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Financial Services Firms and Individuals Face Tougher Scrutiny as Irish Government Introduces New Regulatory Regime

In an effort to boost accountability and stability in Ireland’s financial services sector, the government has introduced the Individual Accountability Framework (IAF), modeled after the UK’s Senior Manager and Certification Regime (SMCR). The new regime aims to hold senior executives and employees accountable for their decisions and actions.

Key Changes: Remuneration Requirements

Under the IAF, banks must establish remuneration policies that are:

  • Gender-neutral
  • Transparent

Specific requirements apply to bank employees whose professional activities have a material impact on the risk profile of the institution. These include:

  • Material risk-takers, defined as staff receiving remuneration above EUR 500,000 or higher than the average awarded to senior management.
  • Staff engaged in controlled functions.

Remuneration policies must comply with various principles, including:

  • Limits on individual payouts
  • A requirement to establish a framework that aligns with the bank’s business strategy and objectives

Prudential Requirements

The Central Bank has set additional capital buffers for significant Irish banks, considering them Other Systemically Important Institutions (O- SIIs’). These institutions are required to maintain a buffer of up to 2% of risk-weighted assets. The countercyclical capital buffer (CCyB) aims to promote a sustainable provision of credit to the economy by making the banking system more resilient.

New Regulatory Regime Aims to Boost Accountability and Stability

The IAF introduces new requirements for financial services firms and individuals, aiming to:

  • Increase transparency in employees’ duties and responsibilities
  • Hold senior executives accountable for their decisions and actions
  • Reduce risky decision-making and increase stability in the financial services market

These changes demonstrate the Irish government’s commitment to strengthening the country’s financial services sector and promoting a more stable and resilient economy.

Stay Compliant with New Regulatory Requirements

Financial services firms and individuals must adapt to these new requirements to avoid contraventions. Non-compliance can result in severe penalties, including fines and reputational damage. Ensure you are aware of the latest regulatory changes and take steps to maintain compliance with the IAF and prudential requirements.

Seek Professional Guidance

If you require assistance in navigating the new regulatory regime or ensuring compliance with remuneration and prudential requirements, consult with a financial services expert or professional advisor.