Entities regulated by the Central Bank of Ireland must review their existing HR and compliance procedures to ensure that they meet the revised fitness and probity regulations and standards published by the Central Bank on 1 September 2011. The new regime, which replaces the regime established in 2006, applies to all persons/entities in Ireland that are regulated by the Central Bank, with the exception of credit unions.
It has application to persons occupying or seeking to occupy pre-approval controlled functions (“PCFs”) or controlled functions (“CFs”) in regulated firms. Regulated entities may not permit a person to perform a PCF or CF unless satisfied on reasonable grounds that he/she complies with the regulations and standards and has agreed to so comply. Where there are concerns about the fitness and probity of such a person, the Central Bank has the power to investigate, suspend, remove and/or prohibit him/her from acting in a PCF/CF position.
PCFs are specifically designated by the regulations and include directors, secretaries, CEOs and heads of specified functions in regulated firms. Before appointing a person to a PCF, the approval of the Central Bank must first be obtained. This is similar to the current regime under which Central Bank approval is required for the appointment of directors and senior staff to a regulated firm.
No specific list of CFs is provided, but such functions would include, for example, the exercise of significant control over the affairs of the regulated entity; the giving of advice or assistance to customers in the provision of financial services; or the dealing in or controlling of a customer’s property.
The revised regime is being introduced on a phased basis with the following being subject to the regulations and standards as and from the dates below:
- 1 December 2011: existing and new PCFs. By 31 December 2011, regulated firms must notify the Central Bank of the persons occupying PCF positions, and confirm that they are satisfied that they are compliant with the regulations and standards and that they have obtained their written agreement to abide by them. To provide the necessary confirmation, regulated firms must undertake an internal due diligence process.
- 1 March 2012: new appointments to CFs.
- 1 December 2012: all CFs.
Regulated firms are required to monitor on an ongoing basis the fitness and probity of persons performing PCFs and CFs, which will include due diligence reviews, the maintenance of records relating to such reviews and the obtaining of annual confirmations from such persons. This is likely to create significant additional HR, employment and data protection law challenges for all regulated firms
Contributed by Patricia Taylor.
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