Central Bank (Individual Accountability Framework) Act 2023

PART 1 Preliminary

1. Short title and commencement

1. (1) This Act may be cited as the Central Bank (Individual Accountability Framework) Act 2023.

(2) This Act shall come into operation on such day or days as the Minister for Finance may appoint by order or orders either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or different provisions.

2. Definitions

2. In this Act—

“Act of 1942” means the Central Bank Act 1942 ;

“Act of 2010” means the Central Bank Reform Act 2010 ;

“Act of 2013” means the Central Bank (Supervision and Enforcement) Act 2013 .

PART 2 Individual accountability and standards

Chapter 1 Responsibility of persons performing pre-approval controlled functions

3. Amendment of section 48 of Act of 2013

3. Section 48 of the Act of 2013 is amended—

(a) in subsection (2), by the insertion of the following paragraphs after paragraph (b):

“(ba) provision specifying the aspects of a regulated financial service provider’s affairs for which a PCF holder has inherent responsibility for the purposes of section 53B of the Central Bank Reform Act 2010 ;

(bb) provision specifying the aspects of a regulated financial service provider’s affairs for which responsibility is to be allocated by the regulated financial service provider to a PCF holder for the purposes of section 53B of the Central Bank Reform Act 2010 ;

(bc) provision as to the arrangements described in subsection (2A) that a regulated financial service provider is to adopt;”,

(b) by the insertion of the following subsection after subsection (2):

“(2A) The arrangements referred to in subsection (2)(bc) are:

(a) arrangements for the regulated financial service provider to allocate to PCF holders for the purposes of section 53B of the Central Bank Reform Act 2010 responsibility for aspects of its affairs specified in regulations under subsection (2)(bb);

(b) arrangements for the regulated financial service provider, so as to ensure the proper conduct of its affairs, to allocate to a PCF holder for the purposes of section 53B of the Central Bank Reform Act 2010 responsibility for aspects of its affairs for which no PCF holder has inherent responsibility under regulations under subsection (2)(ba) or responsibility allocated under arrangements described in paragraph (a);

(c) arrangements for the regulated financial service provider to monitor the performance of pre-approval controlled functions in relation to it;

(d) arrangements to make clear the management structure that identifies the lines of authority and accountability, and specifies roles and responsibilities, in relation to the management of PCF holders and of other persons by PCF holders;

(e) arrangements to make clear the governance structure determining how the regulated financial service provider and PCF holders relate to persons concerned in the ownership or control of the regulated financial service provider or representing its customers or other stakeholders;

(f) arrangements for documenting arrangements referred to in paragraphs (a) to (e).”,

and

(c) by the insertion of the following subsection after subsection (3):

“(4) In this section—

‘PCF holder’ means a person performing a pre-approval controlled function in relation to the regulated financial service provider concerned;

‘pre-approval controlled function’ has the meaning given by section 18 of the Central Bank Reform Act 2010 .”.

4. Amendment of section 51 of Act of 2013

4. Section 51 of the Act of 2013 is amended, in subsection (1), by the insertion of “pre‑approval controlled functions,” after “providers,” in each place where it occurs.

Chapter 2 Power of Bank to prescribe business standards

5. Insertion of Part 2A in Act of 2010

5. The Act of 2010 is amended by the insertion of the following Part after Part 2:

“PART 2A

Powers of Bank in relation to financial service providers

Business standards

17A. (1) A regulated financial service provider shall comply with any standards prescribed by the Bank under subsection (2) (in this section referred to as the ‘business standards’).

(2) The Bank may make regulations prescribing standards for the purpose of ensuring that in the conduct of its affairs a regulated financial service provider—

(a) acts in the best interests of customers and of the integrity of the market,

(b) acts honestly, fairly and professionally, and

(c) acts with due skill, care and diligence.

(3) The business standards shall, in particular, include standards requiring that in the conduct of its affairs the regulated financial service provider—

(a) does not mislead a customer as to the advantages or disadvantages of any financial service,

(b) maintains adequate financial resources,

(c) controls and manages its affairs and systems (including risk management systems, internal control mechanisms and governance arrangements) sustainably, responsibly, and in a sound and prudent manner,

(d) prevents, or identifies and appropriately manages, conflicts of interest,

(e) arranges adequate protection for assets held by the regulated financial service provider on behalf of a customer,

(f) engages and cooperates in good faith and without delay with the Bank, and with authorities that perform functions in a jurisdiction other than the State that are comparable to one or more of the functions performed by the Bank under financial services legislation, and

(g) discloses to the Bank promptly, and in a manner appropriate to the circumstances, any matter relating to the regulated financial service provider of which the Bank would reasonably expect notice.

(4) The Bank may prescribe in regulations under this section the systems and controls, processes, policies and procedures that regulated financial service providers are to adopt for the purpose of ensuring that they comply with the business standards.

