Mr. Gerry Cross:

The first scheme of this type was the UK's senior manager regime and that has been followed in a number of countries. Australia is particularly notable in this regard, as are Singapore and other countries. Other EU countries such as the Netherlands and Belgium have aspects of it but not in this comprehensive way. As the Deputy has intimated, Ireland will be the first country in the EU to introduce such a scheme. There is quite a bit of interest in Europe. Indeed, in the recently published Commission proposal for the capital requirements regulation, based on Basel III, there is reference to this type of scheme.

It is not proposed to implement it in a full-blown way, but our experience and that of others is being considered in that regard. It is something that is of interest and it is being looked at elsewhere.

Turning to lessons learned, the timing of developments in the UK has been useful for us. The Prudential Regulation Authority and the Financial Conduct Authority in that country have recently carried out reviews and they have seen the real benefit. I think that is how they have assessed it. That description refers to how the firms themselves consider it, the enhancement it has been for the firms in respect of their governance, how they enhance and improve their cultures, and generally in the sense it has been a real foundation and boost for effective governance and standards in the UK regime.

Regarding areas where we are a little different from the UK situation, I mentioned in my opening comments the issue of collective responsibility. That is an important aspect for us. The UK authorities have also noted this point in their reports. It is obviously important that individuals are held to account, but we do not want to end up in a situation where that is the whole story and everybody is looking after his or her own part of the business. It is important we also have the elements of collective decision-making and collective responsibility functioning. We have tried to do that and this scheme seeks to create a good bridge between individual and collective responsibility. The UK system does not have that, but the deficiency was called out in a report as something for the relevant authorities there to think about further.

The other thing we have decided to do that is not in the UK scheme per seis to include non-executive directors in the senior executive accountability regime. The UK did not take that approach, although non-executive directors who head committees are included. We have thought long and hard about this aspect and engaged with the Department on it. On balance, we think it is right to include them because non-executive directors are such an important part of the effective functioning of financial firms. It is also important to say, however, that the proposed legislation does not expand their duties or impose additional duties on them. Rather, it is simply stated we must be clear how the non-executive directors fit into the governance of the firm, that they must be clear about what they are responsible for, and that they must also take reasonable steps in discharging their responsibilities. We think this facet of what is proposed is proportionate and we do not think it will have an adverse effect. It was important to have that comprehensiveness.