The importance of fitness, probity and ensuring responsibility - Director General, Financial Conduct, Derville Rowland
Executive Summary
This 2021 speech by Derville Rowland, Director General of Financial Conduct at the Central Bank of Ireland (CBI), emphasizes the critical role of the Fitness & Probity (F&P) regime and the forthcoming Individual Accountability Framework (IAF) in fostering effective culture, governance, and individual responsibility in regulated firms. It matters because it signals CBI's supervisory priorities on senior role holders' competence, integrity, and accountability, which have since evolved into concrete regulatory updates, directly impacting board and compliance functions to mitigate conduct risks and ensure consumer protection. https://www.centralbank.ie/news/article/speech-importance-of-fitness-probity-and-ensuring-responsibility-derville-rowland-10-june-2021 #
What Changed
- The speech itself outlines no new statutory changes but highlights the F&P regime's role in ensuring "fit and proper" individuals in key roles and previews the IAF as a complementary framework to enhance accountability, governance, and culture. Subse
- Consolidation of F&P Standards into the Fitness and Probity Standards 2025, applicable across all sectors, read alongside revised Guidance on the Fitness and Probity Standards (effective 20 November 2025).
- Amendments to Pre-Approval Controlled Functions (PCFs), adding roles like Designated Person for Investment Management (PCF-39D), Distribution (PCF-39E), and Regulatory Compliance (PCF-39F), reinforcing IAF preparations.
- Clarifications on due diligence (best-efforts basis for references, criminal checks, financial soundness via public records only—no bank statements required), time commitments (case-by-case), and CF-2 scope (limited to ensuring/controlling/monitoring
- Proportionality for fitness assessments but not probity; ongoing certification obligations for Controlled Functions (CFs) and PCFs. These build on the speech's vision, addressing Enria Report recommendations for regime efficiency. https://www.centra
Suggested Considerations
- Conduct thorough F&P due diligence on PCF/CF holders pre-appointment and ongoing (best-efforts for references, criminal/financial checks via public records; assess time commitments case-by-case).
- Certify annually that PCF/CF individuals meet standards; no dual certification needed if PCF covers CF-1/2.
- Review and update succession planning, handover policies, and conduct breach procedures in light of new PCFs and IAF/SEAR (Statements of Effectiveness and Accountability of Responsibilities).
- Assess residency and capacity for non-resident PCF holders case-by-case, considering firm complexity.
- Embed F&P into culture and governance frameworks, aligning with IAF Conduct Standards once enacted.[Speech]
- fitness-probity.pdf
Key Dates
Compliance Impact
Urgency: High – While the 2021 speech is foundational, 2025 Standards and Guidance are now effective, mandating immediate due diligence enhancements and certifications amid IAF rollout. Non-compliance risks CBI investigations, prohibitions, or sanctions, especially with expanded PCFs tying into broader accountability (e.g., SEAR). This elevates board exposure, demanding proactive governance review
Who is Affected
References
AI-generated analysis. May contain errors or omissions — verify with the original CBI source before acting. Full disclaimer.
Summary
Speech delivered at Institute of Directors’ Briefing Webinar on 10 June 2021 Good morning everyone, I am delighted to speak to you on the importance of effective culture in firms, the contribution fitness and probity can make, and how we see the forthcoming Individual Accountability Framework further reinforcing effective culture. I’ll come to each of those topics in turn. But first let me say that the Central Bank and the Institute of Directors have overlapping visions. The Central Bank serv...