Bank of Ireland welcomes important step forward in improving accountability in the financial sector
Banking, done well, has a positive role in all our lives and across society. It can help people own a home, put kids through college, and it can support the growth of businesses and creation of jobs in our communities. Today, we see banking play a strong role in helping the economy recover from COVID-19.?
However, we also all know how badly things can go when banking is not done well. That is why I see rebuilding trust and improving accountability in banking as being so important. In 2019 I wrote about why I believe senior bankers in Ireland should be made more accountable. My views have only become firmer since then.??
A strong culture of accountability benefits all our stakeholders from customers to colleagues, shareholders, regulators and wider society. This is why we welcome today’s announcement from the Minister for Finance, Paschal Donohoe TD, that the Government has agreed to introduce legislation to improve accountability in the financial sector.
The Central Bank (Individual Accountability Framework) Bill is intended to introduce a senior executive accountability regime (SEAR) which will place enhanced obligations on firms and senior individuals in relation to accountability, responsibility and decision-making. The Bill will also introduce additional conduct standards for individuals and firms, as well as making enhancements to the Fitness and Probity regime.?
We see this as another important step in rebuilding trust in banking in Ireland. The recent Irish Banking Culture Board colleague surveys showed Bank of Ireland performing well in a number of areas, which was very welcome. However, they also showed that we and the industry as a whole still have work to do to win back the trust of the wider public.
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I have firsthand experience of working within the type of framework envisaged under SEAR. In 2016, the UK introduced something similar – the Senior Manager Regime. This made senior bankers accountable for their actions and decisions. This included a “statement of responsibilities” that defined specifically what each person was personally accountable for, a clear process for delegating any responsibilities to individual members of their team, and an explicit expectation that reasonable steps will be taken to meet not only the letter but also the spirit of the regulation. To this day, I remain accountable for the decisions I took when working in the UK. That’s right and proper.?
While awaiting the legislation in Ireland, we have also been progressing with our own Individual Accountability Framework which we plan to have in place by the end of this year. This is a set of tangible reforms, designed to ensure clarity and transparency for senior executives as to exactly what decisions they are responsible and accountable for. This work will complement the Central Bank’s Individual Accountability Framework legislation when that is eventually enacted.?
We look forward to engaging proactively on these proposals, and on the draft legislation when available, over the coming months. Making senior bankers more accountable is in everyone’s interest, and is another important step in rebuilding trust in banking in Ireland.
Freelance Financial Modeller
3 年This proposed legislation isn’t going to make a blind bit of difference to banker behaviour while our Central Bank continues to regard itself as basically filling the role of spectator at a football match. To date the only punishment they’ve been willing to dish out to etrant bankers is, in effect, to fine shareholders. In my view the Central Bank is not currently fit for purpose. It has a long history as a failed entity, and I don’t see that changing. Banks always resist any government efforts to regulate them, and then, when the financial roof falls in, they’re quick off the mark to look for government assistance. The Central Bank also seems to have an inbuilt bias against Credit Unions. It requires them to meet certain regulatory standards, but won’t tell them what the standards are. One possibile reason might be that the Bank doesn’t actually know itself.
Senior Business Manager at Microsoft/ Personal, Business & Executive Coach
3 年Thanks for sharing Francesca - Hopefully this is followed up by action and appropriate enforcement and that they are not just empty words or unenforceable framework. We've had tribunals before without teeth to enforce or use their powers, costing tax payers millions if not billions. Hopefully this is a positive step forward not just for the banking sector, but for the entire country.
Personal Insolvency Practitioner ("PIP")
3 年This is what we need to be hearing from the CEOs of our Irish banks. Well done and thank you.
Director de Auditoría Interna de Banca Corporativa en Banistmo
3 年Thanks for sharing