Rogue bankers will now be first in the firing line when finance companies break the rules under new legislation approved by Cabinet yesterday.
Long-awaited measures to hold senior financial executives personally accountable for wrongdoing such as the tracker mortgage scandal will break the so-called “participation link” between individuals and the institutions they work for. The change means top figures at banks, brokers and insurance firms could face fines of up to €1m and disqualification even if their companies are not found guilty of breaching regulations.
Under the new “senior executive accountability regime” (SEAR), senior managers will have mandatory responsibilities that are mapped out like a job spec and can be punished for misconduct even if their firms are not implicated – which is impossible under existing law.
The intention is that the new regime changes the culture across firms as individuals will no longer be able to evade personal responsibility for the conduct of the companies they run.
The Central Bank is expected to follow up the new rules with an update to its fitness and probity regimes, which sets out appropriate conduct for financial workers.
Regulators had first proposed the framework in response to the Central Bank’s own investigation of the tracker mortgage scandal, which to date has cost banks more than €1bn in fines and customer compensation.
The new law is expected to be implemented starting next year and will be rolled out alongside the Central Bank’s enhanced supervisory approach to culture and behaviour within firms.