CRD IV comprises a new Capital Requirements Directive (2013/36/EU) and related Capital Requirements Regulation (575/2013)1. The Regulation was directly effective in Ireland from 1 January 2014 and the deadline for transposing the Directive into Irish law was the same date. So far however, the statutory instrument transposing the Directive has not yet been published and we will issue a further client update as soon as it is available.

In November and December 2013, the Department of Finance published two consultations, the first proposing that the Central Bank of Ireland (the Central Bank) be the designated authority for certain CRD IV purposes, and the second proposing particular approaches to remuneration-related areas where Member States have discretion. The approach to be taken as a result of these consultations will become clear once the transposing statutory instrument for the CRD IV Directive is published.

The Central Bank published a CRD IV Consultation Paper 74 (CP 74) on 20 September 2013 seeking industry feedback on competent authority discretions available to it (separate to the designated authority discretions which were the subject of the first Department of Finance consultation in November 2013). The five key policy areas identified by the Central Bank as forming part of CRD IV were liquidity standards, the definition of capital, the leverage ratio, counterparty credit risk and capital buffers. Following on from this consultation, the Central Bank published its Implementation Notice on Competent Authority Discretions and Options on 2 January 2014 (which will need to be updated once the transposing statutory instrument for the Directive is published), together with a feedback statement in relation to CP 74.

It is not yet clear whether CRD IV discretions exercisable by competent authorities in Member States will need to be revisited once the European Central Bank (the ECB) assumes its supervisory role under the Single Supervisory Mechanism (SSM) in November 2014.


On 23 December 2013 the Central Bank published the new Corporate Governance Code for Credit Institutions and Insurance Undertakings 2013 which will take effect on 1 January 2015. In the meantime, institutions will continue to be subject to the requirements of the existing Corporate Governance Code for Credit Institutions and Insurance Undertakings 2011. A copy of our Financial Regulatory Group's Briefing on the revised Code is available here.


Under SEPA (the Single European Payments Area), euro-denominated credit transfers and direct payments (domestic and international) across Europe are subject to the same terms and conditions. For credit transfers, the use of IBANs and BICs to identify banks, payers and payees will become the standard and the SEPA 'Core' direct debit scheme will allow consumers to pay for goods and services in other European countries without having to open accounts in those countries. 1 February 2014 was the date fixed for the existing credit transfer and direct debit schemes of SEPA countries (including Ireland) to be replaced by the equivalent SEPA schemes. However, on 9 January 2014 the European Commission (the Commission) announced a transitional period from 1 February 2014 to 1 August 2014 during which payments which differ from the SEPA format can still be accepted with a view to minimising disruption.

In October 2013, following negotiations between the Irish banks and the Irish Payment Services Organisation, the SEPA 'Core' direct debit scheme as implemented in Ireland was amended to allow business customers of a business to opt-out of the right to a no questions asked refund by signing a one-page waiver of the expanded SEPA refund rights (i.e. the right to an 8 weeks 'no questions asked' refund which is available to consumers under the SEPA 'Core' direct debit scheme). This arrangement, known as the 'SEPA Business Service', is expected to be temporary but its duration, or the nature of its eventual replacement, is uncertain. It is possible that it will be replaced by Irish banks signing up to the SEPA 'B2B' direct debit scheme in due course.

Separately, the European Payments Council updated its three SEPA Rulebooks on 27 January 2014, together with its Model Disclosure Letters.


On 13 February 2014 the Department of Finance published data on mortgage restructures to the end of December 2013 by reference to the March 2013 Mortgage Arrears Resolution Targets (the Targets) set for 6 Irish lenders2. Key points noted as part of that data were that, by the end of December 2013, 51,188 permanent mortgage restructures had been implemented for mortgages over primary residences (PDHs) with 10,148 having been implemented for buy-to-let (BTL) mortgages.

It should be borne in mind that the data issued by the Department of Finance differs from the data issued by the Central Bank as the Department reports only on the banks which are subject to the Targets, whereas the Central Bank's statistics on residential mortgage arrears and repossessions (last published on 28 November 2013) apply in respect of the entire residential mortgage lending sector. The Central Bank's most recent statistics (for Q3 2013) indicated that:

  • the number of mortgage accounts for PDHs in arrears fell from 142,892 (18.5%) to 141,520 (18.4%) during Q3 2013 however the number of PDH properties in > 90 days arrears had increased by 1,315 on Q2 2013
  • the number of BTL mortgage accounts in arrears rose from 39,948 (26.9%) to 40,426 (27.4%) in Q3 2013 however this increase was driven by longer-term arrears, with the number of BTLs in < 90 days arrears actually declining Q3 2013 also saw 23,776 restructuring arrangements agreed on PDH loans and legal proceedings issued in 1,830 cases. 5,399 BTL loans were restructured during the same period, with lenders taking possession of 62 BTL properties (31 on the basis of voluntary surrender/abandonment)

On 5 December 2013 the Central Bank confirmed that, as regards its Targets, it requires sustainable solutions to have been offered to at least 75% of customers in >90 days arrears by 30 June 2014, and for concluded sustainable solutions to have reached 35% by that date.

