As signposted in our recent update, following its September 2021 Notice of Intention the Central Bank is making changes to its list of Pre-Approval Controlled Functions (PCFs) under its Fitness and Probity framework.
Scope: With the exception of the removal of PCF-31 (which is only relevant to investment firms), these changes apply to all Irish regulated financial service providers (RFSPs) other than credit unions.
PCF-16 (Branch managers of branches outside Ireland of Irish Regulated Financial Service Providers in other EEA countries) is being expanded
PCF-16 will now include all branch managers of RFSPs outside Ireland, not just those in EEA countries, and will be re-named PCF-16 (Branch managers of branches established outside the State).
In-scope individuals will still be subject to the fit and proper requirements of the host regulator, and the Central Bank confirmed in its Feedback Statement (published this week) that it will take account of any feedback made available to it from the host regulator’s application process.
Next Steps: No RFSP action is needed for individuals that hold existing PCF-16 designations. RFSPs to whom the expanded PCF-16 is relevant must submit confirmation of their assessment to the Central Bank in respect of individuals in situ by 30 June 2022 (this was extended from the original 3 June 2022 date in conjunction with the subsequent publication, by the Central Bank, of PCF In-Situ Return Guidance on Amendments to the List of Pre-Approval Controlled Functions (PCFs) (May 2022)).
PCF-2 (Non-Executive Directors) is being split
PCF-2 is being split into:
All existing PCF-2’s will be re-designated as PCF-2A.
Next Steps: RFSPs must notify the Central Bank (by 30 June 2022 (again extended beyond the original 3 June 2022 date)) which INEDs should be designated as PCF-2B, and must confirm that they have undertaken the relevant due diligence to assess independence. The Central Bank confirmed that existing definitions and criteria in sectoral requirements, codes and guidelines can be used when assessing independence.
PCF-15 (Head of Compliance with responsibility for Anti Money Laundering and Counter Terrorist Financing Legislation) is being replaced
PCF-15 is being replaced by:
This change does not require an RFSP to create a new role where one did not previously exist.
Next Steps: If an RFSP determines that it is appropriate for an individual designated as PCF-15 to be re-designated as PCF-52, it must notify the Central Bank. In all other cases, each RFSP should review its functions and determine whether any would meet the PCF-52 role. If an RFSP determines that this role exists, it must review its assessment in respect of individuals in situ and submit confirmation of that assessment to the Central Bank.
PCF-31 (Head of Investment) is being removed
The Central Bank’s view is that this is already covered by PCF-30 (Chief Investment Officer).
Next Steps: None. All individuals designated as PCF-31 will automatically be re-designated as PCF-30.
Diversity and Inclusion: Additional changes
The Central Bank is introducing additional changes, in line with the importance that it places on diversity and inclusion. The references to ‘Chairman’ in each of PCF-3 (Chairman of the board), PCF-4 (Chairman of the audit committee), PCF-5 (Chairman of the risk committee), PCF-6 (Chairman of the remuneration committee) and PCF-7 (Chairman of the nomination committee) will be replaced by references to ‘Chair’.
Next Steps: None. These changes will be processed automatically.
The above changes have been confirmed by way of amending regulations.
The full PCF application process will apply to any new appointment to the amended PCF roles after the amended regulations come into effect
A Note on SEAR
The Central Bank confirmed (as expected) that the planned ‘senior executive functions’ under the impending Individual Accountability Framework (IAF) will align with the list of PCFs. It may propose further changes to the list of PCFs as part of its consultation on the IAF once the IAF legislation is enacted later this year.
If you have any questions on, or would like to discuss the foregoing in more detail, please do not hesitate to contact a member of our Financial Regulation Group. For further information on the IAF, please get in touch with our Financial Regulation: Individual Accountability and SEAR team