The Government’s planned rules to make it easier for regulators to hold senior managers in banks and other financial firms accountable for failings under their watch will improve behaviour across the industry, according to a survey of compliance officers.
Some 79 per cent of 195 Compliance Institute members that took part in a survey on the incoming so-called senior executive accountability regime (Sear) said it will bring about "meaningful" behaviour change.
However, only half say their firms have taken active steps to prepare for the new regime, which is expected to be in place by early 2023. The survey was carried out in association with Mazars.
The Government published the general scheme of the so-called Central Bank (Individual Accountability Framework) Bill last July, but the Bill has yet to be published. The Central Bank, which called for greater powers in the wake of the tracker-mortgage scandal, has said that it will be "very keen" to introduce the regime with little delay after legislation has passed, following a period of consultation.
Personal risk
The rules will require firms to set out clearly who makes decisions and where responsibility lies. They will impose a requirement that senior executives take all reasonable steps to ensure the area of the business for which they are responsible is controlled effectively and complies with any regulatory requirements.
The survey found that a large portion of respondents were concerned about the increase in personal risk for people in scope under the rules: those in pre-approved control functions (PCF), who have to be given the nod by the Central Bank before taking up their roles.
Over 41 per cent of respondents are “particularly worried” about how they should document and prove that they are taking “reasonable steps related to their role,” the report said.
‘Fitness and probity’
“It is clear that respondents are seeking clarity on what constitutes reasonable steps in the context of their role and how they manage their personal risk,” it added.
Meanwhile, the head of Barclays' post-Brexit EU banking subsidiary, Dublin-based Barclays Bank Ireland, said in an interview published by The Irish Times last week that he was concerned about how the rules were envisaged to apply to top overseas branch staff of firms regulated in the State.
"I have no problem with discipline and fitness and probity," said Francesco Ceccato, chief executive of the Barclays Bank Ireland. "But Ireland is the only country in the [EU]to introduce a regime like this. And the way that it's currently drafted, it appears to us to incorporate an extraterritorial dimension."
