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The Central Bank of Ireland (CBI) has published its feedback report following a review of delegation practices in the Irish funds sector. Launched in 2025, the review examined how Irish authorised fund management companies (FMCs) manage delegation arrangements, focusing in particular on governance, oversight arrangements and the effectiveness of control frameworks in managing delegated activities.
The review highlighted that, in general, FMCs operating a delegation model have in place good governance frameworks, controls, oversight processes and data capabilities. These findings reflect the significant progress made across the sector in recent years, while also identifying targeted areas where certain FMCs must enhance their arrangements. Aspects for improvement include board independence, over-reliance on group level committees, resourcing concerns, lack of contingency planning and limitations with data access. Only a small number of FMCs fell materially short of supervisory expectations and are now subject to appropriate time-bound risk mitigation programmes to remediate these deficiencies.
All FMCs are now expected to consider the report with input from the FMC board and conduct an analysis of the supervisory expectations and observations set out therein. FMCs are expected to put in place a time-bound plan by year end 2026 to address any gaps identified in their operational, resourcing and governance arrangements in respect of delegation.
Overview and approach
The review builds on earlier supervisory work and thematic reviews that highlighted the importance of strong managerial functions, effective oversight of delegates and clear accountability for delegated activities to be retained within FMCs. Those reviews led to enhancements to FMC governance structures, including improved documentation of oversight activities to ensure designated persons and boards maintained sufficient challenge and engagement with delegates.
Recognising the importance and benefits from delegation, the CBI undertook this review to gain a deeper understanding of how delegation arrangements currently operate with a focus on the arrangements in place for portfolio and risk management activities. The review also assessed whether individual FMC delegation frameworks are meeting requirements across UCITS Regulations, AIFMD, the CBI’s Fund Management Company Guidance (FMC Guidance/CP86) and the CBI’s Cross Industry Guidance on Outsourcing.
The review combined data requests and surveys issued to all FMCs with desk-based reviews and on-site inspections covering a significant portion of assets under management.
Overall findings
The CBI found that FMCs operating a delegation model have, in general, good governance frameworks, controls, oversight processes and data capabilities. FMCs recognise the importance of quality governance and decision-making, risk management and controls in meeting their responsibility to investors and their regulatory obligations. These findings reflect the progress made over recent years, including in the implementation of the FMC Guidance and in responding to the demands of an evolving operating environment.
However, the review also identified that a number of FMCs require certain elements of their governance arrangements and operating models to be enhanced. A small number of FMCs fell materially short of supervisory expectations and are now subject to time-bound risk mitigation programmes to remediate those deficiencies.
Three main FMC operating models were observed:
The CBI notes that the findings are encouraging reflecting the progress that has been made over recent years to evolve firms’ approaches so that they are better resourced, and where strong levels of substance and decision-making are the norm.
The report sets out its findings under five themes. Summarised below are the supervisory expectations, key positive observations and areas identified for enhancement.
1. Governance
FMCs must have governance frameworks fit for purpose for their operating model. The board must ensure delegation has not extended to the point where it cannot effectively manage the fund or exercise sufficient authority over decision-making.
The CBI generally found established governance frameworks with diverse and experienced boards and clear reporting lines providing an appropriate structure to oversee and challenge delegated activity. Local committees provided forums for regular challenge of delegate performance and escalation of issues. Evidence was provided of board challenge, awareness of local autonomy in decision making, awareness of risk attached to delegation and future pipeline of business. Some FMCs also leveraged group expertise, shared services and resource pools to strengthen delegate due diligence, on-site reviews and ongoing monitoring, with clear governance structures and defined roles to ensure accountability and coordination of oversight activities across the group.
Areas for enhancement included insufficient board independence, particularly where group influence was too high or directors served beyond best-practice tenure limits, a need for resource enhancement, including where designated persons were not sufficiently senior or held too many roles, over-reliance on group-level committees where local representatives had limited influence to independently challenge delegate decisions and informal governance practices lacking documented policies and procedures, including entity-specific risk statements.
2. Portfolio management
FMCs must maintain effective oversight and control frameworks for portfolio management. Due diligence must confirm delegates meet all relevant EU and Irish legislative requirements and local rules. FMCs must demonstrate active decision-making through documented governance processes for both delegated and retained portfolio management.
