Tracker, Financial Services Regulation & Compliance - Cross Sectoral


Central Bank publishes results of its themed review of risk function

On 5 December, the CBI published an Industry Letter setting out the outcome of its thematic review to assess the operation of risk function across investment firms, fund service providers and stockbrokers. The assessment involved the review of entities' risk frameworks and risk culture with the objective of evaluating the processes these entities have in place for "identifying, measuring, mitigating and communicating risks". The review identified a number of inconsistencies in how firms deal with risk. The Letter also appends a list of questions firms can use for self-assessment of their risk framework and culture.

Central Bank of Ireland's Director of Enforcement addresses Compliance Ireland

The CBI's Director of Enforcement, Derville Rowland, delivered a speech at a Compliance Ireland event on 2 December 2016. Ms. Rowland focused on recent developments in AML supervision including the recent publication of the National Money Laundering and Terrorist Risk Assessment.

Central Bank of Ireland issues Anti-Money Laundering Bulletin

On 6 December 2016, the CBI issued the first in a series of Anti-Money Laundering Bulletins. The Bulletin provides guidance on the use of third parties by firms as part of their AML framework, as well as providing guidance "based on thematic on-site inspections of firms across a number of sectors".

Central Bank announces Director appointments in Markets Supervision and Financial Stability

Michael Hodson has been appointed to the role of Director of Asset Management Supervision, with effect from 1 January. Mary O’Dea has been appointed to the role of Director of Securities and Markets Supervision effective from September 2017. The current Director of Financial Operations, Maurice McGuire has been appointed as Director of Financial Stability from July 2017.

The Credit Union Fund Stabilisation Levy Regulations 2016 SI 583/2016 (the Stabilisation Regulations) and Credit Union Fund ReBo Levy Regulations 2016 S.I. No. 585 of 2016 (the ReBo Regulations) are published on 12 December 2016

The Stabilisation Regulations specify a credit union levy of 0.022 per cent of the total assets of the credit union from 1 October 2016 to 30 September 2017. The ReBo Regulations specify a ReBo levy of 0.005660 per cent of every credit union's total assets for the period beginning on 1 January 2016 and ending on 31 December 2016 and 50 per cent of any financial assistance advanced to a credit union during that time.

Central Bank holds roundtable discussion on 15 December 2016

The roundtable discussion with Irish financial sector stakeholders covered the consequences of a British exit from the EU and current and emerging regulatory and supervisory issues. Participants included, amongst others, Banking and Payments Federation Ireland, Consumer Association of Ireland, Fintech Ireland, the Department of Finance and the Irish Association of Investment Management.

Central Bank publishes Report on Mortgage Arrears

The Report, published 16 December 2016, which was requested by the Minister for Finance details the mortgage restructuring activity within banks and non-banks, the range of solutions offered by non-banks, assessing the range of solutions that may affect borrowers’ capacity to remain in their primary residences, and whether these are addressing the requirements of over-indebted borrowers.

Central Bank has announced that the countercyclical capital buffer (CCyB) rate on Irish exposures is to be maintained at 0% in Q1 2017

The countercyclical CCyB is a capital requirement which applies to in-scope banks and investment firms. It is designed to make the banking system more resilient by increasing the capital requirement of banks when credit growth is 'excessive'. The CCyB can then be released, partially or fully, either in the case of a period of systemic stress or when credit growth and associated systemic risks recede. The rate will be effective from January 1st 2017.

Central Bank launches the second edition of the 2016 Macro Financial Review

The Review provides an overview of the current state of the macro-financial environment in Ireland. The Review states that: while financial market tensions have eased since Brexit it, risks to European financial stability remain elevated; non-financial private sector credit continues to decline; total returns on Irish commercial property are declining but remain higher than those in other countries; and the value of non-performing loans held by Irish retail banks has fallen substantially over the past three years.

Central Bank issues first in series of Anti-Money Laundering bulletins

The Bulletin focuses on third party reliance and the Central Bank's expectations in this area. In relation to Third Party Reliance, the Central Bank expects: a signed agreement between the firm and a third party; firms only rely on third parties to perform Customer Due Diligence; and that firms should conduct regular assurance testing to ensure documentation can be retrieved quickly and without undue delay, and that the quality of the underlying documents obtained is sufficient.

In a speech to the Institute of International and European Affairs, Central Bank Deputy Governor Cyril Roux, provides perspectives on financial regulation in Ireland

The speech focused on the mandate and limits of the Central Bank by offering examples of the Central Bank's mandate and limitations in the areas of residential mortgages, domestic insurance, and Brexit.


European Central Bank publishes an Opinion on amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing

The EBA's opinion, published 9 December 2016, supported regulation of virtual currency exchange platforms and custodian wallet providers. The Opinion stated that the Union legislative bodies should not appear to promote the use of privately established digital currencies and that the definition of virtual currencies under the proposed directive should be amended to reflect that virtual currencies should be regarded as a means of exchange, rather than as a means of payment.

The European Banking Authority issued a revised list of validation rules in its Implementing Technical Standards (ITS) on supervisory reporting

The revised rules highlight validation rules which have been deactivated. National authorities throughout the EU were informed that data submitted in accordance with these ITS should not be validated against the set of deactivated rules.

European Supervisory Authorities publish Report on automation in financial advice

The ESAs decided not to develop additional joint cross-sectoral requirements as several existing EU Directives and/or other regulatory requirements already apply to automated advice. However, given the potential for growth in this area the ESAs will continue to monitor the evolution of the market.

