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Financial Services Regulation and Compliance - Cross Sectoral and Other April 2024

Financial Regulation Advisory

Financial Services Regulation and Compliance - Cross Sectoral and Other April 2024

Tue 21 May 2024

11 min read


Domestic: Gerry Cross delivered remarks discussing the CBI’s consultation on their proposed review of the Consumer Protection Code. The CBI has published the SEAR Regulations, and its finalised guidance on the IAF. Gabriel Makhlouf delivered a speech at the IMF calling for global coordination in the non-bank sector.

European: The European Parliament has adopted the enhanced AML/CFT package. The ESAs have announced a voluntary dry run exercise to prepare the industry for DORA and have launched a consultation on the conduct activities of joint examination teams under DORA. ESMA has launched a consultation on possible amendments to the Credit Rating Agency Regulatory Framework and has published a report on the quality and use of regulatory data across the EU.


A Revised Consumer Protection Code: a foundation for further success - remarks by Gerry Cross, Director Financial Regulation - Policy and Risk

On 11 April 2024, the Director of Financial Regulation for Policy and Risk in the Central Bank of Ireland (CBI), Gerry Cross, delivered remarks discussing the CBI’s consultation on their proposed review of the Consumer Protection Code (the CPC) at the Compliance Institute.

Cross noted the importance of the revision of the CPC in ensuring the further success of the Irish financial system as well as better outcomes for its customers. Cross noted that the revision would be informed by this story to date and that the compliance industry would play a significant role in its continuance.

In discussing the revised code, Cross commented on the role to be played by the newly articulated duty to secure customers’ interests which is a big aspect of the amendments and also emphasised the importance of adapting the code to introduce new provisions on digitalisation.

Cross concluded by calling on the audience to engage with the CBI’s proposals.  

CBI publishes outcome of review of early mortgage arrears supports

On 24 April 2024, the CBI published the results of its Thematic Review (the review) of the supports banks, retail credit firms and credit servicing firms provide for borrowers in, or facing, early arrears provided under the Code of Conduct on Mortgage Arrears 2013 (CCMA).

The CBI detailed its findings, feedback and expectations in a “Dear CEO Letter” (the letter). The letter identifies deficiencies at industry level, relating to the provision of information, borrower engagement, delays and errors, and temporary alternative repayment arrangements. Notwithstanding the deficiencies identified during the review, the CBI found that firms are generally progressing borrowers who are in pre-arrears and early arrears through the ‘Mortgage Arrears Resolution Process’ (MARP), and that firm’s practices often go beyond minimum compliance with regulation.

Overall, the review found that, when properly applied, the CCMA framework is effective in supporting borrowers in or facing early mortgage arrears with finding solutions. The CBI is proposing enhancements to the CCMA as part of its review of the CPC, which is under public consultation until 7 June 2024.

Governor of CBI, Gabriel Makhlouf, calls for global coordination on non-banks

On 15 April 2024, the Governor of the CBI, Gabriel Makhlouf, delivered remarks in conversation with colleagues from the International Monetary Fund (IMF) and the International Organisation of Securities Commissions (IOSCO) in relation to the importance for policymakers to continue global coordination to make progress addressing systemic risks from the non-bank sector.

Governor Makhlouf noted the sector’s growth over the past decade and particularly in Ireland, and its current role in the global financial system and real economy. He noted the importance for oversight to keep pace with change and the resulting need for collaboration between regulators and central banks.

There is a need for a conversation and reflection on what an updated regulatory framework might look like, and Governor Makhlouf pointed to the relevant CBI discussion paper published in 2023. Governor Makhlouf stated that feedback to the discussion paper would be published in spring of 2024 and that the CBI would be hosting a conference with a view to progressing this work.

CBI publishes Risk Management Working Group report

On 10 April 2024, the CBI published a report (the report) prepared by the Risk Management Working Group of the Climate Risk and Sustainable Finance Forum.

The report provides a baseline of knowledge on the approach adopted across the financial industry on climate risk management and includes practical examples of industry-identified emerging good practice in addressing the risks and opportunities arising from climate change. It also reflects both the domestic and global nature of the financial services sector in Ireland.

The report outlines some of the significant actions underway to incorporate climate risk management into financial institutions and explores the climate related challenges and opportunities facing these firms. It also considers the regulations applicable to different financial services sectors and provides a baseline view on how the financial services industry is supporting the transition to a sustainable future.

CBI publishes SEAR Regulations

On 12 April 2024, the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Senior Executive Accountability Regime)) Regulations 2024 (SI 147 of 2024) (the SEAR Regulations) were published by the CBI.

The SEAR Regulations apply to credit institutions, insurance undertakings and investment firms and specify the arrangements for the SEAR. They specify the aspects of a regulated financial service provider’s (RFSP) affairs for which a pre-approval-controlled function (PCF) holder has inherent responsibility for the purposes of the Central Bank Reform Act 2010 and for which responsibility is to be allocated by the RFSP to a PCF holder for the purposes of the Central Bank Reform Act 2010 and by specifying arrangements that a RFSP is to adopt.

The SEAR Regulations come into operation on 1 July 2024, with the exception of Regulations 5, 6(3), 6(5) and 10(2) which come into operation on 1 July 2025.

CBI publishes final guidance on the Individual Accountability Framework

On 16 April 2024, the CBI published the final version of its guidance on the Individual Accountability Framework (IAF) (the guidance).

