Our second Individual Accountability Framework (IAF) readiness survey report was launched at our annual conference on Thursday. The Report has received coverage in today’s Irish Times.
Central Bank deputy governor Sharon Donnery told finance executives on Wednesday that “consternation” in the industry about incoming rules to make it easier to hold senior executives to account for wrongdoing “misses the point”, as the regime is designed to improve standards.
Speaking at Financial Services Ireland’s annual dinner in Dublin, Ms Donnery said the standards of conduct prescribed in the Central Bank (Individual Accountability Framework) Bill are “reasonable – for your customers, for your investors, for the Central Bank, and for society as a whole”.
She continued: “Standards like acting honestly, fairly and professionally. Standards like acting with skill, care and diligence. Not misleading a customer as to the advantage [or] disadvantage of a financial service and managing your business in a sound and prudent manner. These are not unreasonable standards to expect.
“Indeed, we believe they are standards to which most firms and individuals already hold themselves.”
Some 84 per cent of 160 compliance officers that took part in a recent Compliance Institute/Mazars survey said the incoming regime would make it hard for regulated firms to hire people into senior roles that fall under the scope of the rules.
However, 89 per cent of respondents to the survey, reported in The Irish Times on Monday, said the introduction of the senior executive accountability regime would “bring about meaningful change” in the culture and behaviour of financial firms, and 76 per cent said it would result in “better outcomes” for consumers.
Ms Donnery said the Central Bank will “engage widely” on the planned regime before it come into operation. The Bill is currently going through the Oireachtas.
Ms Donnery, who took over as the deputy governor in charge of financial regulation at the bank in July, said that one of her key priorities is to “transform” the bank’s approach to regulation and supervision.
We apply a risk-based approach to supervision, recognising that resources are finite
“Our supervisory approach continues to be implemented by experienced and committed people, who are keenly focused on the delivery of our public service mandate,” she said.
“We apply a risk-based approach to supervision, recognising that resources are finite, and our attention and supervisory effort must be focused on the greatest risks.”
However, she said that the financial services landscape is changing rapidly and extent of risk is evolving. “For us to continue to deliver effectively on our mandate, both today – and tomorrow – our supervision will need to change,” she said, adding that the bank will need to use “new and enhanced tools and approaches” to continue to supervise effectively.