The past few days have reminded us of the lightning speed at which authorities can act to try to stem the fallout from a bank running into trouble. The US moved over the weekend to protect depositors of Silicon Valley Bank, which collapsed on Friday, and the Bank of England oversaw a sale of its UK unit to HSBC to protect depositors and funding lines to the unit’s customers, mainly start-ups.
Getting regulations over the line to help protect banks from themselves is another matter, as we’ve seen with the torturously slow passage of a senior executive accountability regime in the Republic.
Almost five years after the Central Bank called for legislation to make it easier to hold senior finance industry executives accountable for wilful acts of wrongdoing in the industry in the wake of the tracker mortgage scandal, we finally saw the signing into law of the Central Bank (Individual Accountability Framework) Act last week.
A central aim of the accountability regime – similar to one introduced in the UK in 2016 in the wake of scandals surrounding the rigging of interest-rate benchmarks and the foreign-exchange market – is to do away with a key part of the existing sanctions regime, known as the “participation link”, where regulators must first find that a financial firm committed regulatory breaches before they can take individuals to task.
[ Central Bank starts consultation on banker accountability rulesOpens in new window ]
The Central Bank, in fairness, didn’t waste time launching an initial consultation period on Monday on how it plans to operate the new regime.
Still, it will be the end of this year before the first elements of the framework is implemented, when senior executives of banks, insurers and investment firms will be bound by conduct standards such as acting honestly, fairly and professionally. They’re hardly earth-shattering.
But we learned on Monday that the initial 150 in-scope firms are being given until the middle of next year to document top managers’ responsibilities – a move that would make it easier for regulators to go after individuals if they take unnecessary, uncalculated risks, refuse to follow correct processes or knowingly commit wrongdoing.
That will be six years to the month after the regulator first called for the new powers.
