On 9 March 2023, the President of Ireland signed the Central Bank (Individual Accountability Framework) Act 2023 (Act) into law.
On 13 March 2023, the Central Bank of Ireland (Central Bank) published a consultation paper Enhanced Governance, Performance and Accountability in Financial Services – Regulation and Guidance under the Central Bank (Individual Accountability Framework) Act 2023 (Consultation Paper).
Now that the Act has become law, regulated firms should review and progress their plans for implementation of the individual accountability legislation. The launch of the Central Bank’s consultation on the individual accountability framework and SEAR and the publication of its draft implementing regulations and guidance gives firms a more solid basis for ramping up their IAF/SEAR implementation projects.
Individual Accountability Framework
The individual accountability framework aims to increase levels of individual and personal accountability and responsibility in the Irish financial services sector.
The Act provides a legislative basis for the introduction, by the Central Bank, of an individual accountability framework comprising:
- a Senior Executive Accountability Regime (SEAR),
- standards of conduct for regulated financial service providers (RFSPs) and individual controlled function (CF) and pre-approval controlled function (PCF) holders in RFSPs
- enhancements to the existing regime fitness and probity regime
- increased enforcement powers for the Central Bank to facilitate the direct pursuit of individuals for contraventions of the conduct standards or responsibilities under SEAR.
The individual accountability framework is given legal effect by the Act and by regulations to be issued by the Central Bank (drafts of which are set out in Annex 1 of the Consultation Paper). The primary and secondary legislation will be supported by Central Bank guidance (drafts of which are set out in Annex 2 to the Consultation Paper).
Commencement of Act
On 1 March 2023, when the Act was passed by Dáil Eireann, the Minister for Finance, Michael McGrath, stated that all sections will be commenced as soon as possible, except for sections on SEAR, the conduct standards and the fitness and probity certification requirement. These sections are expected to commence following completion of the Central Bank’s public consultation, which runs for a three-month period from 13 March 2023 to 13 June 2023.
We await publication of the Act and commencement orders.
Central Bank Consultation and Implementation Timeline
The Consultation Paper includes the Central Bank’s proposals for draft implementing regulations and guidance and proposes the following implementation timeline.
| Pillar | To Apply From |
| Conduct Standards (including accountability of senior individuals for running their parts of the business effectively) | 31 December 2023 |
| Fitness & Probity Regime (certification and inclusion of holding companies) | 31 December 2023 |
| Regulations identifying responsibilities and requiring allocation of responsibilities by firms | 1 July 2024 (for firms falling within scope of the initial phase of SEAR) |
Next steps
Now that the Act has become law, regulated firms should review and progress their plans for implementation of the individual accountability legislation. The launch of the Central Bank’s consultation on the individual accountability framework and SEAR and the publication of its draft implementing regulations and guidance gives firms a more solid basis for ramping up their IAF/SEAR implementation projects.
How we can help
William Fry has been assisting regulated financial service providers with their preparations for the individual accountability regime for some time and now is a good time to engage or re-engage with the William Fry Financial Regulation team. See our Individual Accountability and SEAR – An Implementation Action Plan here which has been updated to take account of the enactment of the primary legislation.
We will be hosting a lunchtime webinar at 1pm on Wednesday 29 March 2023 to provide support to firms on next steps/actions arising from the final text of the Act and from the Central Bank’s draft implementing regulations/guidance published on 13 March 2023 as part of its public consultation on the individual accountability framework/SEAR.
Please visit our dedicated Individual Accountability & SEAR web page for our analysis and commentary to date.
Contact Us
For more information, please contact Shane Kelleher, Louise Harrison, Derek Hegarty or any member of the Financial Regulation Unit or your usual William Fry contact.
Contributed by Jane Balfe
