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Markets and Securities Services |
Ireland
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Considering the Central Bank of Ireland’s Strategic
Plan 2016-2018,
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this article examines the Central
Bank’s regulatory priorities concerning the asset
management and investment funds industry in
particular, and assesses progress to date and
possible future developments.
As acknowledged by the Central Bank
repeatedly in its Strategic Plan, the priorities
are devised in a dynamic environment of change
for central banking and financial systems in
Ireland and Europe. Accordingly, the possibility
that elements of the plan may be overtaken by
events that may not have been foreseen at the
commencement of the three-year planning cycle
is recognised by the commitment to carry out
an annual review of the plan.
A stark example of one such event was the June
2016 referendum on the UK’s withdrawal from
the European Union. This article will consider the
likely (and in some cases already evident) impact
of the Brexit vote on the Strategic Plan. It will
also consider the manner in which market and/or
global regulatory developments in areas such as
cybersecurity, investment fund pricing, corporate
governance and anti-money laundering have been
translated into regulatory initiatives in Ireland.
Strategic planning and enforcement
The Strategic Plan is published every three
years and sets out the future priorities,
activities and desired outcomes under each
of the regulator’s main areas of statutory
responsibility. These responsibilities cover: price
stability; financial stability; consumer protection;
supervision and enforcement; regulatory policy
development; payment, settlement and currency
systems operations and oversight; economic
advice and financial statistics; and recovery and
resolution of distressed financial services firms.
The Strategic Plan is not limited to the asset
management industry and considers all entities
subject to Central Bank supervision, including
the banking, insurance and securities sectors.
One of the principal methods by which the Central
Bank carries out its responsibility of supervision
and enforcement is through its annual programme
of themed inspections, which is published at
the beginning of each year.
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In announcing its
programme of themed inspections for 2016, the
Central Bank indicated that entities deemed to
be low impact under its risk-based supervision
framework, including collective investment
schemes and their service providers, would be
subject to increased inspections in future.
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In light
of this, the Central Bank has devoted a team to
low-impact funds. This new approach followed a
number of peer reviews conducted between 2013
and 2015, which suggested that there was possibly
an undue weight of focus on high-impact firms.
Of the 12 themed inspections outlined in the 2016
programme, eight were of relevance to the asset
management industry.
The impact of Brexit on strategic planning
The UK has been central to the growth and
development of the investment fund industry
in Ireland, with 2,128 Irish-domiciled collective
SHIFTING TIDES: DEVELOPING
REGULATORY STRATEGY IN
A DYNAMIC ENVIRONMENT
There has been a significant volume of commentary on the challenges that
financial services industry stakeholders have experienced in trying to meet
the demands of the evolving global regulatory agenda. While the majority
has focused on the experiences of financial institutions adapting their
business and operating models accordingly, there has been less analysis from
the perspective of regulators who, having developed regulatory strategy in
the post-financial crisis environment, must endeavour to strike a balance
between economic growth and greater systemic stability. This article,
however, takes one such perspective.