As I announced last week, I received the agreement of Cabinet to begin the process of drafting heads of a Central Bank Amendment Bill. This follows extensive preparatory work by my officials, in consultation with the Central Bank, over the past year. Any new regulatory regime must be practicable and proportionate, and the issues being addressed by this legislation are complex and required to be constitutionally sound in the event of legal challenge. The Attorney General and his office have reviewed the proposals and given thorough and excellent advice to ensure that any legislation brought forward will be robust and sound. The proposed legislation is necessary and timely and will drive positive changes in terms of wider banking culture, greater delegation of responsibilities, and enhanced accountability while simplifying the taking of sanctions against individuals who fail in their financial sector roles.
It is intended that the legislation will give the Central Bank the power to make regulations intended to drive greater accountability in the financial sector, raising the standards of expected behaviour for individuals and firms, in order to achieve better outcomes for consumers and improve the sustainability of the financial system.
My Department is now beginning further engagement with the Attorney General’s Office in order to draft Heads of Bill to be brought to Government, to provide for:
- Introduction of a Senior Executive Accountability Regime (SEAR) which places obligations on firms and senior individuals within them to set out clearly where responsibility and decision-making lies;
- Introduction of Conduct Standards for individuals and firms to provide for statutory powers to set and impose binding and enforceable obligations on all Regulated Financial Service Providers (RFSPs) and individuals working within them with respect to expected standards of conduct;
- An enhanced Fitness & Probity Regime which includes provisions to enhance the Fitness & Probity regime to ensure the effective operation of the regime and the ability of the regime to support the Central Bank’s proposed individual accountability framework and the conduct standards for individuals and firms.
- Breaking the “Participation Link” which addresses the known deficiency in the legislation which requires the Central Bank to first prove a contravention of financial services legislation against a RFSP before it can take an action against an individual;
- Technical amendments to improve existing legislation and clarify certain statutory processes.
I also intend to address the principles set forth in Deputy Pearse Doherty's private Member's legislation, around the provision of false and misleading information to the Central Bank.
The Central Bank's consultation with industry will take place after the legislation had been enacted.
Following engagement with the Office of the Parliamentary Counsel it my intention to bring forward draft heads of Bill towards the end of the year.