There’s a lot of doublespeak going on over the long-awaited introduction of a new personal responsibility regime for senior staff in financial services.
A survey of senior compliance officers operating in the Irish market on Monday warned proposed rules to make it easier for regulators to hold senior managers in banks and other financial firms accountable for failings under their watch would make it difficult for companies to recruit senior executives.
This view was held by more than half of respondents even though even bigger majorities agreed the introduction of the Central Bank (Individual Accountability Framework) Bill would bring about “meaningful change” and “better outcomes” for consumers.
A week earlier the president of the Compliance Institute said executives were entitled to the “same level of protection” as consumers and the financial services sector, warning that while there was “a clear need” to hold directors and officials to a higher standard “it is also a necessity that we do not lose high-calibre individuals for fear of the personal liability associated with a senior executive position”.
Planning regulator Niall Cussen: We can overcome the housing crisis, ‘if we put our minds to it’
On his return to Web Summit, the often outspoken chief executive Paddy Cosgrave is now an epitome of caution
Surviving a shake-up: is restructuring ever good for staff?
The Irish Times Business Person of the Month: Dalton Philips, Greencore
Cantillon can only imagine that consumers would relish the same level of protection as senior bankers who have proven untouchable despite the recklessness of Celtic Tiger-era lending that dragged the entire State into a period of unrivalled austerity and the subsequent tracker mortgage scandal when banks and their leaders had to be dragged very reluctantly to a reckoning.
Derville Rowland, the director general of financial conduct at the regulator, the Central Bank, put it very well some time ago, referring to a “very long list of global [financial service] misconduct scandals” that had eroded what was historically a very high level of trusts in banks.
“Internationally it is recognised that a lack of individual accountability is a key cultural driver of misconduct, prompting the [Swiss-based] Financial Stability Board to recommend that national authorities hold individuals accountable,” she told an audience of financial professionals.
In moving to a regime of individual accountability, Ireland is simply following the example established in the UK, Australia and further afield.
It will be late next year before the new regime is up and running. Serving to ensnare only the reckless, the irresponsible and the criminal, it should be welcomed by bankers, not feared. It is long past due and it will, in any case, be a prerequisite to any lifting of restrictions on banker pay.
