The Central Bank regulates financial services in Ireland. It regulates over 10,000 firms provide financial services in Ireland, throughout the EU and in other countries. Its mission is to ensure financial stability, market integrity and consumer protection. It performs functions equivalent to those performed by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom.
The Central Bank follows the principles of good regulation. This is a continuous process following the sequence of identification, formulation, selection, implementation, and evaluation. Where it identifies issues through analysis and risk assessment, it seeks to understand their underlying causes and determine whether intervention by the Central Bank is required. It may formulate a set of options which may address the issue in an effective and proportionate way.
The Central Bank authorises supervises and enforces. It has a wide range of enforcement powers some of which are set out separately. The objective of enforcement is to ensure
- the protection of consumers
- that they are financially sound resourced and safety managed
- that their governance and control is appropriate with clearly defined risk characteristics which define their culture
- that there are frameworks in place to ensure that failed or failing entities are resolved in an orderly fashion.
Supervision is undertaken
- through processing applications for authorisation
- monitoring compliance with prudential standards through an examination of returns and financial statements
- regular review meetings and on-site inspections
- developing systems and procedures to monitor activities and detect non-compliance
- issuing guidance notes to enhance supervisory oversight
Inspection seeks to confirm compliance with requirements assess corporate governance and internal controls and risk management systems. Review meetings are undertaken to deal with issues. Generally, 10 days notice is given. Inspections last one day to 2 weeks depending on the scale of the provider. The follow-up review meeting is typically about a day. There is an agenda for review meetings.
Central Bank Engagement in Regulation
The Central Bank will consult interested parties where appropriate during policy development to seek receive analyse and respond to feedback. After consideration of the options and informed by the evidence obtained it makes it preferred policy option. The policy is made public and implemented. It is evaluated on an ongoing basis as to whether the policy meets the mission statement.
The Central Bank engages with the range of national stakeholders including the Department of Finance, consumer and industry representative organisations. Public consultations are held on significant policy initiatives in accordance with a published procedure.
Within the Central Bank, the policy committee advises the Deputy Governor (financial regulation) on supervisory and regulatory policy. Chaired by the Deputy Governor (financial regulation), the policy committee is comprised of the regulatory directors, the chief economist and the relevant heads of divisions from across the Central Bank. Policy initiatives are formally adopted by the Central Bank Commission
The Central Bank engages in the development of laws regulations and standards through various EU working groups, the European Commission, European supervisory authorities, and the European Systematic Risk board.
In its annual report, the Central Bank must prepare an annual performance statement on its regulatory activities and plans for the year ahead. The Central Bank is required to have an international peer review of its regulatory performance carried out at least every four years.
To a large extent, the policy framework is agreed internationally both at EU and worldwide level. The European system of financial supervision is comprised at the micro-prudential level of
- European supervisory authorities
- the joint committee of European supervisory authorities and
- the competent national supervisory authorities which include the Central Bank.
The European supervisory authorities are the European Banking Authority, the European Insurance, and Occupational Pensions Authority and the European Securities and Markets Authority. They develop technical standards guidelines and recommendations giving effect to EU macro-prudential rules of conduct pursuant to financial services legislation.
The Financial Action Task Force is an intergovernmental body with the objective of setting standards and promoting effective implementation of legal regulatory and operational measures for combating money-laundering terrorist financing and other related threats to the integrity of the international financial system. The Central Bank is a member of the Irish delegation to the Financial Action Task Force.
The Central Bank is a member of the International Financial Consumer Protection organisation. Its objectives are to promote sound market conduct and strong consumer protection and to strengthen consumer confidence through the promotion of efficient and effective financial market conduct supervisory practices and standards.