6 things you need to know about the Individual Accountability Framework (IAF)

The Central Bank of Ireland has recently released regulations and guidance on the Individual Accountability Framework (IAF). Here are 6 things you need to know about the updated regulations:

  • What is the Individual Accountability Framework (IAF)? The IAF is made up of four different elements –
    1. Senior Executive Accountability Regime (SEAR)
    2. Conduct Standards
    3. An enhanced fitness & probity regime
    4. An amended Administrative Sanctions Procedure (ASP)
  • What firms are in the initial scope of SEAR? Firms within the initial scope of SEAR include –
    1. Credit Institutions (excluding credit unions)
    2. Insurance Undertakings (excluding reinsurance undertakings, captive (re)insurance undertakings and Insurance SPVs)
    3. Investment Firms which underwrite on a firm commitment basis and / or deal on own account and / or are authorised to hold client assets
    4. Incoming third country branches
  • What is the Management Responsibilities Map? Each in-scope firm must maintain a comprehensive Management Responsibilities Map that describes it management and governance arrangements. It should –
    1. Be maintained and legal entity / firm level
    2. Identify the individuals in PCF roles
    3. Describe the allocation of Prescribed Responsibilities and Other Responsibilities among PCF roles
  • How does SEAR interact with the existing Fitness & Probity regime? Following the implementation of SEAR, those seeking PCF approval will need to submit a Statement of Responsibilities alongside their Individual Questionnaire (IQ).
  • What are the Conduct Standards? There are three ‘sets’ of standards –
    1. Business Standards -> the CBI now has the power to prescribe standards which ensures that firms act with due skills, act honestly and in the best interests of consumers
    2. Common Conduct Standards -> these standards apply to all CFs (and PCFs). They act as a benchmark to guide individuals as to the standards of behaviour expected of them.
    3. Additional Conduct Standards -> these standards apply to individuals performing PCF roles and other individuals who exercise significant influent on the conduct of a firm
  • When does this come into enforcement?
    1. The Conduct Standards and enhancements to the Fitness & Probity Regime will become applicable on the 29th December 2023
    2. SEAR regulations that describe responsibilities of specific roles (CFs and PCFs) apply to in-scope firms from the 1st July 2024 and to (Independent) Non-Exec Directors from the 1st July 2025.

 

To learn more about the Individual Accountability Framework and CalQRisk, contact us today.

 

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