Transforming Regulation and Supervision
In our Strategic Plan (PDF 5.69MB), Central Bank of Ireland committed to transforming its approach to regulation and supervision.
In a rapidly changing world, this is necessary to ensure we continue to deliver on our mandate into the future.
In delivering this strategic aim, we have focused on four key aspects:
- Accelerating the evolution of our risk-based supervisory approach so that it becomes more data-driven, agile and scalable
- Harnessing innovation in how we work through developing our data and tools (including supervisory technology)
- Anticipating and supporting innovation in financial services
- Preparing for new EU anti-money laundering requirements and the establishment of the new EU agency AMLA.
Delivery of this work can already be seen in a number of improvements we have made over the last two years, including the tools we are developing for our supervisors, and enhancements to our technology portals for industry.
We have also enhanced our engagement with innovation in financial services, delivering our first thematic Innovation Sandbox Programme focusing on combatting financial crime, and expanding the programme to continue to support innovation while safeguarding the integrity of the financial sector.
Our transformation is also evident in the step change we have made in our communications with industry and our wider stakeholders – including increasing transparency and the clarity of our expectations.
Examples of this include the Financial Industry Forum and its subgroups, extensive engagement with our wider stakeholders, and the regular publication of the Regulatory and Supervisory Outlook Report and the Authorisations and Gatekeeping Report. (PDF 705.08KB)
New supervisory approach
We have recently implemented our new supervisory approach, which is a key part of delivering on the Transformation and Safeguarding themes of our organisational strategy.
Our new approach builds on the strong foundations of our existing risk-based, outcomes-focused approach to supervision. It incorporates our European and international supervisory responsibilities, and the domestic and European regulatory framework in which we operate. In designing our new approach, we reflected EU and global best practice while recognising also the particular strategic advantage the Central Bank has from having all elements of the central banking and financial regulation mandate in one organisation. Our new approach does not change the safeguarding outcomes we are pursuing – protection of consumer and investor interests, the integrity of the financial system, the safety and soundness of firms, and financial stability. However, it recognises the changing nature of the financial system – which increasingly transcends traditional regulatory distinctions such as “prudential”, “conduct”, and “anti-money laundering” – and delivers a more integrated approach to supervision, with multi-disciplinary teams working together to deliver our supervisory priorities in a more effective way.
Our new supervisory approach sets us up for the future – enabling us to continue to deliver on our mandate by ensuring the financial system operates in the best interests of consumers and the wider economy.
Our Approach to Supervision | pdf 325 KB
Transforming Regulation and Supervision – Frequently Asked Questions
Through our system of regulation and supervision, we seek to achieve four critical safeguarding outcomes:
- Protection of Consumer and Investor interests
- Safety and soundness of firms and the wider system
- Integrity of the financial system
- Financial stability
Our previous approach had separate areas of the Central Bank focusing on different aspects of our work – one area might have focused on safety and soundness, for example, and another on consumer protection. While this has worked well - the Central Bank is seen internationally as a strong and effective regulator – we believe we can further strengthen our approach.
From January 2025, we moved to an integrated supervisory model where directorates overseeing the banking & payments (including credit unions), insurance and funds & capital market sectors have all those teams in the same place. Each of these directorates is responsible for the supervision of all the regulatory requirements in their respective sectors and delivering our four safeguarding outcomes. Our new supervisory framework for supervision remains risk-based and outcomes-focused. This means we spend more time supervising sectors, firms and issues that pose the greatest potential risk to our safeguarding outcomes.
The pace of change, volume and complexity of the financial system continues to increase. Regulated sectors are growing and the number of regulated firms is increasing, with new, innovative business models. This means an increase in new types of risk.
As the financial system evolves, we must also evolve how we regulate and supervise to address such risks. This includes emerging risks to consumers and investors from the new ways in which they can buy, acquire, use and engage with financial services. Our new supervisory framework enables us to be more efficient and effective in our supervisory work given this rapidly changing environment.
In some countries, central banking and financial regulation are undertaken by separate organisations. In Ireland, the Central Bank has responsibility for both. This affords us broad and deep expertise to deliver on our mission.
To support the new supervisory framework, we have put a new organisational structure in place - one that recognises the particular strategic advantage the Central Bank has from having all elements of the central banking and financial regulation mandates in one organisation.
