Tuesday, 21 February 2012
Department of Finance
Financial Services Regulation
Question 163: To ask the Minister for Finance if he will provide an update on the application of the Central Bank of Ireland’s fitness and probity regime to current executives working in the banking industry; the details of the number and employment details of those currently being assessed under the new standards; and if he will make a statement on the matter. [9380/12]
The Central Bank Reform Act 2010 Act provides for new powers to be exercised by the Bank to ensure the fitness and probity of nominees to key positions within financial service providers and of key office-holders within those providers. The new fitness and probity regime is being rolled out by the Central Bank through a code and regulations that were published on 1 September 2011. The regulations apply to Pre-Approval Controlled Functions and Controlled Functions.
The Fitness and Probity Standards are being implemented on a phased basis as follows: from 1 December 2011, the standards applied to persons performing Pre-Approval Controlled Functions; from 1 March 2012, they will apply to persons appointed to Controlled Functions (other than Pre-Approval Controlled Functions). This is to include new offers of employment and internal transfers/promotions which may involve a Controlled Function role after that date; and they will apply to all persons occupying Controlled Functions as at 1 December 2012.
The Central Bank may refuse to approve a proposed appointment to a Pre-Approval Controlled Function where it is of the opinion that the proposed appointee is not of such fitness and probity as is appropriate to perform the relevant function. Where the Central Bank refuses to approve a proposed appointment, then a regulated financial service provider may not appoint the person to the role.
The Central Bank, as part of its role in the on-going supervision of the financial services sector, may from time to time consider that there is reason to suspect the fitness and probity of any person performing a controlled function and may commence an investigation into that person. All assessments of fitness and probity of persons being proposed to Pre-Approval Controlled Function roles, and of persons performing controlled functions are made with respect to the criteria set out in Section 25(3) of the Act and a Code issued by the Central Bank under Section 50 of the Act entitled “Fitness and Probity Standards (Code issued under Section 50 of the Central Bank Reform Act 2010)”. The existence and progress of such investigations are confidential and details of such investigations may not be disclosed by the Central Bank. The Central Bank does not comment on individual cases
The Central Bank regulations identify 41 senior positions as Pre-Approval Controlled Functions such as Chief Executive Officer, Director or Heads of Compliance, Risk, and Internal Audit. The regulations also prescribe specific categories as Controlled Functions and persons performing these functions include the staff who exercise a significant influence on conduct of the affairs of the financial service provider, monitor compliance or perform functions in a customer-facing role.
The Central Bank have informed me that they are reviewing the position of executive and non-executive directors of covered institutions that received state support and who are remaining in director posts after 1 January 2012 to decide whether or not an investigation into any of those persons might be appropriate. This process provides opportunities for persons to make representations to independent decision makers appointed by the Central Bank. The Central Bank does not comment on individual cases.