The Department of Finance recently received approval from Cabinet to draft the heads of a Central Bank (Amendment) Bill. Minister for Finance, Paschal Donohoe, has stated his intention to publish the heads of this Bill before the end of 2019.

The legislation is intended to give the Central Bank increased regulatory powers in order to stimulate greater accountability and transparency in the financial sector by:

  • Introducing a Senior Executive Accountability Regime (SEAR) which places obligations on firms and senior individuals within them to set out clearly where responsibility and decision-making power lies. This will make it easier for regulators to fine, sanction and disqualify top financial executives for regulatory failings.
  • Imposing binding and enforceable Conduct Standards on all Regulated Financial Service Providers (RFSP) and individuals working within them.
  • Creating an enhanced Fitness & Probity Regime in order to strengthen the obligation on firms to assess individuals in controlled functions on an ongoing basis.
  • Breaking the “participation link” so that the Central Bank may pursue individuals directly. This addresses a known deficiency in current legislation, which requires the Central Bank to first prove that a financial company has breached the legislation before it can take action against individuals suspected of participating in the contravention.

Minister Donohoe has also indicated that the legislation will address aspects of Deputy Pearse Doherty's Private Member's Bill (Central Bank (Amendment) Bill 2018) on the provision of false and misleading information to the Central Bank.

This legislation is being drafted against the backdrop of the tracker mortgage revelations, which prompted Minister Donohoe to request the Central Bank to conduct a review of retail bank behaviour in November 2017. This culminated in the publication of the Behaviour and Culture of the Irish Retail Banks Report in July 2018, which report has influenced much of the legislative approach being contemplated by the Minister and his officials.

The regulatory oversight outlined above has already been introduced in other jurisdictions. In the UK, the Financial Conduct Authority and the Prudential Regulation Authority introduced a senior accountability regime for banks, building societies, credit unions and banking firms back in March 2016. The scope of the regime was extended to insurers in December 2018 and will be extended to all regulated firms by December 2019.