Mr. Maurice Crowley:

I thank the Chairman and committee members. I would like to introduce my colleagues. I am accompanied by Mr. Felix O'Regan, the federation's director of public affairs, and Ms Bernice Evoy, head of its legal and regulatory division.

We very much appreciate the opportunity to address the joint committee on the issue of a future framework for accountability in the banking sector. We recognise clearly the importance and value of the work conducted by the Central Bank of Ireland last year in undertaking behaviour and culture assessments of each of the five main retail banks.

As a federation and a trade association, we are committed to working with our member banks and with the Central Bank in helping to drive further improvement in a consumer-focused culture for banking in Ireland. As the committee knows, the Central Bank’s report recommended the enhancement of the current fitness and probity regime by way of implementation of a new framework of individual accountability, to be known as the senior executive accountability regime, SEAR. We have advised both the Central Bank and the Minister of Finance of our support for this direction of travel. We see the opportunities to learn from similar developments elsewhere, not least in the UK, and we have also made it our business to draw from the experience of various parties to this end.

We were pleased to contribute to identifying the broad architecture of a new independent body on banking culture. We have since seen the establishment of the Irish Banking Culture Board and the appointment of its chairman, former Mr. Justice John Hedigan. We remain committed to working, as appropriate, with the board in the development of the highest standards of culture and conduct across the banking sector. We are also very active in facilitating consideration with member banks on how a customer-centric culture can best be embedded in banks here. This has involved our drawing on experiences in other countries, such as the UK, the Netherlands and elsewhere, engaging with relevant participants there and providing a platform for those experiences and learnings to be shared with our members.

In fully supporting the development of SEAR as envisaged by the Minister for Finance and the Central Bank, and particularly in the interests of delivering a fully effective SEAR, we would like to note some issues with the committee which we believe are worthy of further consideration. In particular, it will be important, as we work through the development of SEAR, to get the balance correct between a clear focus on driving a customer-centric culture and a potentially over-bureaucratic process and structure that might ensue. We also consider it important to ensure that SEAR is not introduced in a manner that hinders the attraction of talent to the sector but, equally, that it is no deterrent to mobility or diversity within member banks. We also think it will be important to clarify the distinction between the collective fiduciary responsibility of a bank's board and board members and the all-important individual accountability of board directors and senior executives. Finally, one of the requirements of SEAR would suggest the expectations around senior managers taking "all reasonable steps" - I emphasise that phrase - to mitigate risks, which is a contrast to the position in the UK, which requires just "reasonable steps" to be taken. We feel that interpretation, definition and guidance on this issue as SEAR is introduced will be critical for bank executives as they adjust to the new regime.

To conclude, I am grateful for the opportunity to discuss these issues with the committee and I look forward to hearing its views on this very important issue.