(5) Before making regulations under this section, the Bank—

(a) shall consult with the Minister, and

(b) may consult with such other persons as the Bank considers appropriate in the circumstances.

(6) When making regulations under this section, the Bank shall have regard to the need to ensure that the business standards are effective and proportionate having regard to the nature, scale and complexity of the activities of regulated financial service providers or the class or classes of regulated financial service providers to whom the regulations apply.

(7) Regulations made under this section may—

(a) apply either generally or to a specified class or classes of regulated financial service providers, customers or financial services, and

(b) include different provisions in relation to different classes of regulated financial service providers, customers or financial services.

(8) The Bank shall give to the Minister a copy of any regulations made by it under this section as soon as practicable after the regulations are made.

(9) Sections 61C and 61D of the Act of 1942 apply to regulations made under this section.”.

Chapter 3 Duty of responsibility and standards for individuals

6. Insertion of Part 3A in Act of 2010

6. The Act of 2010 is amended by the insertion of the following Part after Part 3:

“PART 3A

Duty of responsibility and conduct standards

Interpretation (Part 3A)

53A. For the purposes of this Part—

‘common conduct standards’ shall be construed in accordance with section 53C(1);

‘additional conduct standards’ shall be construed in accordance with section 53C(2).

Duty of responsibility

53B. (1) For the purposes of this section—

(a) a person has inherent responsibility for an aspect of the affairs of a regulated financial service provider if—

(i) the person performs a pre-approval controlled function in relation to the regulated financial service provider, and

(ii) the aspect of its affairs is specified in relation to that function by regulations made under section 48 (2)(ba) of the Central Bank (Supervision and Enforcement) Act 2013 ,

and

(b) a person has allocated responsibility for an aspect of the affairs of a regulated financial service provider if—

(i) the person performs a pre-approval controlled function in relation to the regulated financial service provider, and

(ii) responsibility for the aspect of its affairs has been allocated to the person performing that function under arrangements adopted by the regulated financial service provider in accordance with regulations made under section 48 (2)(bc) of the Central Bank (Supervision and Enforcement) Act 2013 .

(2) A person who has inherent or allocated responsibility for an aspect of the affairs of a regulated financial service provider shall take any steps that it is reasonable in the circumstances for the person to take to secure that, while the person has that responsibility, the aspect of the affairs of the regulated financial service provider is conducted so as to avoid contravention by it of its obligations under financial services legislation.

(3) For the purposes of subsection (2), avoiding contravention includes avoiding continuation of a contravention.

Duty to take steps to meet conduct standards

53C. (1) A person who performs a controlled function in relation to a regulated financial service provider shall take any steps that it is reasonable in the circumstances for the person to take to ensure that the standards set out in section 53E (referred to in this Part as the ‘common conduct standards’) are met.

(2) A person who performs a pre-approval controlled function in relation to a regulated financial service provider or any other function by which the person may exercise a significant influence on the conduct of the regulated financial service provider’s affairs shall take any steps that it is reasonable in the circumstances for the person to take to ensure that the standards set out in section 53F (referred to in this Part as the ‘additional conduct standards’) are met.

Relevant circumstances for purposes of sections 53B and 53C

53D. In determining the circumstances that are relevant for the purposes of subsection (2) of section 53B and subsections (1) and (2) of section 53C, as they apply in the case of any person performing functions in relation to a regulated financial service provider, matters to be considered include—

(a) the nature of the business of the regulated financial service provider, including its scale and complexity,

(b) the functions of the person in relation to the regulated financial service provider, and the level of knowledge and experience that a person with such functions could reasonably be expected to have,

(c) the level of knowledge and experience of the person,

(d) the existence and application (or otherwise) of—

(i) appropriate and effective systems (including risk management systems, internal control mechanisms and governance arrangements),

(ii) effective oversight of any delegation of responsibilities and effective safeguards against any inappropriate delegation, and

(iii) appropriate and effective procedures for identifying and remedying problems,

(e) the extent to which any matter referred to in paragraph (d) was within the control or influence of the person, and

(f) in the case of subsections (1) and (2) of section 53C, any guidelines published by the Bank under section 53G.

