Central Bank Director General sets out 2022 financial regulation priorities

• Central Bank will continue to operate a forward-looking approach to the authorisation of firms, in line with European standards and norms
• In retail banking, firms must ensure customer-centric approach to protect customers’ interests amid scheduled exits from the sector
• Differential pricing ban in the home and private motor insurance market will take effect from July

The Central Bank’s objective is to create the regulatory context in which the potential benefits of innovation for consumers, businesses and society can be realised, while the risks are effectively managed.

Director General, Financial Conduct Derville Rowland said the size of the Irish financial sector had grown at pace in recent years, with an associated increase in scale and complexity and new business models driven by advancements in technology.

Outlining the Central Bank’s 2022 financial regulation priorities, Ms Rowland said the Central Bank would continue to operate a forward-looking approach to the authorisation of financial services firms, being clear about its expectations to prospective and applicant firms.

“In an open market economy, it is important that people and companies have the right – legal and practical - to take up new economic activities. The specific authorisation requirements across sectors reflect European regulatory requirements and norms, and are-risk based, anchored in our organisational risk appetite. Our experience has shown that where the authorisation process is done well, it mitigates risks which can emerge in supervision.”

Speaking at an engagement with Financial Services Ireland, Ms Rowland detailed the Bank’s consumer and investor protection priorities over the period ahead.

With two scheduled exits from the retail banking sector, the Bank will be focused on ensuring that firms treat their customers fairly, in line with supervisory requirements.

“Adopting a customer-centric approach to all issues ensures regulated entities protect customers’ interests, prioritise customer needs and outcomes and ensure continuity of access to basic financial services. We expect the banks will be proactive in their response to their customers, both new and existing, putting in place the structures, information and resourcing to help customers navigate this period of change.”

Ms Rowland also outlined the Bank’s continuing expectations of lenders concerning the fair treatment of borrowers in mortgage arrears.

In the area of insurance, she confirmed that the ban on differential pricing in the home and private motor insurance market will take effect from July this year, in order to end a practice harmful to consumers.

More widely, the Bank will publish a discussion paper on the Review of the Consumer Protection Code later this year, and engage widely with stakeholders, in line with the “Open and Engaged” theme of the Central Bank’s Strategy.

In the area of governance, the Bank will continue to work with the Department of Finance on the introduction of the Individual Accountability Framework (IAF).

At European level, significant areas of focus will include the development of a macro-prudential framework for funds, progressing the AIFMD review, seeking to further the advancement of capital markets union, and helping shape the overhaul of European anti-money laundering structures.

“Crypto-assets comprise another area where the European regulatory framework must be strengthened to prevent fraud and real risk to investors, both institutional and particularly retail,” Ms Rowland said.

“We will also continue to step up our work on climate change to both ensure the financial system can support the transition to a carbon neutral economy and is suitably resilient to the risks.”

ENDS

Notes to Editors

• DG Rowland’s speech can be read in full here.
• The Central Bank of Ireland Strategy can be accessed here.
• The Innovation Hub can be accessed here.