FMCs demonstrated robust oversight processes, evidencing regular delegate engagement, detailed performance analysis, comprehensive reporting and clear escalation pathways. FMCs also demonstrated appropriate contingency planning for delegate termination and commensurate substance and resourcing for retained activities.
However, some FMCs were unable to demonstrate suitable autonomy with respect to oversight and decision-making. Others operated unstructured approaches lacking documented procedures, performance standards and regular monitoring. In some instances, limited attention had been given to establishing wind-down or transition procedures where a third-party portfolio manager is unable to continue to fulfil its mandate.
3. Risk management
FMCs must implement risk management frameworks reflecting the operating model and complexity of strategies, clearly distinguishing retained and delegated activities. Where aspects are delegated, FMCs must retain adequate verification of delegate outputs supporting FMC decision-making and active decision-making responsibility for risk management through documented governance processes and decisions with access to timely and accurate data. There must be a well-considered balance between portfolio and risk management delegation so that the overall degree of delegation is not disproportionate.
FMCs largely retained risk management. Where retained, it was established as a core function enabling independent oversight, risk limit-setting and compliance monitoring. FMCs demonstrated independent verification of delegated risk activities, including shadow or independent checks with real-time data access and pre-trade compliance controls.
Where FMCs engage delegates to support core risk management activities, the CBI found that governance and risk management measures require enhancement. In some FMCs, risk management resourcing needed strengthening. Some FMCs were unable to demonstrate robust independent challenge or access to real-time data, relying instead on delegate reporting.
4. Delegate oversight
FMCs must retain clear decision-making authority over all delegated activities, applying a consistent due diligence methodology across all delegates and sub-delegates with appropriate on-site engagement. FMCs should not rely solely on due diligence questionnaires or delegate self-reporting.
The CBI observed that delegate oversight frameworks were in place, supported by robust practices including risk-based due diligence using questionnaires and RAG scoring to prioritise oversight resources. Regular SLA/KPI reporting provided ongoing visibility of delegate performance, compliance and operational status. FMCs conducted targeted annual on-site visits across delegate networks to assess capabilities, controls, systems and personnel.
Areas for enhancement included instances of FMCs relying on group processes for delegate due diligence rather than conducting their own direct assessment, insufficient representation of local FMC management at group-level delegation oversight committees, and insufficient involvement of designated persons and operational risk functions, with some FMCs engaging group or seconded personnel.
5. Data capabilities
FMCs must have data delivery and management arrangements that provide timely and accurate information for decision-making and delegate oversight.
FMCs demonstrated an increasing awareness and use of data as a strategic asset, with data improvement programmes implemented in larger firms. Reliance on automated reporting and business intelligence tools is rising, supporting timely management information and compliance dashboards. Larger FMCs established formal data policies and procedures and dedicated resources to data.
However, the CBI observed a fragmented approach to data integration at some FMCs, with disparate systems for risk, investment, operations and compliance resulting in manual data reconciliation. Some FMCs engaged delegates for pre-trade and post-trade controls and elements of investment and borrowing restrictions monitoring, including instances of overriding internal risk limits. Other FMCs had not established processes and contingency arrangements to manage potential data loss or interruption.
Evolving landscape and next steps
The report highlights that the Irish funds sector continues to navigate an increasingly complex and dynamic operating environment. The CBI notes that such changes underline the importance of strong governance and that the regulatory framework governing delegation must evolve to remain effective and proportionate. Accordingly, the CBI will engage in a review of governance arrangements for FMCs during 2026. Areas in scope include simplifying the FMC Guidance, simplifying and reinforcing the PCF framework for FMCs, enhancing governance requirements and considering how the IAF/SEAR framework might be proportionately applied to the funds sector.
Action required
The CBI expects all FMCs to consider the report with input from their board, conduct an analysis of the supervisory expectations and observations, and put in place a time-bound plan by year-end 2026 to address any gaps identified in their day-to-day operational, resourcing and governance arrangements in respect of delegation, ensuring alignment with all relevant rules and guidance. The CBI has also commenced supervisory engagement with FMCs where shortcomings were identified.
For further information on the implications of this report for your fund management activities, please contact a member of the A&L Goodbody Asset Management & Investment Funds team.
Date published: 7 August 2026