Securities and Markets Stakeholder Group respond to ESMA’s Consultation Paper on draft technical standards under the Benchmarks Regulation

SMSG made a number of recommendations including that ESMA should reconsider whether two independent members of the oversight function is sufficient, ESMA should consider allowing the possibility for non-significant bench-marks to cross-reference the methodology under Article 13 for the purpose of its benchmark statements requirements and whether all submitters, should have to demonstrate their understanding and knowledge on an annual basis, independently of the characteristics of the benchmarks.

European Securities and Markets Authority publishes Decision of the Board of Supervisors

The Decision, published 14 December 2016, relates to rules of procedure of the Board of Supervisors such as its composition, functions and decision making procedures.

European Securities and Markets Authority publishes Summary of Conclusions of the Board of Supervisors

The meeting, which took place on 9 November 2016, made a number of conclusions over a range of topics such as the Capital Markets Union, the MiFID II Q&A, the response to the European Commission consultation on personal pensions and the Q&A on marketing and administration functions under the AIFMD.

European Securities and Markets Authority publishes its annual market share calculation for EU registered credit rating agencies (CRAs)

This calculation is required by Article 8d of the Credit Rating Agency Regulation which states that where issuers or related third parties intend to use two or more CRAs, they should consider appointing one CRA with less than a 10% market share. In order to assist with this assessment EMSA has published CRAs’ market shares.

European Securities and Markets Authority to provide free credit ratings information to public

ESMA has launched its new database, the European Ratings Platform (ERP), to provide access to free, up-to-date information on credit ratings and rating outlooks on its website. The rating information in the ERP is collected and published on a daily basis.

European Securities and Markets Authority publishes Risk Dashboard No. 4

ESMA’s 3Q16 overall risk assessment remains unchanged from 2Q16. While risks in the markets under ESMA remit remained at high levels the outlook for market, liquidity and contagion risk is now assessed to be stable.

FinCoNet, the International Financial Consumer Protection Organisation, publishes Guidance on Sales Incentives and Responsible Lending

The Guidance provides a practical framework for Supervisors to set standards on sales incentives and covers all sales channels and internal controls, as well as sales promotions to consumers.

General Data Protection Regulation (GDPR) will come into force on the 25th May 2018

The GDPR will replace the existing data protection framework. It emphasises transparency, security and accountability by data controllers, while at the same time standardising and strengthening the right of European citizens to data privacy.

European Commission publishes Study on access to comprehensive financial guidance for consumers

The Study concluded that it will be difficult to develop a blue print for financial guidance services that would be appropriate to all member states. National provision needs to build on existing organisations to cover all sections of the population and will need a diversity of channels to achieve this. The Report also concluded that comprehensive provision needs a national body to encourage the development of services.

European Supervisory Authorities issue report on reducing sole and mechanistic reliance on credit ratings.

The Report recommends a common framework of non-binding good supervisory practices for Sectoral Competent Authorities (SCAs) in relation to how they should monitor the use of credit ratings by their supervised entities, what alternative and complementary measures are available and how SCAs can address issues of nature, scale and complexity. The Report also provides greater detail on how mechanistic reliance on credit ratings can be addressed within the different business processes of SCAs' supervised entities. 

Venture capital rules agreed by Council

The proposed regulation is part of the EU's plan to develop a fully functioning capital markets union and aims to boost investment in venture capital and social enterprises. The proposal sets out to enable larger fund managers, i.e. those with assets under management of more than €500 million, to market and manage EuVECA and EuSEF funds as well as expanding the range of companies in which EuVECA funds can invest, including unlisted companies with up to 499 employees (small mid-caps) and SMEs listed on SME growth markets.

Commission publishes Guidelines on the Eurosystem monetary policy framework 

Guideline (EU) 2016/2299 concerns the valuation haircuts applied in the implementation of the Eurosystem monetary policy and Guideline (EU) 2016/2298 addresses the implementation of the Eurosystem monetary policy framework.

Commission publishes Guidelines relating to Eurosystem refinancing operations and eligibility of collateral

Guideline (EU) 2016/2300 of the European Central Bank of 2 November 2016 amends Guideline ECB/2014/31 on additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.

Joint Committee of the three European Supervisory Authorities publish the revised Joint Guidelines on the Prudential Assessment of Acquisitions and Increases of Qualifying Holdings in the Financial Sector

The Revised Guidelines replace the previous Guidelines, adopted in 2008 and will be applicable as of 1 July 2017.

Postponement of PRIIPs

On 8 December 2016, the Council of the EU announced that it had adopted a regulation postponing the application of the Regulation on Key Information Documents for Packaged Retail and Insurance-Based Investment Products (EU/1286/2014) (the PRIIPS Regulation) by 12 months.  The amending regulation (Regulation (EU) 2016/2340) was published in the Official Journal of the EU on 23 December 2016 and entered into force the following day.  The PRIIPS Regulation will now apply from 1 January 2018.

Deputy Governor of the Central Bank, Cyril Roux, addresses the Institute of International and European Affairs

Deputy Governor, Cyril Roux stated that firms seeking authorisation in Ireland will find the Central Bank to be engaged, efficient, open and rigorous. He also stated that the Central Bank has not sought to dissuade investment banking or trading in Dublin and that the Central Bank will expect there to be substantive presence when authorizing a firm.

For further information please contact a member of the Financial Regulation team.

Date published: 06 Jan 2017