The Central Bank of Ireland’s ‘Fitness and Probity’ regime, applicable to financially regulated undertakings, came into effect in December 2011.  At the core of the regime is the requirement that all persons who perform designated controlled functions (CFs) on behalf of those undertakings meet prescribed statutory standards of fitness and probity.
 
A person who is subject to the statutory standards must:

• Be competent and capable (fitness)
• Act honestly, ethically and with integrity and be financially sound (probity)

A financially regulated undertaking cannot allow a person to whom the standards apply to occupy a CF if it is unable to satisfy itself on reasonable grounds as to that person’s compliance with the standards. It was in this context that the Ulster Bank allegedly indicated to one of its senior executives, Mr John McGrane, that it had concerns about his compliance with the probity standard, due to his personal financial indebtedness. The bank also indicated that it proposed conducting an inquiry into Mr McGrane’s fitness, based on his role in the bank’s management team in the years preceding the banking crisis.

Mr McGrane applied to the High Court on an ex parte basis (i.e. Ulster Bank was not present in court) and secured a temporary injunction restraining the bank from taking any steps to dismiss him or to commence an inquiry into his competence. The High Court heard that the implications of a dismissal would be catastrophic for the executive, who has 38 years’ service with Ulster Bank.
 
The case underlines that, although the standards have statutory force, an employer proposing to dismiss a person for failing to meet those standards will not have an automatic defence to any employment claims or proceedings that follow.

Financially regulated employers must have regard to established employment law principles and follow fair procedures in their adjudication of relevant employees’ fitness and probity. 

Contributed by Louise Harrison.
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