Central Bank Sets Out Strategic Priorities for 2018

The Central Bank of Ireland (“Central Bank”) has set out its strategic priorities for 2018 which cover the areas of consumer protection, supervision and enforcement, and regulatory policy development. Among other things, these priorities indicate future regulatory changes as well as areas of focus for Central Bank thematic inspections.

Consumer Protection

Throughout 2018, the Central Bank’s work on consumer protection will be centred around its consumer protection framework, supervisory work and continuation of its role as gatekeeper with the desired outcome that regulated firms are financially sound and safely managed.  Its strategic priorities include amending the Consumer Protection Code 2012 (“CPC”), a review of culture in the five main retail banks, thematic inspections and the tracker mortgage examination.

Consumer Protection Code (CPC)

The Central Bank will amend the CPC to include:

  • enhanced mortgage switching measures; and
  • additional measures to avoid conflicts of interest arising from inducement arrangements as well as providing greater transparency for consumers in this area.

It has also recently consulted on proposed enhancements to the Consumer Protection Code for Licensed Moneylenders (which is separate to the CPC).

Tracker Mortgage Examinations

The Central Bank expects that all relevant lenders will have made redress and compensation payments by mid-2018.  Elsewhere, the Central Bank states that it expects that all the main lenders will face enforcement investigations and that these will all have commenced by the end of 2018.

Review of Culture

The Central Bank will conduct a review of culture in the five main retail banks in 2019 and engage with firms’ boards and senior management on embedding firms’ cultural change programmes.

Thematic Inspections

The Central Bank will commence/complete a range of thematic inspections/reviews including aspects of lending to SMEs by retail banks, insurance companies selling niche/add-on insurance and payment institutions’ safekeeping of client funds. Further information on thematic inspections is set out below under the heading sector specific priorities.

Supervision and Enforcement

The Central Bank’s supervisory engagement and enforcement work throughout 2018 will focus on its core supervisory activity, Brexit and authorisations along with sector specific priorities.  Supervisory activities will include on-site inspections in addition to thematic inspections and targeted inspections in areas of concern.

Core Supervisory Engagement

The CBI proposes a comprehensive on-site inspection programme for banks, credit unions, insurance undertakings and asset managers:

  • Banks: inspections will cover a variety of areas such as the EBA/SSM 2018 stress tests, credit risk, regulatory reporting, operational risk, business models and pricing.  There will also be a continuation of the targeted review of internal models (TRIM); 
  • Credit Unions: the Registry of Credit Unions will engage more frequently and intensively with larger credit unions and conduct more targeted supervision of smaller credit unions;
  • Insurance undertakings: inspections will focus on risk management frameworks in groups, business model analysis of cross-border business (focusing on companies selling non-life products to small businesses and consumers) along with reporting, data quality and governance; and
  • Asset managers: the Central Bank will develop inspection methodologies to implement best practices in the examination of risk with a particular focus on operational, governance, conduct and IT risks. 

The Client Asset Specialist Team will maintain its level of engagement with all firms authorised to hold client assets and investor money. The Central Bank will also conduct anti-money laundering/counter terrorist financing compliance checks on firms deemed to be of a lower risk through random spot check inspections as well as communications and outreach to industry.


Authorisation of institutions relocating from the UK in the context of Brexit will continue to be a key area of supervisory focus with the CBI engaging with industry to ensure that entities are prepared for all Brexit scenarios.  The Central Bank will be open and engaged with firms seeking authorisation or expansion of business and the assessment of each application received will be made in line with legislation and requirements, including SSM as applicable and will be completed within required timelines.

Sector-Specific Priorities

Sector specific priorities for 2018 include compliance with MiFID II focusing on targeted firm visits and thematic reviews.  This will include assessments of compliance with requirements under product governance, fees and disclosure and research.  Other priorities include embedding Solvency II, reduction of NPLs by banks and cross-sector on-site inspections in the areas of governance, culture and operational risk.  2018 will also see the CBI’s IT Risk Team coming into effect which will have responsibility for conducting on-site inspections and on-going supervision in the areas of IT cyber risk.  The Central Bank also intends to increase cross-sector on-site inspections in the areas of governance, culture and operational risks (including outsourcing).

Regulatory Policy Development

The Central Bank will continue to contribute to the development of relevant laws, regulations and technical standards in Europe in order to ensure that regulatory frameworks are appropriate and effective.  The Central Bank will:

  • continue its on-going engagement with the ECB and European Supervisory Authorities as well as international organisations such as the Financial Stability Board and the International Organization of Securities Commissions; 
  • provide assistance to the Department of Finance during negotiations regarding transposition of the Money Market Funds Regulation, Prospectus Regulation and any necessary changes to the domestic Covered Bonds framework;
  • undertake work relating to changes to the Investment Limited Partnerships legislation along with work to transition the CBI rulebooks to regulations under the Central Bank Act 2013 in the areas of investment funds, investment firms and markets; and
  • examine issues such as investment fund pricing errors and breaches of regulatory limits.

The Central Bank will also examine the assigning of responsibility to senior personnel in order to address difficulties that can be encountered by regulators in assigning responsibility to individuals.  This follows the CBI’s response to a Law Reform Commission Issues Paper on “Regulatory Enforcement and Corporate Offences”.

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.