Three people have been removed or prevented from taking up senior positions in the financial services sector in the past 16 months because they did not meet the fitness and probity criteria of the Irish Financial Services Regulatory Authority (IFSRA).

IFSRA has established an "authorisation department" to vet people seeking to work in the upper echelons of the financial services sector and to assess firms applying for permission to operate in the sector.

IFSRA chief executive Dr Liam O'Reilly told the September lunch of the Leinster Society of Chartered Accountants yesterday that it would ensure that only people of the highest integrity occupied senior positions in the financial services sector.

Drawing a distinction with how newspapers sometimes acted, he said he was a firm believer in human rights and in not rushing to judgment regarding people.

However, the authority had to ensure people of the highest quality were running financial companies if the "principles-based" approach to compliance the authority favoured was to operate successfully.

IFSRA, which was established in May 2003, has to vet people's "fitness and probity" to operate as directors or senior executives in authorised firms, be they large or small.

As part of this role the authority is beefing up its forensic and assessment skills, as well as training staff in interviewing techniques and legal issues such as due process.

An IFSRA spokesman said that as well as the three individuals who had been refused authorisation to hold senior positions, a number of firms seeking authorisation to operate in the sector had dropped their applications when they saw it was unlikely they would be successful. He would not give any details or names.

Dr O'Reilly told the lunch that the average age of IFSRA's employees was 33.5 years and that staff "experience levels" were low and needed to be built up. In an effort to address this problem, the authority has been employing people who are well advanced in their careers, and this practice has proved useful.

The authority could never compete with the pay and conditions available in the private sector and so offered staff other rewards such as the opportunity to operate in a range of areas and to be involved in the public service, he said.

The "principles-based" approach that he favours places responsibility on boards and top management, who are expected to be competent and to ensure that systems are in place to ensure compliance has occurred.

Company directors and senior executives had a crucial role to play in inculcating a culture of compliance.

In the past there had been tensions between internal audit teams and executives, but the responsibility lay with executives to ensure that proper matters were brought to the attention of internal audit, Dr O'Reilly said.

"We must ensure that reward systems are set on the long-term bottom line and not the short-term bottom line," he said.

He said "rules-based behaviour" in relation to compliance has "caused trouble not just here but in [companies such as\] Enron and generally".

The spirit behind the rules must not be left behind, he said. The industry needed to do things "generally right" rather than just being precise and rules-focused.

Dr O'Reilly said IFSRA had been involved in a consultative process involving Government, industry, professional bodies, and the consumer. A three-year strategic plan was published last January.