The new organisational structure comprises the creation of seven unique directorates, which report into the existing Deputy Governor for Financial Regulation and Deputy Governor for Consumer & Investor Protection:
- The Banking & Payments Directorate (including Credit Unions), Insurance Directorate and Capital Markets & Funds Directorate are responsible for supervising the various regulated sectors and firms comprising the financial services industry. These directorates have integrated teams responsible for all elements of our mandate. This means supervising to protect consumer and investor interests, safety and soundness, financial stability and the integrity of the system at an individual firm and sectoral level.
- There is a Horizontal Supervision Directorate working in partnership with the sectoral supervisory teams on a system-wide and thematic basis. It delivers supervision across key cross-sectoral risks such as conduct, behaviour and culture, anti-money laundering and terrorist financing, financial resilience, operational resilience and technology risks.
- There is also a Supervisory Risk, Analytics & Data Directorate, a Policy & International Directorate, and an Enforcement Directorate.
Adopting an integrated approach to supervision will enable us to address more effectively all of the aspects of a firm’s activities which can produce risk. This can be everything from a firm’s culture, its governance, the nature of the products and services it sells, or the systems and processes it uses.
We have adopted an integrated approach to our work on a number of significant issues in recent years, so we know how effective it can be. For example, we have used integrated teams to deal with recent changes in the banking sector and the unique challenges presented by Covid-19 and Brexit. This approach has proven to be a very effective way of dealing with complex matters where interconnected risks at play.
We are confident that this new supervisory approach will deliver significant benefits in improving the outcomes we are seeking to achieve and is the best way forward for the Central Bank to successfully deliver on our mission, in the public interest, over the next decade and more.
Our commitment, role and work in protecting consumers of financial services has not changed. Consumer protection continues to be core to the Central Bank’s mandate and we are confident these changes will strengthen how we deliver on this work.
The Central Bank, and its leadership team led by Governor Makhlouf, continues to deliver on the whole of our mandate, which has at its core the objective of protecting the best interests of consumers and the wider economy.
The focus on consumer protection at the most senior level of the Central Bank has not changed. The Deputy Governor for Consumer and Investor Protection continues to have consumer protection at the heart of their role and responsibilities.
Our existing consumer protection experts are now located within all supervisory directorates where they work within multi-disciplinary teams in a more integrated way. Additional specialist teams work on key risks facing consumers (including conduct risk, cyber risks, protecting client assets and governance risk). This enhances our focus on protecting consumers’ best interests. Also, by integrating and embedding consumer protection explicitly in the supervisory responsibilities of all the directors in the financial regulation area of the Central Bank, our focus on protecting consumers is enhanced.
Our
Consumer Advisory Group continues to play its important role in advising the Central Bank on the performance of our functions and the exercise of our powers in relation to consumers of financial services.
Each sector is supervised in an integrated, holistic way with a multi-year supervisory strategy. These strategies articulate the targeted outcomes we seek to achieve, and the proportionate supervisory or regulatory actions we will take at a sectoral, or individual firm level. These strategies also incorporate our European and international supervisory responsibilities.
We deliver supervision through a broad range of supervisory actions and interventions, which are used to prevent or mitigate risks posed to our safeguarding outcomes. These actions and interventions, range from awareness and expectation setting activities, to programmatic supervision with individual firms and sectors, escalating to policy and/or enforcement and resolution actions.
Individual firms will continue to have their prudential impact calculated, where relevant, and should continue to adhere to all relevant requirements based on their impact categorisation.
Our supervisory approach recognises that certain firms could have a significant impact on the achievement of our safeguarding outcomes. These firms are closely supervised on a continuous basis, at an individual firm level, by integrated supervision teams. The Central Bank will have a set level of engagement with these firms on an annual basis.
All firms that are supervised on a close and continuous basis have been directly informed by their supervision team.
There will not be any immediate change to the Industry Funding Levy approach in 2025. The Levy is based on financial regulation costs and each regulated entity’s position in 2024. Over the course of 2025, the Central Bank will be progressing a strategic review of the levy approach, which will consider any changes necessary for the future.
The Central Bank intends to consult with industry and any proposals for change will be subject to public consultation. This is expected to take place during 2025.