Ireland’s Individual Accountability Framework (“IAF”) – What You Need to Know

The Central Bank (Individual Accountability Framework) Act 2023 (the “Act”) was signed into law on 9 March 2023. The Act is amongst the most significant pieces of legislation impacting the powers of the Central Bank of Ireland (“Central Bank”) in recent years. The key objectives of the Act are to improve the management of risk in regulated financial service providers and outcomes for consumers. The Act has four distinct elements:

1. A new Senior Executive Accountability Regime (“SEAR”);
2. Enhancements to the Central Bank’s existing fitness and probity regime (“F&P Regime”);
3. New conduct standards for regulated financial service providers (“RFSPs”) and their staff; and
4. Enhanced Central Bank enforcement powers, including updates to the Central Bank’s Administrative Sanctions Procedure (“ASP”).

The Central Bank has launched a consultation, open until 13 June 2023, on key aspects of the implementation of the Act insofar as it relates to SEAR, the F&P Regime and conduct standards (the “Consultation”). In April 2023, the Central Bank published updated regulations and guidance in respect of F&P Regime investigations, suspensions, and prohibition procedures. The Central Bank plans to launch a further consultation on its ASP in due course.

The Act will have far-reaching consequences for asset managers, funds, their boards and senior personnel (where applicable). This OnPoint summarises the provisions of the Act and the Consultation (which may be subject to change) and suggests some of the ways RFSPs, holding companies and individuals can prepare for the full implementation of the Act.