Delay in banker accountability law as Brexit dominates agenda

Planned new rules to give the Central Bank powers to make senior bankers more accountable individually for failings or wrongdoing may take more than another year before they are in place, the Oireachtas finance committee heard on Tuesday.

Minister for Finance Paschal Donohoe said last November that he planned to publish a draft version of legislation in the first three months of 2019, paving the way for a so-called senior executive accountability regime. However, the timing of the introduction of the heads of a Bill is likely to be pushed out as the Government prepares for Brexit.

Speaking to the Oireachtas finance committee, Banking & Payments Federation Ireland's interim chief executive, Maurice Crowley, said that after the Government introduces enabling legislation, he expects the Central Bank to put the matter out to consultation later this year before new rules take effect.

“My expectation is we’ll have a serious outline in the first quarter, or first half, of next year of how it’s going to work and how it’s going to impact banks,” Mr Crowley said.

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A senior executive accountability regime – similar to rules introduced in the UK two years ago – would force banks to document each top manager’s responsibilities, making it easier for regulators to make individuals answerable if they take unnecessary, uncalculated risks, refuse to follow correct processes or knowingly commit wrongdoing.

Different sanctions

The Central Bank currently has the power to fine individuals up to €1 million and bar them from working in important roles in regulated firms. It is not yet clear whether the planned Central Bank (Amendment) Bill will lead to different sanctions.

Also speaking to the Oireachtas committee, Gary Tobin, assistant secretary general with responsibility for banking and financial stability at the Department of Finance, said talks with the Attorney General's office on the draft laws are ongoing and he is hopeful that they could be published "relatively quickly".

Mr Crowley said that although banks support “the direction of travel” on the plans, there is a “need to get the balance correct between a clear focus on driving a customer-centric culture and potentially over-bureaucratic process and structure”.

He added that it was important the new regime did not hinder the attraction of “talent” to the banking sector or movement within firms. In addition, Mr Crowley noted that although the UK rules require senior managers “take reasonable steps” to prevent regulatory breaches from occurring in their area of responsibility, the Irish Central Bank’s proposal is that executives “take all reasonable steps”.

“Guidance on this issue will be critical for bank executives as the new regime is introduced,” he said.