On 13 January 2014 the Department of Justice published the Report of the Expert Group on Repossessions which, while it contained a number of key recommendations regarding the process for taking repossession proceedings, did not recommend legislative change.

In its updated Legislation Programme, published on 15 January 2014, the Government signalled its intention to introduce a draft bill in 2015 dealing with the sale of loan portfolios by regulated financial institutions to unregulated financial institutions. Following recent media coverage regarding the possibility that the sale of the INBS residential mortgage portfolio to one or more unregulated entities could result in consumers losing the protections of the Central Bank's Code of Conduct on Mortgage Arrears, the Central Bank and the Department of Finance are understood to be working together to consider possible solutions, and it remains to be seen whether earlier regulation of unregulated purchasers of residential mortgage portfolios or their servicers results from these discussions.


On 3 December 2013, reforms to Irish bankruptcy law were commenced by way of five statutory instruments. From that date onwards, as part of the revised personal insolvency regime introduced by the Personal Insolvency Act 2012 (the PIA), the automatic discharge period from bankruptcy has been reduced from 12 years to 3 years, the debt threshold to be reached before a bankruptcy application can be made has been increased to €20,000 and the 'look-back' periods for fraudulent preferences and the avoidance of certain transactions have been extended from 1 year to 3 years. For further detail, see our Finance Group's recent update on the PIA, available here.


The Credit Reporting Act 2013 (the CRA 2013) was signed into law on 23 December 2013. Under the Act, a central credit register will be established, to be managed by the Central Bank (the Register). The Register will hold information about credit applications, credit agreements and parties to credit agreements. A credit reporting system will also be implemented whereby lenders will be required to report information on credit applications and credit agreements to the Central Bank. Regulated financial services providers, NAMA, local authorities and other credit providers (with the exception of central banks and pawnbrokers) are all in scope, as are most types of credit. Key regulations expected in 2014 under the CRA 2013 will cover the type of personal information and credit information to be provided, which is expected to vary depending on the class of borrower (consumers, corporates etc.) It is expected that the Register will become fully operational in 2016.


On 11 June 2013 Guidelines on Remuneration Policies and Practices (MiFID) were published by the European Securities and Markets Authority (ESMA) relating to MiFID investment firms, credit institutions that provide investment services, and UCITS management companies and external alternative investment funds when they are providing individual portfolio management services or non-core investment services. National competent authorities (including the Central Bank) were required to confirm whether or not they intended to comply with these guidelines by 29 November 2013. The Central Bank confirmed to ESMA, in November, its intention to comply and all affected firms are now expected to have been in compliance with the guidelines from 28 January 2014 and to be taking the guidelines into account when formulating their remuneration arrangements. It remains to be seen how this will interplay with the remuneration requirements under CRD IV, however the guidelines do provide some guidance as to the relationship with the existing CRD III requirements relevant at the time of publication.

In January 2014, following industry consultations and a review of its process for the authorisation of investment firms under MiFID, the Central Bank issued details of a more transparent and efficient two-track authorisation process for these firms. This process went live on 8 January 2014 and was accompanied by an application form tailored to match the risk of an applicant firm's business model or strategy.


On 11 October 2013 further provisions of the Credit Union and Co-Operation with Overseas Regulators Act 2012 (the 2012 Credit Union Act) were commenced. Following this, the Central Bank wrote to credit unions on 15 and 18 October 2013 confirming that Section 15(1) of the 2012 Credit Union Act (which was to have commenced on 11 October 2013 and which deals with a credit union's board of directors) will now commence on 3 March 2014, together with the remaining un-commenced provisions of the 2012 Credit Union Act.

On 23 December 2013 the Central Bank issued Consultation Paper 76 on the introduction of a two-tiered regulatory approach for credit unions, seeking views on its proposed approach to tiering, the high level operation of the tiers and the appropriate timing for the introduction of such an approach. The closing date for this consultation has been extended from 28 February 2014 to 31 March 2014 and the Central Bank has indicated that a further consultation paper, which will include a regulatory impact analysis, will also be issued on the draft regulations which are intended to give effect to the proposed two-tiered regulatory approach.


