Central Bank lists targets of fitness and probity tests

THE CENTRAL Bank has published a list of 42 senior positions in the financial sector where appointments must be approved in advance before people can take up the positions.

As part of a new set of regulations and standards on the fitness and probity of executives working in Ireland’s financial institutions, the Central Bank has identified a further set of staff positions from which individuals can be removed or prohibited.

The first more senior set of positions, known as “pre-approval controlled functions”, includes chief executives; company directors; chairs of the audit, risk, remuneration and board nomination committees; heads of finance, compliance, risk, internal audit and retail sales; head of underwriting; chief actuary; head of markets supervision; and other investment-related positions.

Meanwhile, the list of less senior positions from which individuals can be removed or banned by the Central Bank, known as “controlled functions”, focuses on staff who interact with customers, such as employees who give advice on investment products, approve or reject insurance claims and adjudicate on complaints.

The standards set out the conditions that staff must satisfy to perform the function assigned to them. These include the obligation to be competent and capable; to act honestly, ethically and with integrity; and to be financially sound.

The regulations, published under part 3 of the Central Bank Reform Act 2010, also require employers to take responsibility for ensuring that staff meet the standards, both on entry to the industry and during their careers.

The new regime will be introduced on a phased basis, with the regulations on pre-approval controlled functions applying to new staff from December 1st.

The rules on controlled function positions will apply to new staff from March 1st, 2012. The regulations will extend to all existing staff on December 1st, 2012.

The Central Bank has also published on its website a list of responses from financial institutions and other firms to its initial consultation on the new fitness and probity regime.

In its response, AIB warns that if large numbers of junior employees fall within the definition of a controlled function, “there is a real danger that the administrative burden of managing the new regime will detract from the critical objective of ensuring high standards of fitness and probity in the financial services industry”.