The Central Bank Reform Act 2010 introduced new statutory standards of fitness and probity to be applied to high level positions within entities regulated by the Central Bank of Ireland (the “Central Bank”). The Central Bank has published a Consultation Paper (“CP 51”) proposing the implementation of new statutory fitness and probity powers. CP 51 sets out the Central Bank’s proposals on the introduction of statutory and enforceable standards of fitness and probity for the financial services industry and includes a list identifying the senior positions to which the powers should apply. The new requirements will apply to all entities regulated by the Central Bank with the exception of credit unions.

Proposals

The Central Bank is seeking views from stakeholders on the proposed new statutory standards of fitness and probity of persons in positions of significant influence in regulated financial service providers, which, together with certain statutory grounds identified in the Central Bank Reform Act 2010, will set the requirements for entry into and removal from a senior position within regulated firms. CP 51 sets out the legislative framework for the new powers under the Central Bank Reform Act 2010 which has provided the Central Bank with powers to veto senior appointments, as well as to suspend or remove people from senior positions. Where it is appropriate, the Central Bank can also prohibit individuals from working in senior financial services industry positions entirely.

The Act also provides additional criteria as to when the Central Bank can use its powers to refuse an application to appoint or remove someone to or from a senior position in a regulated entity and the Central Bank has, in CP 51, sought industry views as to what senior positions should be subject to the new regime. Under CP 51 it is also proposed to require firms to identify and maintain a record of the individuals who are in roles subject to the additional and more onerous requirements and firms will be required to provide a list of those individuals when the regulations come into effect.

Timeline

It is expected that new regulations and statutory standards implementing the regime will come into effect from 1 September 2011. Failure to comply with the fitness and probity requirements in the Act and the standards finalised by the Central Bank once CP 51 has been completed, may also be subject to sanction under the Administrative Sanctions Framework administered by the Central Bank.

Submissions on the proposals are required no later than 20 May 2011.