The Central Bank is consulting on its Fitness & Probity (F&P) Standards and proposing changes to the list of pre-approval controlled functions (PCFs).
Background
The report by Andrea Enria (pdf, 1050 KB) (Enria Report) arising from the independent review into the CBI's F&P approval process was published on 11 July 2024. It made 12 recommendations which were accepted by the CBI.
For more information on the Enria Report's recommendations, read our insights here: Fitness & Probity: Report published following independent review.
As a key initial step towards implementing the recommendations, the CBI announced the establishment of a dedicated F&P Unit in December 2024. The Unit became operational in January 2025 (read our insights here: Fitness and Probity: Central Bank announces establishment of dedicated Fitness and Probity Unit).
Consultation Paper
This month's Consultation Paper (CP160) (pdf, 339 KB) focuses on how the CBI plans to implement the Enria Report's recommendations that called for increased clarity and transparency of the CBI's supervisory expectations on the application of its F&P standards.
CP160 includes proposals for a review of the list of prescribed pre-approval controlled functions (PCFs) and updated draft Guidance on F&P Standards (pdf, 1086 KB) which aims to consolidate and improve existing guidance. The consultation closes on 10 July 2025.
The draft Guidance includes proposals for:
- High-level (non-exhaustive) expectations regarding inherent responsibilities, role summaries, time commitments, experience and knowledge/qualifications for certain PCFs. The focus is on executive directors, non-executive directors, independent non-executive directors and heads of control functions.
- How conflicts of interests should be identified, managed and mitigated.
- Clarifying how suitability and diversity in boards and management teams is assessed.
- How the relevance of past events to an individual's application should be determined (firms wouldn't be expected to look back more than 10 years, save where a custodial sentence may have been imposed on that individual).
Regarding the list of PCFs, CP160 sets out the CBI's plans for initial targeted revisions to the list. A more substantive review will be carried out in 2025 and 2026 to tie-in with the planned 3-year review of SEAR in 2027. The targeted revisions proposed by CP160 would reduce the number of PCF roles from 59 to 45, but wouldn't require firms to appoint new PCFs and firms wouldn't be required to create a PCF role for the sole purposes of complying with the revised list. However, as sector-specific categorisations would be removed, there would be one list of PCFs which applies to all regulated firms (other than credit unions) – this could mean that a PCF role that previously applied to firms in a limited number of sectors would apply more broadly – the CBI notes that it would apply an in situ process to individuals in those roles at the time the PCF list is changed. The CBI plans to give regulated firms advance details of any related changes to its processes once the CP160 consultation period ends.
Gatekeeper Process
In tandem with CP160, the CBI also published a new F&P Gatekeeper Process (pdf, 800 KB) to explain the PCF application process for firms, which is being closely reviewed.
Particular focus areas (arising from the Enria Report's recommendations) relate to notifications of interviews (e.g. detailed invitations that include any documents for discussion, and a minimum of five working days' notice of the interview), ending 'meet and greet' interviews, committing to remove 'off record' discussions with firms (all discussions would be 'on record'), committing to 90-minute interviews, providing minutes for review within 5 working days, committing to a 90-day timeframe for completing assessments of applications (noting that this may not be achievable in all cases) and clarifying how feedback will be given.
Implementation Report
An Implementation Report (pdf, 496 KB) also accompanies CP160, detailing the CBI's progress against the Enria Report's 12 recommendations. Output to date includes:
- Publishing the above F&P Gatekeeper Document. Establishing a Gatekeeping Decisions Committee to consider cases of potential refusal. Plans to apply a complaints procedure to the F&P gatekeeping process (complaints will be considered by a third party).
- Consulting on revised and consolidated Guidance on F&P Standards as part of CP160.
- Proposals to refine the categorisation of PCFs (in two stages – the first stage forms part of CP160).
- Establishing an F&P Unit in January 2025. Committing to host annual industry workshops (with industry stakeholder engagement to take place in Q2 2025).
- Enhancing the management information and statistics that the CBI shares externally (the 2025 Authorisation and Gatekeeping Report will contain additional information).
- Planning quality assurance once the changes have been embedded.
- Enhancing training for sectoral supervisors and teams (focused on carrying out interviews in a fair and consistent manner).
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