On 11 October 2013 the Central Bank issued the final versions of its Authorisation Requirements and Standards for Debt Management Firms, its Application Form for Authorisation and its Guidance Note on Completing an Application Form for Authorisation. The Central Bank also published Consultation Paper 75 on 26 November 2013 on a set of proposed additional consumer protection requirements that will apply to debt management firms, with a particular focus on the provision of information generally (and in relation to charges), a standardised method of financial assessment and the provision of a suitability statement. The consultation period closes on 18 February 2014.


In November 2013 the Central Bank published a Report on the Licensed Moneylending Industry following research that it had undertaken to identify consistent trends and new issues. Among the main conclusions identified were:

  • a majority of customers (84%) know the cost of credit on their loan and 69% understand the amount of interest charged on their loans. This is a significant improvement from 2007, when 71% of customers did not understand the amount of interest being charged on their loans
  • while some customers felt under pressure to make repayments on time, the majority felt that they were treated fairly by their moneylender if they missed scheduled repayments
  • 63% of moneylenders agreed that the level of attention from the Central Bank as regulator had increased over the previous 24 months


On 18 October 2013 the Central Bank published Guidance on the Advertising Requirements of the Consumer Protection Code 2012. While the guidance was issued for information purposes only, and does not amend or form part of the Consumer Protection Code 2012, it is notable that the guidance stemmed from research carried out by the Central Bank with a view to better understanding the attitude of consumers to financial services advertising. Key findings arising out of that research included the existence of a demand for specific key information to be "clearly displayed in high profile text in the main body of print advertisements" but, balanced against that, a concern that the focus must remain on key information to avoid over-burdening consumers and causing confusion, in particular as regards online ads. The guidance also sets out recommended systems and control checks to be carried out by regulated entities when formulating new advertising campaigns, and reiterated that the compliance function in a regulated entity should work closely with the relevant advertising/marketing agency.


On 8 November 2013, the Central Bank updated its Q&A on the Alternative Investment Fund Managers Directive (AIFMD). The updated Q&A clarifies that, as a transitional arrangement, registered financial vehicle corporations within the meaning of Article 1(2) of the FVC Regulation (ECB Regulation 24/2009) or financial vehicles engaged solely in activities where economic participation is by way of debt or other corresponding instruments which do not provide ownership rights in the financial vehicle as are provided by the sale of units are shares, do not need to seek authorisation as, or appoint, an alternative investment fund manager unless the Central Bank issues a replacement answer on this point. For further detail, see our Capital Markets Group's November 2013 Briefing, available here.

On 4 February 2014 the Central Bank updated its AIFMD Q&A and confirmed that the MiFID services listed in Article 6(4) of AIFMD (i.e. discretionary portfolio management on a client-by-client basis and investment advice) will benefit from an AIFMD passport. Previously, the Central Bank's position was that MiFID firms would not have been able to passport those services under the AIFMD passport if they were to convert to AIFMs.


On 24 January 2014 the Department of Finance published the Anti-Money Laundering Sectoral Guidelines for Investment Funds, which had been agreed in December 2013 between the Central Bank and the Irish Funds Industry Association.


The Minister for Finance published a general scheme in relation to an Irish Collective Asset-management Bill on 20 December 2013 under which it is proposed to establish a new type of corporate vehicle for investment funds. A copy of the Briefing issued by our Asset Management and Investment Funds Group on the general scheme is available here.


Following the publication by the European Insurance and Occupational Pensions Authority on 27 September 2013 of its Solvency II Guidelines, the Central Bank published its Guidelines on preparing for Solvency II on 4 November 2013 and hosted an industry briefing on Solvency II on 25 November 2013. For further detail, see our Insurance Group's November 2013 Bulletin, available here.


On 23 December 2013 the Central Bank published a revised Auditor Protocol (the Protocol) between the Central Bank and auditors of regulated financial services providers. The Protocol's scope has been broadened to capture all meetings between auditors and the Central Bank including meetings regarding non-High Impact firms. The Protocol has also been updated to reflect the limitation on auditors' liability set out in Section 58 of the Central Bank (Supervision and Enforcement) Act 2013.


On 30 January 2014 the Central Bank published its Fitness and Probity Service Standards Performance Report for July- December 2013, giving details of the Central Bank's performance against the service standards for processing Individual Questionnaires in respect of persons proposed to hold Pre-Approval Controlled Functions. The report indicated that all targets for that period were exceeded.


