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Central Bank (Individual Accountability Framework) Bill 2022 taken at Second Stage, Seanad Eireann

On 8 February 2023, the Central Bank (Individual Accountability Framework) Bill 2022 (the "Bill") was taken at second stage, Seanad Éireann (the "Seanad").

The Minister of State for Financial Services, Credit Unions and Insurance, Jennifer Carroll-MacNeill, (the "Minister") introduced the Bill and outlined the Bill's aims and provisions to the Seanad.

The Minister noted that there were a number of amendments made to the Bill at Committee and Report Stages in Dáil Éireann (the "Dáil") that were "technical in nature and did not involve any substantive change to the policy objectives of the Bill". She advised that the Minister for Finance intends to bring forward another "minor technical amendment at Committee Stage relating to a transitional provision in regard to Part 7".

During the debate, Senator McDowell raised a number of concerns regarding the personal sanctions that may be brought against individuals. He maintained that "if the Central Bank decides to prosecute individuals within this process, they will be under massive obligations to comply with the inquiry". Senator McDowell was of the belief that the powers that the Bill proposes to confer on the Central Bank of Ireland (the "Central Bank") are "excessive, and not balanced" and that the conduct standards "are demanding when deployed against an individual."

Senator Gavan raised a number of issues previously raised by Deputy Pearse Doherty at Dáil Committee stage. The first being the issue of training. He then queried the choice of the time period of six years as the relevant period preceding the commencement of an investigation (in respect of a suspicion of a breach of the fitness and probity requirements) noting that "many issues have not come to light under such a time, which could pose a problem for ensuring accountability after the fact". He also asked the Minister to re-examine the provision in Section 15 of the Bill on the discontinuation of an investigation for reason of lack of resources.

The Minister, in response to the query raised on the Central Bank's powers, advised that a similar regime was introduced in the United Kingdom seven years ago and the effect that it has had in organisations is that "it has become about centralising the cultural question around individual accountability but at CEO level, so it is not something just for compliance, it relates to the whole-of-bank or whole-of-institution function and is driven by the CEOs office".

In respect of the six year rule, the Minister explained that this is being introduced in response to a concern that individuals who had reason to believe they would be subject of a fitness and probity investigation could prevent the investigation by a "strategic resignation" in advance of the investigation.

In relation to Section 15 on the discontinuance of an investigation for lack of resources, she noted that the former Minister for Finance, Pascal Donohoe wrote to the Finance Committee in response to this question stating that he "wholeheartedly agreed" that the Central Bank should not be prevented from conducting any investigation due to lack of resources. The Minister, in response to queries on fair procedures, identified Section 15 as an example of such fair procedures "the reason for discontinuing the investigation should be as transparent as the taking of it in the first instance. As I see it, the change in section 15 is a measure to try to rebalance that".

Next Steps

Speaking to the Central Bank consultation process, the Minister advised that it is her understanding that the Central Bank will leave the consultation open for "a period of up to three months, with three months for analysis."

The Bill was read a second time and now moves to Seanad Committee Stage. The Committee Stage is scheduled to take place on Tuesday, 14 February 2023. We will include an update on that in next week's FIG Top 5 at 5.