01 01 2022 Information Hubs

RDJ SEAR Information Hub

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About this Information Hub

Welcome to the RDJ SEAR Information Hub where you will find in one location all of the key pieces of information regarding the Senior Executive Accountability Regime (SEAR) and the Individual Accountability Framework. The information contained in the Hub has been distilled to make it easier for you to pinpoint the most relevant sources on this topic. We will be updating the Hub to reflect new SEAR-related developments. Bookmark the page so you can stay up-to-date.

SEAR in Brief

The anticipated Senior Executive Accountability Regime (SEAR) is expected to form one part of a package of reforms that are set to be introduced under the much-anticipated Central Bank (Amendment) Bill as part of what is termed the Individual Accountability Framework.

The Bill will implement reforms in four key areas:

  • New Senior Executive Accountability Regime
  • New Conduct Standards
  • Enhanced Fitness and Probity Regime
  • Breaking the participation link in enforcement actions.

For more information on SEAR, read the latest RDJ Insight here

Update - 1 September 2021

In recent weeks the Government published the General Scheme or draft version of the long-awaited Central Bank (Individual Accountability Framework) Bill which will introduce a number of new measures that are intended to greatly enhance the ability of the Central Bank of Ireland to hold individuals within financial services firms to account for their actions.

The provisions of the draft legislation are considered in detail in the RDJ Guide to the General Scheme of the Central Bank (Individual Accountability Framework) Bill which can be accessed here.

News Update – 27 July 2021

SEAR Legislation Published in Draft Form

The Cabinet has approved the General Scheme of the Central Bank Bill which will provide the legislative basis for the new Senior Executive Accountability Regime (SEAR). You can access the draft legislation in the Table below.

Draft SEAR Legislation

Date

Title

Link

Notes

27 Jul 2021

General Scheme of the Central Bank (Individual Accountability Framework) Bill

https://assets.gov.ie/180083/8175a004-8e41-4e76-b09d-d6ee8ab72506.pdf


There are four main aspects to the proposed Bill which collectively constitute the Individual Accountability Framework.

The draft legislation provides for:

1. The introduction of a Senior Executive Accountability Regime (SEAR);

2. The introduction of conduct standards;

3. Enhancements to the Fitness & Probity Regime;

4. Breaking the “Participation Link”.

27 Jul 2021

Regulatory Impact Assessment - Central Bank (Individual Accountability Framework) Bill

https://assets.gov.ie/180086/b0c689f0-6577-4b25-9db6-6f6e4e811ee5.pdf

Assesses the elements of the proposed Individual Accountability Framework.

CBI Authored Documents

Date

Title

Link

Notes

Jul 2018

Report on “Behaviour and Culture of the Irish Retail Banks"

Behaviour and Culture of the Irish Retail Banks (centralbank.ie)

This Report represents one of the better and more detailed accounts of the likely elements of the proposed Individual Accountability Framework of which the Senior Executive Accountability Regime forms part. Elements or proposed reforms addressed in this Report include:

  • Senior Executive Accountability Regime (36 & 37)
  • Conduct standards (p.34 - 36)
  • Enhanced fitness and probity (37 & 38)Unified enforcement process (38)

Dec 2017

Central Bank of Ireland Response to the Law Reform Commission Issues Paper “Regulatory Enforcement and Corporate Offences”

Central Bank of Ireland Response to the Law Reform Commission Issues Paper "Regulatory Enforcement and Corporate Offences"

Initial references to the need for an individual accountability regime to be modelled on UK SMCR (p.7 & 8).

Other potential initiatives/areas for reform:

  • Enhanced fitness and probity (p.5 & 6)
  • Conduct standards (p.10 & 11)

Central Bank Speeches

Date

Title

Link

Notes

14 Feb 2021

Speech by Deputy Governor Ed Sibley entitled “Governance and risk in a time of uncertainty and change”

“Governance and risk in a time of uncertainty and change” - Deputy Governor Ed Sibley (centralbank.ie)

Address discusses the proposed new Individual Accountability Framework and speaks to the 4 elements of that, those being:

  • Conduct Standards,
  • SEAR,
  • Enhancements to fitness and probity regime, and
  • Unified enforcement process.

31 Oct 2019

Speech by Director General Derville Rowland entitled “The Senior Executive Accountability Regime: Our Expectations of Firms”

The Senior Executive Accountability Regime: Our Expectations of Firms - Director General Derville Rowland (centralbank.ie)

Address which specifically focuses on the CBI’s plans for an enhanced level of individual accountability.

Topics addressed include:

  • Rationale for focusing on individual accountability,
  • The four elements of the Individual Accountability Framework,
  • Cultural change,
  • Fitness & Probity.

22 Oct 2019

Speech by Derville Rowland, Director General entitled “The Case for the Senior Executive Accountability Regime”

The Case for the Senior Executive Accountability Regime - Director General, Financial Conduct Derville Rowland (centralbank.ie)

Address which focuses on the CBI’s plans to increase the level of individual accountability.

Address outlines the 4 elements of the proposed Individual Accountability Framework.

