Update to Individual Accountability Framework

The CBI has deferred the introduction of the SEAR for NEDs and INEDs until 1 July 2025. This will enable, in the first instance, both the Central Bank and regulated firms to learn from the introduction of the new framework to executives.

Additionally, as set out in the Guidance, the standards to be met by these individuals in their role as NEDs and INEDs will relate exclusively to their non-executive oversight functions and will be limited to what should reasonably be expected of individuals in that role.

Based on feedback received, the Central Bank has additionally, amended some of the Prescribed Responsibilities such as:

• The removal of PR8 (responsibility to consider the impact of, and any necessary changes to, key business initiatives and strategic decisions) and PR26 (responsibility for oversight of the implementation of conduct requirements);
• Merging PR29 (responsibility for overseeing the adoption of a firm’s diversity and inclusion policy) with PR4 and PR5; and
• Moving PR19 (responsibility for managing a firm’s treasury management functions) and PR23 (responsibility for a firm’s compliance with client asset requirements) from General list of Prescribed Responsibilities to Sector of Circumstance Specific list.

In addition, the guidance has been amended to provide clarity on the responsibilities for senior individuals in firms and ensuring firms know to document where the responsibility for decisions, and decision-making lies within an organisation.

The CBI has acknowledged that certain PCF roles may be performed by two individuals. In such cases, the CBI expects that only the following PCF roles could be potentially shared based on the role requirements:

• PCF18 (Head of Underwriting)
• PCF19 (Head of Investment), PCF29 (Head of Trading), and PCF 30 (Chief Investment Officer)

Where a role is shared between two individuals, each individual is responsible for all the responsibility allocated to that PCF role. The details of the job-sharing arrangements should be set out in the Statement of Responsibilities and Management Responsibility Map.

Both the Statement of Responsibilities and Management Responsibility Map must be kept up-to-date and submitted to the Central Bank on request. However, they will no longer be subject to periodic reporting requirements. They should be considered live documents and will be reviewed as part of the regulators ongoing supervision. The framework seeks to align with the way that firms have chosen to structure themselves, while ensuring that such structures have appropriate levels of governance and clarity. Both documents are required to be retained for 10 years.

The CBI will provide additional clarification in the future with respect to reasonable supporting steps. It will support what is already found in legislation. It is noted that reasonable steps should already be embedded into an individual’s actions. The central bank has set a non-exhaustive list of factors that may be considered in these steps, which they will continue to develop in the future.

SEAR and the Conduct Standards are applicable when someone has been pre-approved as a PCF, even if the appointment is or is meant to be temporary. However, a Statement of Responsibility will not be necessary, as a temporary officer appointed to a PCF job is not subject to the PCF application procedure.

The CBI requires that, where outsourcing arrangements are in place, there is a PCF role holder with responsibility for outsourcing arrangements; this will be PCF19 (responsibility for the firm’s outsourcing framework). Where a firm chooses to outsource a PCF role, the outsourced PCF role should fall under the oversight of an appropriate PCF role holder within the firm. Additionally, this should be acknowledged in the Statement of Responsibilities and the Management Responsibility Map.

The CBI has changed the requirement on the roles which firms need to have certified under enhanced due diligence, these roles are now limited to PCF’s and CF1-2. CF3-11 can now self-certify and has been removed from the enhanced due diligence aspect of the certification process.

After formal disciplinary action has been taken against a person for violating the Conduct Standards, regulated firms are no longer required to report this to the CBI when the firm or individual has already been reported to the Central Bank, under separate new or pre-existing reporting obligations.