As reported in our October Legal News, the Central Bank Reform Act 2010 provided the basis for a new and more stringent statutory-based fitness and probity regime for regulated providers of financial services.
The new fitness and probity regime will apply to those persons in regulated entities (excluding credit unions) carrying out “controlled functions” and “pre-approval controlled functions” as defined in the Act.
In the case of “pre-approval controlled functions”, appointments of individuals to carry out such functions will require the prior approval of the Central Bank. In the case of “controlled functions” while prior approval of appointments will not be required the Bank will nevertheless have the power to investigate, suspend and prohibit persons from fulfilling such functions if it considers that such persons do not meet the requisite standards of fitness and probity.
Under the Act, the Bank has the power to designate functions as pre-approval controlled functions and controlled functions.
The Act also provides the Bank with the power to issue regulations setting out the standards of fitness and probity that will apply to individuals carrying out these functions.
Regulated entities will have to ensure that persons proposed for appointment to carry out pre-approval controlled functions are suitable for appointment and will also have to ensure ongoing monitoring of persons carrying out pre-approval controlled functions and controlled functions to ensure that they continue to meet the requisite standards of fitness and probity.
As promised, the Bank has now initiated a public consultation process to ascertain the views of interested parties in relation to (a) the designation of functions in regulated entities as controlled functions and pre-approval controlled functions and (b) the new standards of fitness and probity to apply to such functions.
The paper contains draft Regulations specifying functions as controlled functions and pre-approval controlled functions and also contains draft Regulations outlining the proposed new standards of fitness and probity.
Submissions by interested parties must be made prior to 20 May 2011.
The new regime is due to come into force on September 1, 2011. Individuals holding positions as pre-approval controlled functions and controlled functions as at that date will continue in those positions. However there are a number of obligations that must be undertaken by firms as part of the transition to the new regime that are referred to in the paper including the submission to the Bank, prior to December 31 2011, of a list of individuals in the firm carrying out pre-approval controlled functions at the date the new regime comes into effect.
Contributed by Barry Conway.
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