RDJ - SEAR Information Hub

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.  

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.

1 July 2021

Minister Pascal Donohoe, speaking in the Dáil (1 July 2021): “On the domestic front, it is important that problems in the banking sector are anticipated and prevented before they impact on the wider public. This is why we will bring forward a Central Bank (amendment) Bill to make a significant contribution in this regard. The Bill will introduce a senior executive accountability regime, SEAR, which will place obligations on firms and the senior individuals within them to set out clearly where responsibility and decision-making lies. Among other provisions, the Bill will also introduce conduct standards for individuals and firms, imposing binding and enforceable obligations on all regulated financial service providers, RFSPs, and relevant individuals working within them with respect to expected standards of conduct. Subject to the advice of the Attorney General, I intend to publish the heads of this Bill before the summer recess.” 

Dáil Debates
https://www.oireachtas.ie/en/debates/debate/dail/2021-07-01/34/?highlight%5B0%5D=senior&highlight%5B1%5D=executive&highlight%5B2%5D=accountability

22 April 2021

According to Minister Pascal Donohoe, in the Dáil (22 April 2021) it is expected that the draft Heads of Bill will be presented to Government in July 2021.   

Dáil Parliamentary Question (Written) 
https://www.oireachtas.ie/en/debates/question/2021-04-22/26/#pq_26  

21 April 2021

According to Minister Pascal Donohoe, in the Dáil (21 April 2021):
Department of Finance officials are engaging 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 hoped that the Heads of Bill can be published in July 2021;
  • The publication of the Heads will be subject to the Attorney General’s advice on the adequacy of the safeguards included to protect the constitutional rights at stake;
  • The agreement and publication of the heads of the Bill will allow the pre-legislative process to begin;
  • As regards how and when the Bill will be implemented, experience from other jurisdictions suggests that a change as significant as this will take some time to bed down;
  • The Central Bank has indicated that it intends to hold a public consultation on the implementation of the Bill following enactment of the legislation.

Dáil Parliamentary Question (Written)
https://www.oireachtas.ie/en/debates/question/2021-04-21/532/#pq_532

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

Draft SEAR Legislation

Date Title Link Notes

27 July 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 July 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

July 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 February 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 October 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 October 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 October 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 June 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 April 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 April 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 March 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 March 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 March 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 February 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 November 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
December 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.
December 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.
February 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 July 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 December 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 January 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 September 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 December 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
July 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 April 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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