Enhanced measures for the Central Bank’s Fitness and Probity Regime from 31 December 2023

Following enactment of the Central Bank (Individual Accountability Framework) Bill 2022 on 9 March 2023, an important deadline is now looming in relation to changes that will come into effect for the existing Fitness and Probity regime from 31 December 2023. The changes aimed at enhancing the regime and strengthening the Central Bank’s enforcement powers will be made to certain aspects of the existing Fitness & Probity regime.

Two important new requirements will apply from 31 December 2023:
  1. Certification by Regulated Financial Service Providers (RFSP’s)
  2. Inclusion of Holding Companies
Certification by RFSP’s

Regulated Financial Service Providers will be required to certify that they are satisfied that any individual performing a Pre-Approval Controlled Function (PCF) / Controlled Function (CF) function meets the requirements under the F&P regime.


Inclusion of Holding Companies

The fitness and probity regime will be extended to apply to the directors/staff of unregulated holding companies/ mixed financial holding companies established in Ireland.

In light of these changes and the Central Bank’s enhanced procedures for fitness and probity investigations, suspensions and prohibitions, it’s worth looking again at some of the key requirements of the existing fitness and probity regime.

The Fitness & Probity Regime

Key aspects of the Fitness & Probity regime that RFSP’s should bear in mind when striving to comply are as follows:

  1. Continuing Nature
  2. Additional Due Diligence for CF1, CF2 and PCF’s
  3. Investigate thoroughly if need arises
Continuing Nature

The obligation on RFSP’s to carry out Fitness and probity checks are not designed to be a one-off task only discharged at the initial appointment to a CF / PCF role.  Appropriate checks will be required when any material change takes place after initial due diligence is carried out and should be audited on an annual basis. RFSP’s are also obliged to investigate without delay when they become aware of any concerns regarding the fitness and probity of any person performing a CF.

Additional Due Diligence for CF1, CF2 and PCF’s

More onerous obligations apply to fitness and probity checks to be carried out in relation to those performing CF1, CF2 and PCF’s.  The following minimum additional due diligence checks must be undertaken by RFSP’s; (a) Regulatory / Sanction check (b) Companies Registration Office check (c) Disclosure requirement to RFSP’s of any related public or private disciplinary action, investigation, suspension or other enquiry (d) Judgment check. In these cases it is not sufficient for those parties performing CF1, CF2 and PCF’s to self-certify.

Investigate thoroughly if need arises

Sections 4.1 and 5.2 of the F & P Standards relate to the assessment required by RFSP’s of a person’s probity to perform a CF role.  There is a limit to the due diligence checks that can be carried out but when there is evidence to suggest that a person might not comply with the standard of probity required then a regulated financial service provider is obliged to investigate thoroughly.

Orion Risk has been conducting fitness and probity reports for our clients in the Financial Services Provider industry for over 30 years and is well placed to help with your fitness and probity regulatory requirements. Please do not hesitate to contact us for a free consultation and we can discuss how Orion Risk reports can help you.

DISCLAIMER: This document is for information purposes only and does not constitute any legal advice.

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