INTRODUCTION
In the run-up to the Central Bank's expected Summer 2022 consultation on its proposed individual accountability framework, this is the first of a new series of client briefings on what steps firms should be taking now to prepare for the Central Bank's individual accountability framework which is expected to come into effect in early 2023.
Our previous briefing on the heads of bill on individual accountability published in July 2021 is available here.
In this briefing, we examine conduct standards – one of the four pillars of the individual accountability framework - and we outline the actions that can be taken by firms and individuals to prepare for the enforceability of those conduct standards.
CONDUCT STANDARDS
The conduct standards pillar of the proposed individual accountability regime will apply to all regulated financial service providers (RFSPs) from when the individual accountability regime comes into effect which is expected to be in early 2023.
Three categories of conduct standards are proposed.
1. BUSINESS CONDUCT STANDARDS
Business conduct standards will apply to all RFSPs from the outset as they are designed to create a single benchmark of conduct which all RFSPs are required to meet, regardless of sector.
Proposed business conduct standards include:
- Conducting business professionally, honestly, ethically and with integrity.
- Conducting business with due skill, care and diligence.
- Taking appropriate steps to prevent or effectively manage conflicts of interest.
- Acting in the best interests of customers and treating them fairly and professionally.
- Maintaining adequate financial resources.
- Controlling and managing its affairs and systems in a sustainable, responsible, sound and prudent manner.
- Arranging adequate protection of client assets when responsible for them.
- Dealing with its regulators in good faith, and in an open and cooperative manner.
The Central Bank will have the power to supplement these business conduct standards.
Failure to comply with business conducts standards may be enforced against an RFSP under the Central Bank's Administrative Sanctions Procedure (ASP).
2. COMMON CONDUCT STANDARDS
Common conduct standards will apply to all persons performing controlled functions (CFs) and pre-approval controlled functions (PCFs) in all RFSPs.
Proposed common conduct standards include:
- Acting honestly, ethically and with integrity.
- Acting with due skill, care and diligence.
- Cooperating with the Central Bank and other regulators or authorities and dealing with them in good faith and without delay.
- Acting in the best interests of customers and treating them fairly and professionally.
- Observing proper standards of market conduct.
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