The guidance sets out the CBI’s expectations on how firms should comply with the requirements of the Senior Executive Accountability Regime (SEAR), the Conduct Standards, certification and the extension of the fitness and probity (F&P) regime to holding companies. 

The Guidance aims to:

The guidance will be updated periodically by the CBI as considered appropriate.


The European Parliament adopts the enhanced AML/CFT package

On 24 April 2024, the European Parliament adopted the final texts of the enhanced anti-money laundering and counter financing of terrorism (AML/CFT) package.

The European Parliament adopted three proposed legislative texts:

The remaining element of the AML/CFT package, a recast of the Transfer of Funds Regulation 2015, was previously adopted in June 2023. The package seeks to establish a robust and future-proof enforcement system, which will contribute to improved detection of money laundering and terrorism financing in the EU.

The Council of the European Union will adopt these proposals, following which, they will be signed into law and published in the Official Journal.

ESMA consults on possible amendments to the Credit Rating Agencies Regulatory Framework

On 2 April 2024, the European Securities and Markets Authority (ESMA) launched a consultation on proposed amendments to Commission Delegated Regulation (EU) 447/2012 (the Delegated Act) and to Annex I of the Credit Rating Agencies Regulation (CRAR).

The proposed amendments to the Delegated Act and CRAR explicitly integrate environmental, social and governance factors into the regulatory framework and are supported by a number of complementary amendments which support their integration. These proposals aim to enhance the transparency and credibility in the credit rating process.

The deadline for submission of responses to the consultation is 21 June 2024.

ESMA publishes outcome of first year of the DLT pilot regime

On 4 April 2024, ESMA published a letter to the European Commission (the Commission), the European Parliament (the Parliament), and the Economic and Financial Affairs Council (ECOFIN) providing an interim update on the distributed ledger technology (DLT) pilot regime.

While no market infrastructures have yet been authorised, the letter provides an update on the status of the applications submitted so far and highlights the main challenges observed in interactions with national competent authorities (NCAs) and potential applicants.

Four official applications have been submitted to date and are currently under assessment by the respective NCAs, and around eight other potential applications may be submitted during 2024. The challenges listed in the annex to the letter relate to innovative solutions for cash settlement, custody through self-hosted wallets, interoperability, investor protection and competitiveness vis-à-vis third country regimes.

ESAs to run voluntary dry run exercise to prepare industry for the next stage of DORA implementation

On 11 April 2024, the European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) announced that they will launch the voluntary exercise for the collection of the registers of information of contractual arrangements on the use of ICT third-party service providers by the financial entities under the Digital Operational Resilience Act (DORA).

From January 2025, financial entities will be required to maintain registers of information regarding their use of ICT third-party providers under DORA. This voluntary exercise will serve as an aid in preparing for the implementation of the requirement and information is to be collected from financial entities through their competent authorities.

The ESAs will provide support and feedback to those financial entities participating in the exercise. The collection is expected to be launched in May 2024 with financial entities expected to submit their registers between 1 July and 30 August.

ESMA report on quality and use of regulatory data across EU

On 11 April 2024, ESMA published the fourth edition of its report on the quality and use of data aiming to provide transparency on how the data collected under different regulations is used systematically by authorities in the EU, and clarifying the actions taken to ensure data quality.

This new edition of the report includes new developments that comment on the link between the overall ESMA data strategy and technological evolution and includes more in-depth data than previously included.

The report details how the National Competent Authorities (NCAs), the European Central Bank (ECB), the European Systemic Risk Board (ESRB) and ESMA use the data that is gathered as a result of different legislative requirements.

The report also includes the results of the data quality actions conducted in 2023. It also includes a new methodology annex in order to increase transparency with external users and to support them in their efforts to enhance the quality of reported data.

Remarks by Jose Manual Campa on cyber resilience and financial innovation

On 11 April 2024, the chairperson of the European Banking Authority (EBA), Jose Manuel Campa, delivered remarks to the Annual Assembly of the Spanish Banking Associated in relation new preparation for new challenges posed by cyber resilience and financial innovation.

In discussing the risks from digitalisation of financial services, Campa commented on the increased threats of cyber incidents and cyber-attacks, the high level of operational interconnectedness between financial entities and ICT third-party providers and the introduction by financial entities of new technologies and new cooperative arrangements in the provision of their services. Campa noted that it is the task of prudential regulation to assess the impact of these changes and set boundaries.

Campa discussed the regulatory response to date to increased cyber resilience risks through consultation on and implementation of DORA. Campa noted the work being carried out by the ESAs in ensuring that the oversight operating model functions properly.

Campa also commented on the increased need for fast communication and efficient supervisory coordination as a result of cyber risks and concluded by highlighting some of the EBA’s work on innovative applications to digitalisation trends.

ESAs consult on technical standards for joint examination teams under DORA

On 18 April 2024, the ESAs launched a public consultation on the draft regulatory technical standards (RTS) on the conduct of oversight activities in relation to the joint examination teams (JETs) under DORA.

DORA introduces a European oversight framework for ICT third-party service providers designated as critical (CTTPs). CTTPs will be subject to the oversight of the Lead Overseer, who are supported in their oversight role by JETs.

The RTS sets out the criteria for determining the composition of the JETs in addition to the designation of the members, their tasks and working arrangements.

The consultation remains open until 18 May 2024 and all contributions received will be published following the end of the consultation.

For more information on these topics please contact any member of A&L Goodbody's Financial Regulation Advisory team.

Date published: 21 May 2024