Individual Accountability Framework: Commencement of key sections

On 19 April 2023, key sections of the Central Bank (Individual Accountability Framework) Act 2023 (IAF Act 2023) were commenced by the Minister for Finance. Our Risk Consulting team explain the implications below.

These key sections apply to all regulated financial service providers with effect from 19 April:

• Enhancements to the Central Bank’s existing Fitness and Probity (F&P) regime to improve efficiency and effectiveness;
• Extension of the scope of the existing F&P regime to certain categories of holding companies;
• Amendments to the Central Bank’s Administrative Sanctions Procedure (ASP) for enhanced individual accountability, including the breaking of the “participation link” between the conduct of an individual and a firm’s wrongdoing.

Commencement of these sections significantly enhances the powers of the Central Bank and represents an important step towards improving governance and transforming the culture in regulated firms.

Stakeholder feedback on the above sections of the IAF Act 2023 was not requested as part of the ongoing three-month consultation process launched by the Central Bank on 13 June 2023, however a separate public consultation on the changes to the ASP is proposed to begin in mid-2023. 

On 21 April 2023, following the partial commencement of the IAF Act 2023, the Central Bank published updated procedures for F&P investigations, suspensions and prohibitions, including Regulations and Guidance, with immediate effect from 20 April.

It is expected that an order to commence the remaining sections of the IAF Act 2023, concerning the Senior Executive Accountability Regime (SEAR), Conduct Standards, and the Fitness and Probity firm certification, will occur later in the year after the Central Bank’s Consultation Process concludes on 13 June 2023.