On 6 November 2013 the Central Bank published its revised Outline of the Administrative Sanctions Procedure and Inquiry Guidelines following two previous consultations (May 2013 (CP 65) and November 2011 (CP 57)) on those Inquiry Guidelines. The Central Bank's Director of Enforcement also issued a statement on 19 December 2013 confirming that, in 2013, the number of settlement agreements concluded with regulated entities numbered 16, with €6.35 million in fines imposed as a result.


Greece assumed the EU Council Presidency in January and, as the European Parliament (Parliament) elections are scheduled for May 2014, Greece's Minister for Finance indicated that Greece intends to frontload key workstreams with a view to concluding them by April 2014. Notably, those workstreams include the adoption of the proposed regulation establishing the Single Resolution Mechanism (SRM), continuing the work necessary to ensure that the SSM is up and running by November 2014, reaching agreement on the proposed Fourth Money Laundering Directive (MLD4) and completing work on the proposed MiFID II directive and regulation.



On 29 January 2014 the Commission published a legislative proposal for a regulation designed to introduce structural reforms to the EU banking sector. The regulation will apply to EU banks that are regarded as being of global systemic importance or exceeding certain specified thresholds (i.e. banks which are 'too big to fail'). Where a bank comes within the scope of the regulation, the Commission proposes to introduce a ban on proprietary trading from 1 January 2017 and give supervisors, from 1 July 2018, the power to require banks to separate certain trading activities from their deposit-taking function. It is expected that the regulation will not be adopted until mid-2015 at the earliest.


On 29 October 2013 the two regulations comprising the SSM were published in the Official Journal of the EU (the OJ). The first, conferring specific tasks on the ECB in relation to the prudential supervision of credit institutions, came into force 5 days later and the second, amending the regulation governing the operation of the European Banking Authority (EBA), came into force on 30 October 2013. The ECB is expected to assume its supervisory role on 4 November 2014.

The Inter-Institutional Agreement between the Parliament and the ECB was published in the OJ on 30 November 2013, having come into force on 7 November 2013. A Memorandum of Understanding between the EU Council and the ECB was also announced on 2 December 2013, setting out cooperation procedures between the two organisations.

On 23 October 2013 the ECB announced details of the assessment that it is carrying out, in advance of its SSM role commencing in full, on a number of large banks. The assessment (which began in November) consists of a supervisory assessment of liquidity, leverage and funding risks, a review of the quality of bank assets including the adequacy of asset and collateral valuation, and a stress test. The outcome will be published prior to the ECB fully assuming its SSM role in November 2014 and the following five Irish institutions are in scope: AIB, Bank of Ireland, permanent tsb, Merrill Lynch International Bank Limited and Ulster Bank Ireland Limited.


On 11 December 2013 the Parliament and EU Council reached political agreement on the proposed Recovery and Resolution Directive (RRD) which is now expected to enter into force on 1 January 2015 once the text of the directive has been finalised and approved in a plenary session of the Parliament. The provisional compromise text was then agreed between the Parliament and EU Council on 20 December 2013. The RRD will introduce a 'bail-in' mechanism under which shareholders and creditors will be the first to bear losses, with smaller depositors protected. Once at least 8% of the bank's total liabilities have been 'bailed-in', the expectation is that resolution funds (comprising bank contributions) will be capable of being accessed, with government stabilisation tools available as a last resort.


On 17 December 2013 it was announced that political agreement had been reached on the proposed directive to recast the existing Deposit Guarantee Schemes Directive (94/19/EC). Key points to note are that:

  • the coverage level will remain €100,000 per depositor per institution, funded by banks rather than by taxpayers
  • the level of contributions from banks will be determined in accordance with their risk profiles and each fund must reach an amount equal to 0.8% of covered deposits within 10 years
  • the repayment deadline, currently 20 working days, will be gradually reduced to 7 working days by 1 January 2024
  • banks will be required to provide more detailed information to depositors regarding key aspects of deposit protection

The EU Council and the Parliament will now begin work towards finalising the form of the directive, and the expectation is that Member States will be required to transpose it into national law within 12 months of the directive entering into force.


On 18 December 2013 the EU Council announced that it had agreed a general approach on the SRM, and called on the EU Council Presidency to begin negotiations with the Parliament with a view to agreeing the SRM before May 2014. The SRM proposal comprises a draft SRM regulation and a commitment by EU Member States to agree, by 1 March 2014, an Intergovernmental Agreement (IGA) in relation to the single resolution fund (the Fund). Key points to note are:

  • the Fund will be financed by bank levies raised at national level which will initially be transferred into "national compartments" and eventually mutualised
  • while the Fund is being built up, bridge financing will be available from national sources backed by bank levies or by the European Stability Mechanism

A single resolution board will also be established which will, once notified by the ECB that a bank may fail, adopt a resolution scheme which must then be implemented by the relevant national competent authority.

