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Central Bank proposals on the Senior Executive Accountability Regime (“SEAR”)
Central Bank proposals on the Senior Executive Accountability Regime (“SEAR”)
The proposed new Central Bank regulations on accountability and responsibility will be introduced as part of the Central Bank (Amendment) Bill 2019. There is nothing new in this for those who attended the recent ICSA Ireland annual conference in Dublin where delegates heard Gerry Cross, Director Financial Regulation Policy and Risk at the Central Bank, elaborate on these proposals.
The new regulations will allow the Regulator to sanction or disqualify senior bank management as well as insurance and asset management company senior executives for failings connected with their role.
New standards of conduct for both firms and individuals will also be implemented under the new legislation in the financial sector. These will enhance the Central Bank’s existing fitness and probity regime that assesses the suitability and standing of senior staff in regulated firms.
Speaking at our conference Gerry Cross said:
“Our proposals include the implementation of a Senior Executive Accountability Regime (SEAR). This will place obligations on firms to set out clearly where responsibility lies for all aspects of their business. It will drive better governance structures in firms by identifying the Senior Executive Functions within the firm and stating clearly, by means of statements of responsibility, which individuals are responsible for what. Not only will this mean that it is clear where responsibility lies for each of the key aspects of a firm’s business and for its governance and control activities, we also propose to introduce a number of prescribed responsibilities – such as responsibility for ensuring and overseeing the integrity and independence of the compliance function; the risk function, internal audit etc – which must be assigned to an individual, so that there cannot be gaps in the framework of overall responsibility.”
The new rules are similar to those introduced recently in a number of jurisdictions who have already implemented individual accountability frameworks and will impose a requirement that senior executives take all reasonable steps to ensure the area of the business for which they are responsible is controlled effectively and complies with any regulatory requirements.
The new regulations will come into force after the Central Bank holds a consultation process, which is expected to start later this year.
For the full text of the speech from Gerry Cross at the recent ICSA Ireland conference please see here:
https://www.centralbank.ie/news/article/key-themes-in-financial-regulation-gerry-cross
John Burns Business Development Manager, ICSA:The Governance Institute, Ireland and member of the ICSA Company Secretarial Practice Committee.
ICSA’s Excellence in Governance Awards is judged by two independent judging panels. Judging takes place in July and August, with the shortlist announcement in early September.
Transparency in governance categories
Transparency in governance categories are judged by Hermes and ISS. Hermes helps institutional shareowners around the world to meet their fiduciary responsibilities and become active owners of public and private companies. Their team of engagement and voting specialists monitor its clients' investments in companies and intervene where necessary with the aim of improving performance.
Our judging criteria for these categories stipulate good and poor practice within each category area.
Ø Download the transparency in governance category judging criteria. [LINK]
Company secretary award categories
Company secretary award categories are judged by a select panel of five judges, all highly experienced in company secretarial and governance fields, spanning private and not-for profit sectors.
To allow our judges to assess nominations fairly and objectively, all nominations are judged on the same criteria. Nominators will be asked to submit biographical information of the nominee and a general statement in support of the nomination, plus specific examples or evidence of achievement across the following six areas:
1. Company law, regulation and compliance. Demonstration of the meeting of their organisation’s legal obligations and keeping on top of legislative development and change; examples of excellence in the design and maintenance of efficient and effective control systems for ensuring compliance.
2. Corporate governance and shareholder relations. Demonstration of measures implemented to improve the effectiveness of corporate governance and shareholder communication within their organisation.
3. Corporate restructuring. Demonstration of having undertaken acquisitions, disposals and any other significant restructurings or transactions.
4. Information management and communication. Examples of excellence in the management, retrieval and dissemination of information, including the harnessing of information technology to aid performance; evidence of timely and effective communication with both internal and external stakeholders.
5. Leadership and management. Evidence of circumstances where an individual has shown exemplary leadership and management.
6. Innovation. Examples of achievements using new thinking to solve issues and problems.
We ask nominators to include evidence of achievement in at least three of these six areas.
