The Central Bank of Ireland has recently published its annual report for 2018. The report contains significant points to note for individuals with an interest in Public and Regulatory matters.
As noted in the report: “The Central Bank uses its suite of enforcement tools to hold firms and individuals to account, achieve the highest regulatory standards of compliance, promote the behaviours the Central Bank expects of firms and individuals and change culture in firms from the top down.”
This is significant, given the context of the reputational damage suffered by the financial sector over the decade prior to the publication of this report.
As Derville Rowland, Director General, Financial Conduct, of the Central Bank, said in a speech to a Financial Services Industry Board member event in May 2019: “Global and national experience indicates that in order for a regulatory framework to work well, it needs to drive strong and effective governance within firms.
As part of its gatekeeping function, individuals nominated by banks, insurers and investment companies for senior positions must be assessed and approved by the Central Bank, via its Enforcement Directorate. This is referred to by the Central Bank as the Gatekeeper Process.
2018 - Developments in gatekeeping
Last year the Central Bank Enforcement Directorate conducted 74 fitness and probity assessments of individuals in senior positions in financial institutions. Of these 74, the applications of 18 applicants were withdrawn by the applicant during the process “typically before, during or after an interview
” according to the 2018 report.
This figure is more than double the 2017 number (8) and more than three times the 2016 figure (5).
The Central Bank recently issued a letter to the CEOs of financial firms, reminding CEOs of their responsibilities to ensure that their existing staff occupying senior positions are fit to perform the roles they have been appointed to.
This letter was prompted by the Central Bank’s receipt of applications for the approval of individuals to senior positions where the individual was clearly unsuitable. For example, in one case a significant money judgement had been made against an individual.
The letter constitutes part of the ongoing efforts by the Central Bank in conjunction with the Gatekeeper Process, to raise awareness of the strict requirements for Central Bank approval of senior staff.
As Derville Rowland noted in the same speech in May: “As gatekeepers, we find that where we raise the prospect of refusing to approve individuals for senior roles, proposed applications are in most cases withdrawn.
In 2018, the Central Bank has sanctioned and completed ten enforcement actions against regulated firms and prohibited two individuals from holding any role in financial services indefinitely.
The way forward
Plans to grant further powers to the Central Bank to make those in senior positions accountable individually for failings or wrongdoings for which they are ultimately responsible have been delayed due to the legislative agenda being dominated by Brexit. Through plans for new powers and the Gatekeeping process, the Central Bank continues to enhance its role in public protection.
The annual report can be accessed here