Against the backdrop of the ongoing COVID-19 pandemic, the Central Bank of Ireland (the CBI) has put in place a streamlined and expedited process to support regulated entities seeking CBI approval for the temporary appointment of employees to ‘pre-approval controlled function’ roles.
Approval Process for PCFs
As detailed in our recent article, the CBI’s Fitness and Probity Regime requires regulated financial service providers (RFSPs) to obtain the prior approval of the CBI for the appointment of persons to perform pre-approval controlled functions (or PCFs). PCFs are a sub-set of the senior positions under the regime known as Controlled Functions or CFs. Persons performing such CFs (including PCFs) within RFSPs must be (i) competent and capable; (ii) honest, ethical and act with integrity; and (iii) financially sound.
Under the Fitness & Probity regime, the RFSP is required to undertake its own due diligence before proposing a PCF candidate to the CBI. The CBI approval process for PCFs is generally based on an Individual Questionnaire (IQ), which is completed in respect of the appointee and submitted to the CBI by the RFSP, reference checks and, in certain cases, requests for further information. However, the CBI may also, when it considers it necessary, conduct an interview(s) with the proposed PCF holder before granting the requisite approval.
Impact of the Pandemic on PCF Approval Process
The CBI has published, under its ‘Covid-19 – Regulated Firms FAQ’, useful guidance for RFSPs navigating the pre-approval process for temporary PCF appointments necessitated by pandemic-related vacancies. The guidance provides for two separate scenarios in which an expedited temporary PCF appointment process may be available:
- If a PCF holder is unable to perform their role due to illness; and
- If a firm cannot fill a permanent PCF role vacancy due to the pandemic.
According to the Guidance, in the above scenarios, the RFSP may temporarily appoint another suitable individual to perform the relevant PCF role for a limited period (which should normally not extend past 3 months) without the prior approval of the CBI. In keeping with its gate-keeper role however, the prior agreement of the CBI remains a pre-requisite to any such temporary appointment. The expedited process for the appointment of temporary PCFs in either of the above scenarios requires that:
- The RFSP consult its succession and contingency plan and identify a suitable individual to perform the PCF role.
- The RFSP contact the CBI and provide the following:
- an outline of the circumstances that have given rise to the need for the temporary PCF appointment;
- confirmation that the RFSP is satisfied on reasonable grounds that the person complies with the Fitness and Probity (F&P) Standards. In providing this confirmation; the RFSP should consider time commitments and other roles that the proposed temporary appointee may already be performing;
- confirmation that the temporary appointee has agreed to abide by the F&P Standards and will continue to do so whilst performing the PCF role; and
- the period of time for which the appointment is requested (which should normally not extend past three months).
- No Individual Questionnaire (IQ) be submitted.
- If the CBI agrees to the appointment in light of the exceptional circumstances outlined by the RFSP in its submission (see 2 above), a letter will issue to the RFSP regarding the appointment.
- The RFSP should keep the situation under review and inform the CBI of any changes in relation to that appointment.
Contributed by Lisa Shannon