RegSol Blog

Individual Accountability Framework Update

November 2023

The Central Bank of Ireland (CBI) has published its final Guidance, draft Regulations and Feedback Statement with regard to the Individual Accountability Framework (IAF). The documents outline a number of substantive changes to aspects of the IAF, including SEAR, as against the draft Guidance.

The key changes are summarised as follows:
  • The application of SEAR to non-executive directors (NEDs) and independent non-executive directors (INEDs) of in-scope firms will now be deferred by one year until 1st July 2025.
  • The deferral applies to all NED/INEDs, including the Chair of the Board and Chairs of audit, risk, remuneration and/or nomination committees for in-scope firms.
  • SEAR will still apply to all other PCF roles in in-scope firms from 1st July 2024.
  • The Common Conduct Standards will apply to all CFs from 29th December 2023.
  • The Additional Conduct Standards will apply to PCFs from 29th December 2023.
  • The Common Conduct Standards and Additional Conduct Standards will still apply to NEDs and INEDs from 29th December 2023. The Duty of Responsibility (which is part of SEAR) will also apply to all PCFs, including NEDs and INEDs, from 29th December 2023.
  • The Business Standards are being reviewed and updated as part of the CBI’s ongoing review of the Consumer Protection Code 2012. The Business Standards will not therefore be effective until the revised CPC is reviewed and implemented.
  • Periodic reporting - The CBI proposes to limit the extent of mandatory periodic reporting to the CBI. Instead, it is proposed that firms take responsibility for relevant documentation and make it available to the CBI on request.
  • Disciplinary actions - The CBI has removed the additional obligation for a regulated firm to report to the CBI where formal disciplinary action has been concluded against an individual in respect of a breach of the Conduct Standards.
  • Head of Material Business – The CBI confirms the introduction of Head of Material Business line roles for insurance undertakings and investment firms as proposed bringing it in line with the introduction of a new PCF-50 Head of Material Business Line for credit institutions in October 2020. The CBI does not require a firm to create a new PCF role where one did not previously exist or where the size or complexity of a firm’s business does not warrant it; this is for the firm to determine itself.
  • Certification Requirements
The CBI has limited the scope of the enhanced due diligence aspect of the certification requirement to PCFs, CF1s and CF2s. This facilitates self-certification in respect of individuals within the CF3 – CF11 categories.

The feedback statement notes that the Central Bank will undertake a review of the IAF three years after implementation which will include an assessment of the functioning of the framework, how the benefits and costs are being realised in practice, and whether any changes should be introduced.