compliance with obligations under financial services legislation
• to amend the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (S.I. No. 352 of 2011), and
  
• to provide for related matters

Posted by: Peter Oakes, Founder of CompliReg a leading specialist governance, regulatory and compliance strategy firm.  Peter established and led the Enforcement and AML/Supervision Directorate of the Central Bank of Ireland as its inaugural Assistant-Director General, then later Director of Enforcement and AML/CFT Supervision. ​

​On 04 July 2022 the Finance Minister sought approval from the Government for the text of the Central Bank (Individual Accountability Framework) Bill. The draft legislation is expected to be published prior to the Dáil’s recess on 14 July 2022.

Once the draft legislation is published, we will post a link here.

[Update 28th July 2022 - The Bill is located here.]

Posted by: Peter Oakes, Founder of CompliReg a leading specialist governance, regulatory and compliance strategy firm.  Peter established and led the Enforcement and AML/Supervision Directorate of the Central Bank of Ireland as its inaugural Assistant-Director General, then later Director of Enforcement and AML/CFT Supervision. ​

There are four (4) recommendations arising out of the Joint Committee on Finance, Public Expenditure and Reform and Taoiseach Report on Pre-Legislative Scrutiny of the General Scheme of the Central Bank (Individual Accountability Framework) Bill 2021 (33/F/7 April 2022).

The four (4) recommendations are:

• ​Recommendation 1

The Committee recommends that the Central Bank report on the possible inclusion in the SEAR of the entities currently proposed to be excluded (credit unions, reinsurance/captive reinsurance undertakings and Insurance Special Purpose Vehicles) within one year of commencement of the Act.
​

• Recommendation 2

The Committee recommends that the Department should clarify if certain payment gateways are to be excluded from the SEAR.

• Recommendation 3

The Committee recommends that, upon conclusion of the extensive consultation exercise with the financial services sector proposed, the Central Bank reports back to the Committee with any revisions or changes to the scheme based on the consultation. 

• Recommendation 4

The Committee recommends that the Department clarify the intended meaning of ‘third country branches’ of the RFSPs included in the SEAR.

The General Scheme contains 41 heads in six parts as follows:

​Cathaoirleach's forward from the Joint Committee on Finance, Public Expenditure and Reform and Taoiseach

​The General Scheme of the Central Bank (Individual Accountability Framework) Bill 2021 proposes to address matters related to individual accountability on the part of senior executives in the financial sector through a Senior Executive Accountability Regime (SEAR), the introduction of new conduct standards for businesses and individuals, an enhanced fitness and probity regime, and a breaking of the “participation link” between the firm and the individual. The proposed scheme will convey further powers on the Central Bank to intervene on these matters and have a meaningful impact on holding individuals accountable for wrongdoing.

Senior executive accountability and reform is of great importance and interest to the Joint Committee, and Members will continue to monitor and engage with the Central Bank and Department of Finance as they implement the regime and ancillary proposals. The submissions received from both the Banking Payments Federation of (BPFI) and the Irish Banking Culture Board (IBCB) highlighted to the Committee the importance of the implementation of a SEAR process that was both flexible in its implementation, but also strict in its approach in order to be effective.

In the course of the meetings held, it was established that the Committee would like some clarity regarding the scope of the entities encapsulated by the framework and the possibility that this may be widened. In addition, the Committee fully endorses the request in both submissions received as part of the scrutiny process that the consultation process should be essential in actioning the proposed measures. To this end, the Committee strongly recommends that the Central Bank reports to the Committee within one year of the commencement of the legislation on both the scope and effects of the consultation process.
I wish to thank the BPFI and IBCB for providing submissions and the representatives from the Central Bank of Ireland for attending meetings of the Joint Committee as part of the analysis of the general scheme. The Joint Committee also thanks the Secretariat for its work on this report and the Department officials who assisted the Committee with its consideration of the general scheme. The Joint Committee is supportive of the general scheme and looks forward to further engaging with the Minister as the legislation progresses through the Houses of the Oireachtas.

Report available HERE

This is around minutes 55-57 (around 2:25pm-2:27pm) at full video at Oireachtas.ie  ​https://media.heanet.ie/page/0382d466362a4d90b07d8e7d7f27fdd9 

13:30 Wednesday 3 November 2021
​
Oireachtas Hearing: Director of Financial Regulation - Policy & Risk, Gerry Cross, and Director of Enforcement & Anti-Money Laundering, Seána Cunningham, at Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach on Central Bank (Individual Accountability Framework) Bill.

This should be an interesting hearing, and worth tuning in, as we believe it is the first appearance by the Central Bank of Ireland before an Oireachtas Committee on the General Scheme of Central Bank (Individual Accountability Framework) Bill .  Copy of the General Scheme here.

If you are not familiar with the structure of the Central Bank of Ireland, see the image below showing where  Seána Cunningham and Gerry Cross sit within the organisation (as at 29 October 2021)

Sources:  
https://www.oireachtas.ie/en/committees/schedule/
Central Bank of Ireland

Author: Peter Oakes, Founder of CompliReg a leading specialist governance, regulatory and compliance strategy firm.  Peter established and led the Enforcement and AML/Supervision Directorate of the Central Bank of Ireland as its inaugural Assistant-Director General, then later Director of Enforcement and AML/CFT Supervision.