The Central Bank of Ireland has rowed back on what has been seen as some of the more problematic aspects of its long-awaited rules aimed at holding managers in banks and other financial firms accountable for failings under their watch.
Some international firms had been concerned about how the rules were envisaged to apply to senior overseas branch staff of firms regulated in the State.
The regulator has now said the senior executive accountability regime (Sear), which takes effect next July, will only apply to senior figures in foreign branches if the scale of the operations meets a certain “materiality threshold. Guidance on the practical operation of the threshold will provided, as appropriate, in the coming weeks,” it said at the end of a consultation process on the new regime, which was put in motion as in the wake of the State’s tracker mortgage scandal.
That particular concession may come too late for Barclays’ European Union hub in Dublin, which had been among the most exercised about the measure. Barclays said in August that it is considering moving its EU headquarters from Dublin to Paris “to be closer to the balance of operations of our business in Continental Europe”.
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Central bank governor Gabriel Makhlouf had also signalled last week that his officials would defer by one year the application of Sear to non-executive directors of financial firms covered by the incoming rules.
“As regulators, our approach to implementation of the framework will be founded on the principles of proportionality, predictability and reasonable expectations, underpinned by effective enforcement,” said Derville Rowland, a deputy governor at the Central Bank.
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“At its core, financial regulation is about supporting positive outcomes, protecting consumers and investors, and, ultimately, contributing to the economic wellbeing of the community as a whole. These regulations support this objective.”
Meanwhile, the regulator has dropped previous plans to require financial firms to report disciplinary action taken by firms against staff for breaches of conduct standards. The logic behind this is that firms would already be required to notify the Central Bank of suspected regulatory breaches or criminal offences under existing reporting obligations. Well, at least that’s the hope.
