Financial ‘fitness’ plans opposed

THE Financial Regulator faces opposition to plans for strict requirements for individuals who are to become directors of financial services companies.

It published a consultation paper earlier this year proposing new measures to judge the “fitness and probity” of individuals.

Under the proposals, potential directors will have to disclose they are tax compliant, and will have to provide a tax clearance certificate from the Revenue Commissioners every year.

The regulator has also suggested that if an individual has had dealings with a tribunal of inquiry or other bodies, such as the director of corporate enforcement or a professional body, this would not make them suitable to become a director.

The consultation paper added that if an individual failed to manage finances, but at no loss to anyone else, it would still have to look at whether the person was suitable.

However, several submissions to the regulator from the country’s banks and financial institutions have indicated their opposition.

AIB chairman Dermot Gleeson wrote: “It is in all our interests to seek to ensure that only individuals of the highest integrity and with the appropriate skills and expertise occupy positions as directors and senior management of financial institutions.

“In line with the Financial Regulator’s stated principles-based approach, we feel, however, that primary responsibility for the recruitment and appointment of directors and senior management should rest with the institution itself.”

He added: “We feel strongly that some of these proposals, if implemented, could act as a substantial deterrent to the recruitment of perfectly suitable and desirable directors or senior management from Ireland and abroad.

“This would not be in the best interests of Irish financial institutions, either from a commercial or regulatory perspective.”

AIB also believes the requirement to disclose personal information will deter foreign nationals from joining Irish companies.

“The proposal may confidently be expected to have a chilling or discouraging effect on good, tax compliant and law-abiding candidates who would simply prefer to preserve their privacy.”

The Irish Bankers’ Federation, in its submission, was also against the proposed new measures.

“While it is reasonable to review standards of fitness and probity, we believe the changes, if implemented will not add real value, will be overly bureaucratic and unduly burdensome to firms.

“This will in turn damage the competitiveness of financial firms based in Ireland and the attractiveness of the IFSC in particular,” it said.

The Irish Bank Officials Association, though, said it welcomed the changes.

It said closer scrutiny of the conduct of individuals in positions of responsibility was needed.