3rd August 2021

Senior Executive Accountability Regime (‘SEAR’) - draft legislation has been published

On 27 July 2021, the Central Bank of Ireland welcomed the publication by the Department of Finance of the General Scheme of the Central Bank (Individual Accountability Framework) Bill 2021. The draft legislation provides for:

• The introduction of 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 lies. This will be rolled out on a phased basis, and will apply, in the first instance, to banks, insurance companies, and other sectors with a high degree of retail consumer interaction. Additional sectors may be brought within the scope of SEAR by the Minister in the future.
• The introduction of common conduct standards to apply to all persons in controlled function roles, additional conduct standards for individuals in senior positions, as well as business conduct standards for all regulated firms in the financial sector. The introduction of these conduct standards will give the Central Bank powers to set and impose binding and enforceable obligations on all regulated financial service providers and individuals working within them with respect to expected standards of conduct. Such standards include acting honestly, ethically, with integrity and with due skill, care and diligence, as well as observing proper market conduct standards.
• Enhancements to the Fitness and Probity Regime to ensure the effective operation of, and the ability of the regime to support, the Individual Accountability Framework and the conduct standards for individuals and firms. This includes a new certification requirement whereby regulated financial services providers must certify in writing that a person proposed for a controlled function role complies with the applicable fitness and probity standards.
• Strengthening the Central Bank’s enforcement capabilities by breaking the “participation link”, which addresses the deficiency in the legislation requiring the Central Bank to first prove a contravention of financial services legislation against a regulated financial service provider before it can take action against an individual.