In line with increased regulatory activity, our monthly Tracker newsletter has become a much longer publication over recent years. We are conscious that this might result in Tracker becoming unwieldy and deviating from its purpose as a short synopsis of key developments, and as a result we have made some changes. Tracker will now cover only key Irish and European (non-jurisdiction specific) developments.
Finance (Tax Appeals) Act 2015 signed into law
The President has signed the Finance (Tax Appeals) Act 2015 into law. The Act establishes a new regime for appealing tax matters, including the establishment of a new 'Tax Appeals Commission' to operate the revised rules. Please note the Act had not been commenced by the Minister for Finance at the time of writing.
Credit Union regulations imposing a limit on individual members' savings now in force
The Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 came into force for credit unions on 1 January 2016. The rules introduce increased prudential and governance requirements in relation to borrowings, investments, lending, liquidity and reserves. The Regulations include the establishment of the categories and limits of loans that credit unions may provide. They also include related limits, counterparty and maturity limits for investments. There will now be a maximum individual members' saving limit of €100,000.
The Central Bank of Ireland publishes the first Quarterly Bulletin for 2016
The Central Bank's Bulletin examines recent trends in both the domestic and international economies, provides its forecast for the Irish economy and sets out its position on domestic macroeconomic policies. The Bulletin reported that: (i) the stabilising influence of policy and macroeconomic adjustments has underpinned stronger growth; and (ii) incomes have been stimulated by the increase in employment, wage growth and lower energy prices, all of which support a favourable outlook for the coming months. The Central Bank forecast a 4.8% growth in GDP for 2016, and a growth in GNP is forecast at 4.3%. Chief Economist, Gabriel Fagan stated that "[l]ooking at current forecasts, there is still sufficient spare capacity to accommodate this strong growth over the next two years without encountering major constraints".
Pension Fund (Prohibition of Levies) Bill 2016: First Stage
The Pension Fund (Prohibition of Levies) Bill 2016 has been introduced by the opposition to provide for a referendum which will prohibit any legislation which would unilaterally impose a levy, or similar charge, on private pension funds.
Central Bank of Ireland acknowledged as Central Bank of the Year
The Central Bank has been awarded the accolade of 'Central Bank of the Year' by the Central Banking Journal and centralbanking.com for its work in 2015. The award is made by an advisory board of former central bank governors worldwide who found that the CBI has restored its credibility among its peers through its forward-thinking, particularly in the area of supervision.
The Central Bank's treatment of mortgages and borrowers was one of the main areas which was praised by the Advisory Board. The CBI's introduction of residential mortgage lending rules last year was praised as 'timely' action taken to cool an 'overheated' property market. The fact that these rules were introduced despite protestations by businesses and political interests was pointed to as an example of the Central Bank acting with 'new-found resolve to tackle sensitive issues in an independent manner'. In addition, it was stated that the Central Bank's work in protecting borrowers through the statutory mortgage arears code has influenced and shaped wider policy debate at EBA level. The Central Bank's performance in relation to non-performing loans – in particular, mortgage arrears – was also referred to, with the Advisory Board quoting CBI figures estimating that "sustainable solutions have been proposed to the majority of those in arrears, and concluded in 62% of these cases".
EBA consultation on draft Guidelines under the CRR on implicit support for securitisation transactions
In the context of Article 248 of the Capital Requirements Regulation, which sets out restrictions on sponsor institutions and originator institutions providing support to securitisations beyond their contractual obligations, the EBA is currently seeking views on what constitutes arm’s length conditions, and when a transaction is not structured to provide support for securitisations. The proposed Guidelines include an objective test for both, in addition to providing guidance to those assessing whether a transaction is not structured to provide support and the applicable notification requirements for those transactions.
The closing date for responses to the EBA Consultation is 20 April 2016.
FCA consultation on loan-based crowdfunding platforms and segregation of client money
This consultation seeks to address proposals to lift current restrictions which require the segregation of monies where firms hold money in relation to both P2P and B2B agreements. Under the proposals, firms would be allowed to do so as long as client money is kept separately from the firm's money.
The consultation ends on 11 February 2016.
FCA consultation on proposed Guidance on voluntary redress schemes under the Competition Act 1998
The FCA is consulting on proposed Guidance which will relate to voluntary redress schemes under the Competition Act 1998. The UK Consumer Rights Act 2015 provided the FCA with additional powers to approve voluntary redress schemes relating to infringements of prohibitions on anti-competitive behaviour. The consultation includes information on how the FCA proposes to review and approve redress scheme applications.
Submissions are sought by 15 February 2016.
ESRB published its report to the EU Commission on the systemic risk implications of central counterpart interoperability arrangements ("CCP")
The ESRB report concludes that CCP interoperability arrangements can have systemic risk implications and sets out requirements for Inter-CCP exposures to avoid contagion from the default of an interoperable CCP. Exposures must be properly monitored by NCAs, a sound risk management framework must be in place in relation to exposures and they must be backed by adequate financial resources.
EU Commission consultation on non-binding guidelines on disclosure of non-financial information by certain large companies
The EU Commission are currently seeking views on developing a methodology for forthcoming non-binding guidelines, which will be introduced to assist large public-interest entities with over 500 employees (listed companies and banks are given as examples) on reporting non-financial and diversity information. The information envisaged to be disclosed includes social and environmental information.
The deadline for submissions is 15 April 2016.
EBA updates its Q&A on the Single Rulebook
On 15 January 2016 the EBA updated its Q&A on the Single Rulebook in order to clarify both the relevant reference year from which remuneration data must be collected for benchmarking under these rules and the application of Article 11 of CRR in determining the scope of application for multi-national banking groups.
Letter from the European Supervisory Authorities to the European Commission to address legislative inconsistencies between the banking, insurance and investment sectors
A letter dated 26 January 2016 has been published from the ESAs to the European Commission in which they requested that the European Commission urgently address legislative inconsistencies in cross-selling of financial products between the banking, insurance and investment sectors.