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Central Bank accepts findings of F&P review

The Central Bank says that it has accepted recommendations made by an independent review of the system under which it approves the appointment of individuals to key roles in regulated financial institutions.

The review of the fitness-and-probity (F&P) framework was undertaken by Andrea Enria, a former chair of the ECB Supervisory Board.

The report stated that confidential feedback that it had received had highlighted areas in which the operation of the F&P process was “not always up to the requisite standards of fairness and transparency”.

The review was commissioned in February after a judgment published by the Irish Financial Services Appeals Tribunal (IFSAT) that identified several issues in how the Central Bank handled a case in which an individual’s application to a senior role was refused.

‘Divergences’

Enria found that the Central Bank’s conduct of the F&P process was broadly in line with that of other supervisory authorities.

He added that the practices adopted by the Central Bank were already, to a large extent, aligned with his recommendations, but “there might have been some divergences from these good practices at times”.

The review’s recommendations focus on three areas:

• Clarity of supervisory expectations,
• Internal governance of the process, and
• Fairness, efficiency and transparency of the process.

Call for single unit

The review found that the standards published by the Central Bank were “fragmented across different documents” and not user-friendly in their presentation, and called for them to be consolidated in a single location.

The report also found that the F&P process itself was also fragmented, and recommended the establishment of a single unit in charge of F&P gatekeeping.

The review also made several recommendations aimed at improving fairness – including giving candidates advance notice of a draft agenda, “with a clear indication of the topics on which the interview will focus”.

It added that candidates should also be told that they could be accompanied by a note-taker or a lawyer.

The review also said that the write-up of the interview should be shared with the candidate within a week, and the candidate should be granted another week to provide comments.

‘Fair and impartial’

The Central Bank Governor Gabriel Makhlouf said that the regulator accepted all the recommendations.

“As we introduce these improvements, it is paramount that our supervisory judgement is consistently grounded in a fair and impartial evaluation process, ensuring equity and transparency for all parties involved,” he stated.

“We are immediately looking to our implementation approach – including the creation of a new unit to bring together F&P activities that are currently dispersed across the Central Bank,” he added.