Matheson's recent webinar "The Individual Accountability Framework: What Actions Must Employers Take Now?" was attended by over 450 participants who heard our recommendations on the key actions and immediate next steps regulated financial services providers (RFSPs) should take now to prepare for the implementation of the Individual Accountability Framework (IAF) in their firms.
Over the coming weeks, our IAF Series will delve into the detail of the IAF, address some of the trickier aspects and provide practical guidance for RFSPs. During the webinar, we conducted a survey to understand the key concerns and priorities for attendees in respect of their IAF compliance and what they considered to be their next steps.
Part 1 of Matheson's IAF Series considers the results of that poll and we share our insights and guidance in respect of the survey responses.
What Arose As the Key Focus For RFSPs?
Unsurprisingly, the introduction of the Senior Executive Accountability Regime (SEAR) and the corresponding requirement to prepare Responsibility Maps and Statements of Responsibilities presented as the overwhelming priority for participants with 37% and 35% respectively identifying these areas as their key area of focus. Over the coming weeks, we will look at these components as part of our IAF Series, and in particular at the allocation of responsibilities requirement which was identified as a very acute concern for the vast majority (75%) of attendees.
18% of the participants identified the Conduct Standards as their key area of focus. During the webinar, we provided practical guidance in respect of the actions required to ensure compliance with the Common and Additional Conduct Standards and how to embed them within the organisation. The key actions include:
- Updating employment contracts to provide for the Conduct Standards, particularly the clauses governing duties, policy compliance, gross misconduct and termination.
- Updating the staff handbook and / or policies to refer to and embed the Conduct Standards within the RFSP, particularly the disciplinary, grievance, bullying and harassment, performance assessment, remuneration/bonus and whistleblowing policies.
- Consider employee engagement and the necessary training programmes on the Conduct Standards and roll out bespoke training for relevant individuals.
- Put in place internal processes to notify the CBI of breaches of the Conduct Standards and/or disciplinary actions in line with the relevant reporting timelines.
Lastly, only 11% of participants identified the Fitness and Probity (F&P) Certification Requirement as a current key focus. It is likely that this lower percentage is due to the fact that RFSPs are already familiar with the existing F&P regime and, although it has been enhanced by the IAF and a new annual Certification Requirement has been introduced, there may be a sense of familiarity with this component. We will take a closer look at this component of the IAF in a later part of Matheson's IAF Series.
What Next Steps Were Identified By Participants?
Building on the poll results, which identified the preparation of the Responsibility Map and Statements of Responsibilities as being the key area of focus and the key area of concern, it is no surprise that 40% of participants identified their next task as being the commencement of their responsibility mapping exercise. The learning from the UK and other jurisdictions with similar requirements is that employers cannot start this process early enough.
The results also revealed that:
- 23% of participants considered their next step to be the exercise of reviewing and updating their HR documentation (employment contracts and policies);
- 20% of participants identified their next step as hosting firm-wide IAF awareness and education sessions; and,
- 17% of participants posited that board and senior management training was their next task.
What Are the Implementation Deadlines and Did Participants Think They Were Achievable?
The commencement of the majority of the IAF Act is expected imminently with the balance to be commenced in accordance with the Central Bank of Ireland's proposals, as set out in its recent Consultation Paper outlining its draft Guidance and Regulations (CP153):
- Conduct Standards - Common, Additional and Business apply from 31 December 2023;
- F&P Regime – Certification requirement and the extension of the F&P Regime to holding companies apply from 31 December 2023; and
- SEAR – including the allocation of Prescribed Responsibilities, preparation of Statements of Responsibilities and Management Responsibility Maps to apply from 1 July 2024. (Although this is a later date than the 31 December 2023 deadline, there is a merit in RFSPs considering this step contemporaneously with the Conduct Standards and the F&P Certification process, given the interconnectivity between the three areas. Additionally, by doing so firms will be avoiding a duplication of work to meet the 1 July 2024 deadline.)
Interestingly, only a little over half of the participants (56%) considered the proposed implementation deadlines achievable. This concern reflects discussions we have been having with clients in recent months. While a large number already started on this project some time ago, and are prepared to take the necessary steps to ensure that they meet the requirements of the IAF within the requisite timeframes, they still see completing such a multi-faceted project in what is now an even shorter time period than anticipated to be a very definite challenge. Cognisant of this and to support clients with their implementation plans, we have prepared an implementation roadmap which can be found here.
Keep an eye out for our next insight as part of this IAF Series which will be published in the coming days.
How Can Matheson Support You?
Matheson's dedicated multi-disciplinary IAF team consists of specialists from our Financial Institutions, Employment and Regulatory Investigations Groups, and is closely supported by our Digital Services Group which provides bespoke technical platforms to enable clients to effectively manage and illustrate IAF compliance. Together, we are on hand to prepare, support and project manage your IAF compliance from end to end, including:
- Preparing your project plan for IAF compliance;
- Conducting readiness assessments: assessing current practices and identifying any gaps in policies or procedures;
- Providing regulatory, employment and corporate governance advice on any gaps identified and designing a bespoke roadmap to IAF compliance;
- Advising and reviewing the SEAR documentation, including overseeing role profiling, the allocation of responsibilities and drafting the Statement of Responsibilities and Management Responsibilities Map;
- Advising on the Duty of Responsibility and devising a Reasonable Steps Framework;
- Advising on enhanced F&P regime and devising a bespoke internal process to manage the Certification Requirement;
- Advising on the Conduct Standards and implementing a Conduct Standards Framework;
- Reviewing and updating employment contracts and HR policies and procedures to ensure IAF compliance;
- Employee engagement and training: Embedding IAF compliance in the organisation through ongoing communication, engagement, education and training; and
- Ongoing compliance review: Advising on how to ensure continued compliance after initial implementation.
For more detail on these services and others which we provide, please do not hesitate to contact any member of our dedicated IAF team to discuss or to request a copy of our IAF Capability Statement.