Prudential Risk

Individual accountability framework

The challenges, opportunities and our services.

Building blocks of individual accountability framework

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The expectations

Senior Executive Accountability Regime (SEAR)

The increased focus of the Central Bank of Ireland (CBI) on behaviour and culture and its views on the interconnectedness of same with conduct risk in regulated firms has been a recurring theme of senior regulators in recent times. Following on from the CBI report on Behaviour and Culture in Irish Retail Banks in 2018, the CBI formally signposted its desire to enhance its gatekeeping, supervision and oversight powers by implementing a comprehensive accountability framework for individuals operating in regulated firms. Together with other measures (conduct standards, enhancements to fitness and probity, and administrative sanctions) SEAR is part of the CBI's wider framework to enhance transparency and accountability in the financial sector. The new regime will introduce a wide array of challenges that will need to be addressed and overcome if organisations are to be successfully compliant.

  • With specified exemptions in each sector, it is expected that the bill will initially be applied to:− banks;
    • insurance undertakings; and
    • investment firms and their third country branches.
  • Senior Executive Functions (SEFs) will broadly correspond to Pre-Approval Control Function (PCF) role holders under the current fitness and probity regime, with in-scope SEFs expected to include board members, executives reporting directly to board and heads of critical business areas.
  • Each person carrying out a SEF will have role-related responsibilities allocated by their firm and the CBI will also prescribe mandatory responsibilities depending upon the type of firm and sector (Additionally, conduct and prudential risk will be the responsibility of someone carrying out a SEF).
  • Firms will be required to draw up comprehensive responsibility maps setting out their key governance and management oversight arrangements.

The four pillars: A closer examination

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