2 May 2019

Speech by Derville Rowland, Director General entitled “The Senior Executive Accountability Regime: The Central Bank’s Expectations and Insights for Boards”

The Senior Executive Accountability Regime: The Central Bank’s Expectations and Insights for Boards - Director General Derville Rowland

Address which outlines the key aspects of the proposed elements of the Individual Accountability Framework.

Ministerial Speeches

Date

Title

Link

Notes

31 Oct 2019

Speech by Minister Pascal Donohoe to Kobn Conference on the proposed Senior Executive Accountability Regime (SEAR) in the Central Bank (Amendment) Bill 2019

http://paschaldonohoe.ie/speech-to-kobn-conference-on-the-proposed-senior-executive-accountability-regime-sear-in-the-central-bank-amendment-bill-2019/


Key address in which Minister for Finance spells out some of the core elements of the proposed new individual accountability framework which will have the Central Bank (Amendment) Bill as its basis. Minister refers to:

  • UK SMCR serving as a basis for SEAR;
  • Constitutional challenges presented by the proposals;
  • Key elements of SEAR;
  • Conduct Standards;
  • Changes to enforcement regime;
  • Cultural change.

18 Jun 2019

Minister Donohoe to progress Central Bank (Amendment) Bill 2019 the aim of which is to improve transparency and accountability in the financial sector

http://paschaldonohoe.ie/minister-donohoe-to-progress-central-bank-amendment-bill-2019-the-aim-of-which-is-to-improve-transparency-and-accountability-in-the-financial-sector/

Press release of the Minister for Finance confirming Government approval to begin the process of drafting heads of a Central Bank (Amendment) Bill.

Parliamentary Debates

Date

Title

Link

Notes

22 Apr 2021

Dáil Parliamentary Question (Written)

https://www.oireachtas.ie/en/debates/question/2021-04-22/26/#pq_26

Department of Finance officials continuing their engagement with the Attorney General's Office in advance of submitting draft heads of Bill to Government so as to ensure that the correct balance is struck between appropriate additional powers for the Central Bank and the protection of individuals' constitutional rights.

It is expected that the Heads of Bill can be published in July 2021.

21 Apr 2021

Dáil Parliamentary Question (Written)

https://www.oireachtas.ie/en/debates/question/2021-04-21/532/#pq_532

Department of Finance officials are engaging with the Attorney General's Office.
It is hoped that the Heads of Bill can be published in July 2021.
The agreement and publication of the heads of the Bill will allow the pre-legislative process to begin. The Central Bank has indicated that it intends to hold a public consultation on the implementation of the Bill following enactment of the legislation.

31 Mar 2021

Dáil Parliamentary Question

https://www.oireachtas.ie/en/debates/question/2021-03-31/52/

Statement by Minister Pascal Donohoe on SEAR and other aspects of the individual accountability framework

9 Mar 2021

Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach

https://tinyurl.com/ah536tdk


Attendance of Deputy Governor Ed Sibley and Director General Derville Rowland before the Joint Committee of the Houses of the Oireachtas. Much of the debate focused on the fine that CBI had imposed on Davy Stockbrokers. Individual accountability, and SEAR, were addressed on a number of occasions throughout the debate.

3 Mar 2021

Dáil Parliamentary Question (Written)

Legislative Measures – Wednesday, 3 Mar 2021 – Parliamentary Questions (33rd Dáil) – Houses of the Oireachtas

Statement by Minister Pascal Donohoe on status of the proposed legislation underpinning SEAR

4 Feb 2021

Dáil Parliamentary Question (Written)

https://www.oireachtas.ie/en/debates/question/2021-02-04/42/

Statement by Minister Pascal Donohoe on status of the proposed legislation underpinning SEAR

27 Jan 2021

Dáil Parliamentary Question (Written)

Proposed Legislation – Wednesday, 27 Jan 2021 – Parliamentary Questions (33rd Dáil) – Houses of the Oireachtas

Statement by Minister Pascal Donohoe on status of the proposed legislation underpinning SEAR

26 Nov 2020

Dáil Parliamentary Question (Written)

https://www.oireachtas.ie/en/debates/question/2020-11-26/95/

Statement by Minister Pascal Donohoe on SEAR and other aspects of the individual accountability framework

UK

Date

Title

Link

Notes

Dec 2020

PRA Report on the Evaluation of the Senior Managers and Certification Regime

https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/report/evaluation-of-smcr-2020.pdf?la=en&hash=151E78315E5C50E70A6B8B08AE3D5E93563D0168

This Report sets out the work and conclusions of the PRA evaluation, which reviewed the operation of the SM&CR against its original objectives. It also examined whether the SM&CR has resulted in unintended consequences.)

Dec 2020 (first published in July 2015)

PRA - Supervisory Statement | SS28/15 - Strengthening individual accountability in banking

https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/supervisory-statement/2020/ss2815-update-dec-2020.pdf?la=en&hash=A39074526A2BB377D5A4D58CAEF5E50368396E78

This supervisory statement sets out the PRA’s expectations of how Relevant Firms should comply with the regulatory framework of the:

  • Senior Managers Regime (SMR);
  • Certification Regime;
  • Assessment of fitness and propriety;
  • Conduct Rules; and
  • Regulatory References.

