SEAR Update: The Central Bank Bill has now entered the third stage

The Central Bank (Individual Accountability Framework) Bill (the Bill) has now moved from the second stage, during which the general principles of the Bill were debated, to the third stage, also known as the committee stage, whereby the Bill is examined section by section and amendments may be made.

We have closely followed the debate at the second stage, during which the general principles of the Bill were debated, including the following points:

1. as indicated by the CBI previously, the conduct standards proposed in the new framework are in and of themselves, unremarkable. The innovation of the new framework is that a breach of the standards will be a prescribed contravention and therefore subject to enforcement by the CBI;

2. the removal of the participation link will require numerous amendments to the administrative sanctions procedure, including deletion of the concept of being concerned in the management of a regulated financial services provider;

3. the fitness and probity regime will be extended to persons performing controlled functions in relation to financial holding companies;

4. the Bill may be amended to take account of the ECB’s opinion on the proposed individual accountability framework. While the ECB strongly welcomes the measures envisaged by Bill, the opinion notes that in the case of significant credit institutions, the approval of appointments to controlled functions is subject to the exclusive competence of the ECB under Articles 4(1)(e) and 9 of the SSM Regulation. The Irish government has been requested to refrain from conferring regulatory authority and tasks on the CBI which may impinge upon the ECB’s exclusive competence in this regard; and

5. as regards timing, it was noted that: (i) much of the detail of the new framework will be set out in regulations to be made by the CBI; and (ii) a comprehensive consultation exercise will be conducted in relation to the CBI regulations.

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