As I announced recently, I received the agreement of Government on 18th June 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.
The next step in the process is engagement by my officials with the Office of the Parliamentary Counsel to begin drafting Heads of Bill. The issues being addressed by this legislation are complex and are required to be constitutionally sound in the event of legal challenge. This will require careful drafting to ensure that the proposed legislation is robust, fit for purpose, and legally sound. It is my intention to bring forward draft heads of Bill to Government for approval later this year and to progress the Bill for debate in the Houses following this.
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.
The draft Heads of Bill will 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 its effective operation and its ability 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; and
- 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.