Members of the Oireachtas Finance Committee have voiced frustration at how planned senior executive accountability rules for financial firms may not be in place until early 2023, 4½ years after the Central Bank called for such a regime.
The Government published the general scheme of the so-called Central Bank (Individual Accountability Framework) Bill in July, with the Minister for Finance Paschal Donohoe predicting at the time that it could be a further 18 months from then before the regime would be in place.
Sinn Féin finance spokesman Pearse Doherty said on Wednesday, as the committee questioned senior Central Bank officials as part of a pre-legislative scrutiny of the general scheme, that the delays were "unacceptable". Labour Party Senator Marie Sherlock said that many members of the committee were "very frustrated" by the long wait for the heads of the Bill.
The proposed laws involve the setting up of a senior executive accountability regime (Sear) as well as the introduction of common conduct standards for key employees, and follow on from a similar rules introduced in the UK in 2016.
“The objective of the [individual accountability framework] proposals is to ensure good standards of governance and behaviour amongst financial firms to the ultimate benefit of consumers and investors while respecting the key principles of proportionality and predictability,” Gerry Cross, director of financial regulation in the areas of policy and risk, told the committee.
“It will help firms identify risks before they crystallise, facilitate greater internal challenge, and ultimately should result in fewer serious issues in the sector. Where serious issues do arise, however, we will not hesitate to take enforcement action, using the enhanced toolkit of the framework to ensure individual as well as firm-level accountability.”
Greater powers
Mr Cross said the Central Bank,which called for greater powers in the wake of the tracker-mortgage scandal, is “very keen” to introduce the regime with little delay after legislation has passed, following a period of consultation.
The Irish public has lower trust in its banking system than consumers globally have in financial firms, according to a survey carried out by consultancy firm Edelman for the Irish Banking Culture Board (IBCB) earlier this year. It follows on from taxpayers having to commit €64 billion to bailing out the sector during the crisis, and the tracker mortgage debacle.
A central aim of Sear is to do away with a key part of the existing regime – what is known as the “participation link”, where regulators must first find that a financial firm committed regulatory breaches before they can take individuals to task.
The Central Bank’s current sanctions toolkit, ranging from barring executives from senior financial roles to fines of up to €1 million, will continue to apply.