Feb 2020 (first published in Aug 2015)

PRA - Supervisory Statement | SS35/15 - Strengthening individual accountability in insurance

https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/supervisory-statement/2020/ss3515-update-february-2020.pdf?la=en&hash=2BFB68D7CD2F45C1216C9018A9983D5BBAD43009

This supervisory statement sets out the PRA's approach to strengthening individual accountability in insurance. The statement sets expectations regarding:

  • the SIMR;
  • the application of conduct standards and associated notifications; and
  • assessing fitness and propriety.

Updated Jul 2019

The Senior Managers and Certification Regime: Guide for FCA solo-regulated firms

https://www.fca.org.uk/publication/policy/guide-for-fca-solo-regulated-firms.pdf

This guide is a summary of the rules and guidance on the SMCR. It provides an overview of how the SMCR works and what firms need to do under the regime

2016

Bank of England and Financial Services Act 2016

https://www.legislation.gov.uk/ukpga/2016/14/contents/enacted

The 2016 Act extends the SMCR to all sectors of the financial services industry.

2013

Financial Services (Banking Reform) Act 2013

https://www.legislation.gov.uk/ukpga/2013/33/contents/enacted

The 2013 Act underpins SMCR – see Part 4. In 2016, UK Parliament introduced the Senior Managers and Certification Regime (SM&CR) which applied to banks and insurers from the end of 2018. Central to this was a requirement that the most senior

decision-makers in firms should have clearly assigned responsibilities and be accountable for actions

within their remit. These reforms complemented other reforms which ensure that senior individuals

are also held accountable for their actions through their remuneration.

12 June 2013

Report of the Parliamentary Commission on Banking Standards entitled “Changing banking for good”

https://www.parliament.uk/globalassets/documents/banking-commission/Banking-final-report-vol-ii.pdf

In this Report, the Commission recommended the introduction of an individual accountability regime – which would become known as SMCR.

Other Jurisdictions

Date

Title

Link

Notes

11 Dec 2020

Australia – APRA Information Paper on “Implementation of the Banking Executive Accountability Regime (BEAR)”

https://www.apra.gov.au/sites/default/files/2020-12/BEAR%20information%20paper%20December%202020.pdf

The Australian Banking Executive Accountability Regime (BEAR), has its basis in Part IIAA of the Banking Act 1959. It establishes accountability obligations for authorised deposit-taking institutions (ADIs) and their senior executives and directors.The APRA has published an information paper detailing the findings from its review of the implementation of the Banking Executive Accountability Regime by three of Australia’s largest ADIs.

22 Jan 2020

Australia – Treasury Proposal Paper on “Implementing Royal Commission Recommendations 3.9, 4.12, 6.6, 6.7 and 6.8 Financial Accountability Regime"

https://treasury.gov.au/sites/default/files/2020-01/c2020-24974.pdf

Following adoption of BEAR the Australian government established the Hayne Royal Commission into Misconduct in Banking, Superannuation and Finance Services Industry. A key recommendation of the Commission was for the extension of BEAR across the financial sector. To advance this recommendation Australian Treasury published a paper setting out a model to extend BEAR to all APRA regulated entities - the Financial Accountability Regime (FAR).

10 Sept 2020

Singapore – Monetary Authority of Singapore -Guidelines on Individual Accountability and Conduct

https://www.mas.gov.sg/-/media/MAS/MPI/Guidelines/Guidelines-on-Individual-Accountability-and-Conduct.pdf

The purpose of the Guidelines is to improve standards of conduct across the financial services sector. The Guidelines promote the individual accountability of senior managers and also strengthen oversight of material risk personnel. The Guidelines also seek to improve standards of conduct among all employees.

16 Dec 2016

Hong Kong - Circular to Licensed Corporations Regarding Measures for Augmenting the Accountability of Senior Management

Circular to Licensed Corporations Regarding Measures for Augmenting the Accountability of Senior Management | Securities & Futures Commission of Hong Kong (sfc.hk)

Hong Kong’s Securities and Futures Commission (SFC) introduced a Manager in Charge regime which is aimed at increasing the accountability of senior management. The regime applies to "Managers in Charge" usually senior management including directors and Responsible Officers across eight core functions.

International Authorities

Date

Title

Link

Notes

Jul 2015

G30 – Report on Banking Conduct and Culture

G30_BankingConductandCulture.pdf (group30.org)

See pp.46 – 48 where the Report makes recommendations concerning measure that can be taken to enhance Senior Accountability and Governance.

20 Apr 2018

FSB Report - Strengthening Governance Frameworks to Mitigate Misconduct Risk: A Toolkit for Firms and Supervisors

Strengthening Governance Frameworks to Mitigate Misconduct Risk: A Toolkit for Firms and Supervisors (fsb.org)

In this Report, the FSB identified a lack of accountability as a key cultural driver of misconduct.

The FSB recommended that national authorities identify and assign key responsibilities, that they also hold individuals accountable and assess the suitability of people assigned key responsibilities.

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