The Central Bank of Ireland (the Central Bank) has recently published a statutory instrument that prescribes six new pre-approval controlled functions (PCFs) for the purposes of the fitness and probity regime (F&P). As a result, regulated financial service providers (RFSPs) will need to update their procedures and records. These updates will have to take account of those staff who currently fill the newly prescribed PCFs, and those who will fill PCFs in the future.
F&P requires that persons performing certain designated functions for RFSPs are competent and capable to carry on those functions (the “fitness” aspect), and that they act honestly, ethically, with integrity and are financially sound (the “probity” aspect).
Unless an RFSP is satisfied that a person carrying on any controlled function has a level of fitness and probity appropriate to the performance of that function, the exercise by him of the controlled function is prohibited.
PCFs are a subset of controlled functions. Broadly speaking, PCFs encompass directorships and senior management roles. The appointment of a person to perform a PCF is subject to pre-approval by the Central Bank, part of which involves the candidate submitting a detailed individual questionnaire to the Central Bank.
Newly Prescribed PCFs Relevant to our Insurance and Reinsurance Clients
The newly prescribed PCFs that are relevant to the insurance and reinsurance industry (PCFs 42 to 44) are:
- Chief Operating Officer (for all RFSPs)
- Head of Claims (for insurance undertakings)
- Signing Actuary (for Non-Life Insurance Undertakings and Reinsurance Undertakings)
What Does this Mean?
Persons who are in-situ in any of the newly prescribed PCFs on or before 31 December 2014 may continue in these functions and do not require approval from the Central Bank to do so.
For appointments to any of the newly prescribed PCFs on or after 31 December 2014, the Central Bank’s prior approval will be required and must be obtained in the standard way.
By 30 June 2015, RFSPs will need to do the following:
- Submit to the Central Bank a list of persons performing the newly prescribed PCFs as of 31 December 2014
- Certify to the Central Bank (in a form yet to be prescribed) that:
- Due diligence has been undertaken as to the fitness and probity of the persons performing the newly prescribed PCFs
- The RFSP is satisfied on reasonable grounds that those persons meet the statutory standards of fitness and probity
- Those persons have agreed in writing to abide by the F&P standards