Insight

The Central Bank of Ireland (CBI) has implemented a new fitness and probity regime effective from 1 December 2011 for regulated financial service providers (RFSP), for example, funds and investment firms.

The Regulations and Standards of Fitness and Probity (F&P Standards) are issued under Part 3 of the Central Bank Reform Act 2010, which gives the CBI extensive powers not only to set statutory standards of fitness and probity, but also to approve or prevent the appointment of certain persons and to investigate, remove or prohibit certain position holders.

The F&P Standards apply to two categories of persons; “Pre-Approval Controlled Functions” (“PCF”) and “Controlled Functions” (“CF”). The Regulations identify 41 senior positions as PCFs (e.g. director, head of finance), which require the Central Bank’s approval before these positions can be effective.  Certain controlled functions which interact with customers are also set out in the Regulations and these activities are covered by the Minimum Competency Code.

The F&P Standards set out conditions that staff must satisfy to perform the controlled functions.  These include the obligation to be capable and competent to carry out the function, to act honestly, ethically, with integrity and to be financially sound.

RFSPs are responsible for ensuring that controlled functions meet the Standards, initially and throughout their careers in the firm. Therefore, they are required to carry out due diligence to ensure the F&P standards are met. 

From 1 December 2011 existing and new staff in PCFs became subject to the Regulations and Standards. Although RFSPs were required to notify the Central Bank of each individual in the organisation who is a PCF by 31 December 2011, firms have until 31 March 2012 to confirm in writing to the CBI that the RFSP has performed the relevant due diligence on the PCF.

From 1 March 2012 new appointments to CF will be subject to the Regulations and Standards. From 1 December 2012 the Regulations and Standards will apply to all staff in existing CFs.

The Central Bank has also published Guidance for industry which, among other things, indicates the type of due diligence that RFSPs should carry out in relation to persons proposed for or
holding PCFs or CFs.

Our experienced team of regulatory examiners and specialists can work with you to help you prepare for the revised F&P regime. We can assist you in the design and implementation of the Firm’s strategy, assess your current Fitness and Probity procedures and controls, deliver bespoke Fitness and Probity training and vet funds’ PCFs.

For further information please contact Ciara O'Sullivan