Common conduct standards

53E. (1) The standards referred to in section 53C(1), in the case of a person who performs a controlled function in relation to a regulated financial service provider, are—

(a) that the person acts with honesty and integrity, including—

(i) having regard to the legitimate interests of the regulated financial service provider, its staff, customers and other persons with whom it engages,

(ii) operating without bias and preventing, or identifying and appropriately managing, conflicts of interest,

(iii) not exerting pressure or influence on a customer so as to limit his or her ability to make an informed choice in relation to any financial service,

(iv) not misusing or misappropriating any assets or information of the regulated financial service provider or its customers, and

(v) reporting appropriately, and not impeding others from reporting, to the management of the regulated financial service provider—

(I) information relevant to, or giving rise to a suspicion of, the commission of a prescribed contravention or contravention of any other legal obligation or standard imposed on the regulated financial service provider, and

(II) any matter otherwise adversely affecting the activities or interests of customers, the regulated financial service provider, its related undertakings, or the financial system in the State,

(b) that the person acts with due skill, care and diligence, including—

(i) having appropriate knowledge of the business activities of the regulated financial service provider relevant to the controlled function, and the associated risks of those activities,

(ii) having appropriate knowledge of the legal and regulatory framework, including any legal obligation or standard imposed on the regulated financial service provider, relevant to the controlled function,

(iii) operating in compliance with the systems and controls, processes, policies and procedures of the regulated financial service provider and any legal obligation or standard imposed on the regulated financial service provider,

(iv) acting without detriment to customers, the regulated financial service provider, its related undertakings, or the financial system in the State,

(v) ensuring that any communication, including any record, provided to a customer or other person is clear, accurate, up to date and not misleading,

(vi) acting appropriately in any decision-making, including collective decision-making, ensuring decisions are properly informed and exercising sound judgement, and

(vii) monitoring the performance of any delegated tasks and ensuring that those tasks are appropriately performed,

(c) that the person cooperates in good faith and without delay with the Bank, and with authorities that perform functions in a jurisdiction other than the State that are comparable to one or more of the functions performed by the Bank under financial services legislation, including—

(i) responding to requests and requirements under financial services legislation in an open and timely manner,

(ii) disclosing information or records when required to do so under financial services legislation,

(iii) attending meetings and interviews when required to do so under financial services legislation,

(iv) not providing false, inaccurate or misleading information, records or explanations,

(v) not destroying, hiding or putting beyond reach information or records that it is reasonable for the person to expect to be required to be disclosed under financial services legislation, and

(vi) not engaging in evasive, misleading or obstructive conduct,

(d) that the person acts in the best interests of customers and treats them fairly and professionally, including—

(i) ensuring that customers are informed in a clear manner of relevant information relating to financial services of which they ought to be aware, and not impeding the provision of relevant information to customers,

(ii) communicating with customers in a timely manner having regard to the urgency of any matter and the time required by the customer to consider the relevant information,

(iii) assessing the needs and circumstances of customers, including their level of knowledge and experience of financial services, their financial circumstances and the range of options available to them, and ensuring that any advice or recommendation provided to customers is appropriate and tailored to their needs and circumstances,

(iv) ensuring that customers are not misled as to the advantages of any financial service,

(v) acknowledging and seeking to resolve any complaints received from customers,

(vi) resolving errors or mistakes affecting customers, and disclosing errors or mistakes to the customers affected in a timely manner, and

(vii) not acting in a manner that is unfair to customers,

and

(e) that the person operates in compliance with standards of market conduct and trading venue rules to which the regulated financial service provider is subject by law and any market codes that apply to the affairs of the regulated financial service provider.

(2) Nothing referred to in a subparagraph of any paragraph of subsection (1), as included in that paragraph, limits the scope of that paragraph or any other paragraph of that subsection.

(3) In subsection (1), ‘related undertaking’ has the meaning given by section 3 (1) of the Central Bank (Supervision and Enforcement) Act 2013 .

Additional conduct standards

53F. The standards referred to in section 53C(2), in the case of a person who performs a pre-approval controlled function in relation to a regulated financial service provider or any other function by which the person may exercise a significant influence on the conduct of a regulated financial service provider’s affairs, are—

(a) that the business of the regulated financial service provider is controlled effectively,

(b) that the business of the regulated financial service provider is conducted in accordance with its obligations under financial services legislation,

(c) that any delegated tasks are assigned to an appropriate person with effective oversight, and

(d) that any information of which the Bank would reasonably expect notice in respect of the business of the regulated financial service provider is disclosed promptly and appropriately to the Bank, including information relevant to, or giving rise to a suspicion or expectation of, any of the following:

(i) commission of an offence by the regulated financial service provider or a person performing a controlled function in relation to it;

(ii) commission of a prescribed contravention or any other breach of obligations under financial services legislation by the regulated financial service provider or a person performing a controlled function in relation to it;

(iii) concealment or deliberate destruction of evidence relating to a matter referred to in subparagraph (i) or (ii);

(iv) provision of false or misleading information to the Bank relating to a matter referred to in subparagraph (i) or (ii);

(v) obstruction or impeding of an investigation relating to a matter referred to in subparagraph (i) or (ii);

(vi) commencement of legal proceedings by or against the regulated financial service provider arising from its obligations under financial services legislation;