Government approval has been given for the Department of Finance to draft Heads of Bill for the proposed new Senior Executive Accountability Regime.
As outlined in our recent briefing (Accountability for Senior Executives – Update on Central Bank Proposals), the Central Bank has formally recommended the introduction of an Individual Accountability Framework comprising:
- A Senior Executive Accountability Regime (SEAR)
- Conduct Standards
- Enhancements to the existing Fitness and Probity Regime
- Enhancements to the existing Administrative Sanctions Regime
This week, the Government agreed that the Department of Finance should begin work on drafting Heads of Bill for the Central Bank (Amendment) Bill 2019 which will:
- Provide for the introduction of the SEAR and the Conduct Standards
- Set out enhancements to the existing Fitness and Probity Regime
- Break what is known as the 'participation link' whereby a Central Bank must first prove a breach of financial services legislation by a regulated financial services provider before it can pursue an individual
The Heads of Bill will be developed in close consultation with the Attorney General, and are expected to be published towards the end of 2019. Following this, the Central Bank will publicly consult on detailed aspects of the new regime and that consultation is likely to include related proposals to enhance the existing Administrative Sanctions Regime.
While finalising the legislation, and consulting on and finalising the terms of related Central Bank guidance and codes to implement the SEAR, may take some time, it is clear that the Government and the Central Bank are very focused on 'behaviour and culture' related issues. These issues are a recurring theme in speeches by senior Central Bank officials, and firms should therefore continue to monitor and review those speeches and presentations to understand the Central Bank's latest thinking on this evolving area.
We are also monitoring these developments.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.