Independent Review of the Central Bank's Fitness and Probity Regime published

The process adopted by the Central Bank for assessing candidates seeking pre-approval Controlled Functions ("PCF") roles was recently subject to scrutiny.

In March 2024 the Irish Financial Services Appeals Tribunal ("IFSAT") issued a highly critical judgment in a case involving an individual known as AB.

IFSAT found the CBI's decision-making process was flawed. The detailed judgment (which can be found here), outlines how AB was denied fair procedures at each stage of the process  including:

• Insufficient and inappropriate notice given to AB in relation to the material to be discussed at interview;
• A detailed line of questioning which was akin to an investigation taking place rather than an assessment interview;
• AB was not allowed to take notes, and the minutes recorded did not accurately reflect what had been said;
• The absence of a stenographer;
• The lack of knowledge of interviewers in relation to the types of bonds which were relevant; and
• detailed questioning in relation to a separate matter involving AB which the CBI had already investigated in 2019.

This prompted the Central Bank to commission an independent review of the fitness and probity regime by Andrea Enria, the former Chair of ECB Supervisory Board.

The review, available here, sets out 12 recommendations to enhance the Fitness and Probity regime.

Key recommendations in the report include:

• Establishing a 90-day timeframe to conclude all fitness and probity applications, with limited opportunity to stop the clock.
• Creating a single unit within the Central Bank to manage fitness and probity assessments and to ensure that this work is distinct from the bank’s enforcement department, which investigates potential wrongdoing.
• Ensuring that candidates called for an interview are provided with sufficient advance notice of a draft agenda, clearly indicating the topics to be discussed. Additionally, interviews should have a well-defined time limit, such as 90 minutes, which is considered good practice by other authorities.

The Central Bank has confirmed it accepts all recommendations within the report.

The recommendations are expected to initiate the most significant overhaul of the fitness and probity process since its introduction in the wake of the Irish banking crash.

The new regime aims to improve transparency and predictability. All stakeholders will be following implementation closely.

For further information, please contact James Roche or Barry Fagan.