The Central Bank of Ireland needs to improve the transparency and fairness of its vetting regime for key financial services industry roles, a review conducted by a former top supervisor at the European Central Bank found on Thursday.
The Republic is a major centre for the fund management industry, a regional hub for a number of international banks and has a domestic financial sector, all of which are regulated by the Central Bank.
The Central Bank launched the review in February after an independent tribunal that hears appeals from aggrieved parties against the bank's decisions found its decision-making process in a recent case was "flawed" and that it had denied fair procedures at each stage of the process.
The review led by Andrea Enria, whose term as chair of the ECB's Single Supervisory Mechanism ended last year, found the Central Bank process broadly aligned with peer jurisdictions and had succeeded in raising the bar for entry into the industry.
But it said the recent independent tribunal's decision and confidential feedback "highlighted a number of areas in which the operation of the fitness and probity process is not always up to the requisite standards of fairness and transparency."
The fitness and probity process is a central part of reforms introduced in the aftermath of the 2008-09 banking crash that assesses the suitability of applicants for any of the 21,000 key positions in Ireland's diverse financial sector.
The 100-page report made 12 recommendations, including on the provision of greater clarity on the vetting regime's rules, the bank's own governance of the process and the tone, lack of timely notice, lack of senior staff involvement and lack of clarity on topics to be discussed in key interviews with those being assessed.
It also said the Central Bank must not engage in off-record discussions with regulated entities during the process after stakeholder feedback suggested the regulator may have informally raised issues regarding applications with the entity involved.
"There are clearly improvements we can make in the way we manage applications and come to a judgement on them," Central Bank Governor Gabriel Makhlouf said in a statement, accepting all the recommendations.
The Central Bank said the recommendations will be implemented over the coming months and should be in place by the end of the year.
