In September 2011, the Central Bank introduced Fitness and Probity regulations and standards (“Standards”) for most Central Bank regulated financial service providers (“RFSPs”) pursuant to the Central Bank Reform Act 2010.  RFSPs include banks, (re)insurers, MiFID firms, investment fund companies, fund administrators and custodians.  This replaces the existing Fitness and Probity regime which has applied to directors and senior personnel within RFSPs since 2006 and applies to a much broader range of persons in RFSPs than was previously the case.  

The Standards apply to all persons occupying what are described as “pre-approval controlled functions” (“PCFs”) (requiring Central Bank approval prior to appointment) or “controlled functions” (“CFs”) in RFSPs.   

It is an offence for RFSPs to permit a person to perform a PCF or a CF function unless the RFSP is satisfied on reasonable grounds that the person complies with the Standards and the person has agreed to abide by the Standards. The revised Fitness and Probity regime is being implemented on a phased basis as follows:

• From 1 December 2011 existing and new PCFs became subject to the Standards
• From 1 March 2012 new appointments to CFs will be subject to the Standards (this will include new offers of CF positions and internal transfers/promotions in an RFSP)
• From 1 December 2012 the Standards will apply to all CFs

All RFSPs were required to provide to the Central Bank a list of PCFs in situ as at 1 December 2011 (“Existing PCFs”) by 31 December 2011.  They will also be required to provide written confirmation as to the compliance by the Existing PCFs with the Standards by 31 March 2012.  

All RFSPs are required to undertake:

• An internal due diligence process with all Existing PCFs in order to be able to provide the necessary confirmation to the Central Bank by 31 March 2012
• An internal due diligence process as to compliance with the Standards by all persons in CF roles, as at 1 March 2012, by 1 December 2012
• Due diligence on all new (post-30 November 2011) PCFs and new (post-29 February 2012) CFs prior to their appointment to the RFSP
• Monitoring of the ongoing fitness and probity of all CFs/PCFs and to obtain certification from them, on at least an annual basis, as to their conformity with the Standards

Contributed by Patricia Taylor.

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