New governance rules, aimed at holding individuals accountable for willful wrongdoing in the financial sector, could hinder the recruitment of executives to senior positions within organizations, according to a survey conducted by the Compliance Institute and Mazars.

The Individual Accountability Framework (IAF) rules, introduced by the Central Bank, are set to be implemented in the coming months with the goal of reinforcing sound governance in the financial sector. However, the survey revealed that nine out of ten firms believe these rules may make it more challenging to attract individuals to top positions within their organizations.

The IAF is expected to increase personal risk for individuals appointed as Pre-Approval Controlled Functions (PCFs), and while it provides better guidance on responsibilities in financial services, concerns exist about the potential impact on recruitment and personal accountability.

Michael Kavanagh, CEO of the Compliance Institute, emphasized the need for a balance, ensuring that the legislation drives positive changes to the banking culture while offering employees, regardless of seniority, the same level of protection as consumers.

The survey showed that about half of the firms have made significant progress in the last six months in preparing for the IAF requirements, a notable increase from just over a quarter the previous year. However, there was a decline in the number of firms believing that the IAF implementation would bring about meaningful positive changes in the culture and behaviors of the financial services industry. 0# 0# 0# 0# 0# 0# 0# 0# 0#

Kavanagh suggested that the decrease in positive sentiment may indicate the industry feeling overwhelmed by the numerous regulations implemented in recent years. Nevertheless, he expressed optimism that the financial services sector is moving in the right direction, acknowledging the complexity of the legislation and the time required for its implementation.