The IGA is to be entered into first and the SRM is currently expected to come into force on 1 January 2015. The aim of the SRM is to ensure that the supervision and resolution of banks is exercised at the same level for all SSM countries (i.e. the eurozone Member State and the non-eurozone countries that opt to join the SSM).

While the SRM is currently scheduled to be considered by the Parliament in February 2014 , MEPs issued a press release on 9 January 2014 expressing their dissatisfaction with the EU Council's general approach. This was followed by a letter from the Parliament dated 16 January 2014 where concerns were expressed that the IGA on the operation of the Fund would jeopardise the establishment and functioning of the SRM due to both the perceived infringement of the principle of equal treatment of all banks in the participating Member States, irrespective of their place of establishment, and impediments to the efficient functioning of the decision-making process. The Parliament highlighted that due to the divergent negotiating positions of the EU Council and the Parliament, it might not be possible to reach agreement on the SRM before the Parliament elections in May 2014.



On 14 January 2014 it was announced that a deal had finally been reached, following trialogue discussion between the Commission, the Parliament and the EU Council, on the MiFID II package (comprising a directive and a regulation, amending both MiFID and the European Markets Infrastructure Regulation (EMIR)). The press release indicated that agreement was reached on market structure, investor protection, commodities (in particular, the power of competent authorities to limit the size of a net position that a person may hold in commodity derivatives), high-frequency algorithmic trading in financial instruments and the use of an 'EU passport' by third countries whose rules are equivalent to the MiFID II rules. MiFID II is now expected to enter into force in the second half of 2014 and firms are likely to be required to comply by the end of 2016. The form of both the directive and regulation, reflecting the agreement reached in trialogue, are expected to be available shortly. Our Financial Regulatory Group will be issuing a more detailed updated briefing on MiFID II very shortly.


On 10 December 2013 the Parliament announced that it had voted to adopt the proposed Mortgage Credit Directive (the MCD) which will now need to be formally adopted by the EU Council. It will enter into force 20 days after it is published in the OJ and Member States will then have 2 years to transpose it into national law. The MCD is designed to create a single market in residential mortgage credit for consumers, creditors and credit intermediaries, and ensure that consumers are provided with consistent and comparable information when applying for residential mortgages across the EU. On 19 December 2013 the EBA published a consultation paper on draft regulatory technical standards (RTS) relating to the minimum monetary amount of payment protection insurance that mortgage intermediaries must hold, setting a response deadline of 18 March 2014.


On 29 January 2014 the Commission published a proposed regulation on the reporting and transparency of securities financing transactions. Proposals include a requirement that financial or non-financial counterparties of securities financing transactions report details of those transactions to trade repositories; that UCITS management companies, UCITS investment companies and AIFMs provide information to investors on their use of securities financing transactions and other financing structures; and that counterparties looking to engage in rehypothecation ensure that certain conditions are satisfied before they have the right to rehypothecation. The regulation is expected to enter into force towards the end of 2015, with the requirements relating to reporting to fund managers applying 6 months later, and the reporting requirement for securities financing transactions applying 18 months later.


On 6 January 2014 ESMA issued its final draft RTS and final draft implementing technical standards (ITS) under Article 10a(8) of MiFID on the assessment of acquisitions and increases in qualifying holdings in investment firms. The Commission now has 3 months within which to endorse the final draft standards.


While ESMA had put forward a draft ITS proposing that the reporting start date for exchange traded derivatives (ETDs) to trade repositories be delayed until 1 January 2015 to give ESMA more time to develop related guidelines and recommendations, the Commission refused to endorse that proposal and EMIR reporting requirements start on 12 February 2014. For further information on the EMIR reporting requirements, see our Capital Markets Group's EMIR Update available here.

Registrations of the first trade repositories under EMIR were approved by ESMA on 7 November 2013, with those registrations taking effect on 14 November 2013 in advance of the 12 February 2014 start-date for the EMIR reporting obligation.

ESMA's EMIR Q&A was also updated on 11 November 2013 and 20 December 2013 with a view to enabling consistent supervisory practices as between national competent authorities, and assisting market participants and investors. The particular focus of the December update was the addition of a new Part V concerning the reporting of ETDs to trade repositories. In the meantime, the Commission has also updated its own FAQs, focussing on the concept of "undertaking" in the definition of a "non-financial counterparty" and the extent to which municipalities are subject to EMIR requirements.

On 4 February 2014 the Central Bank published its first EMIR FAQs, focussing on FX forwards, reporting to trade repositories and LEI codes. As regards FX forwards, the Central Bank clarified that all FX transactions with settlement beyond the spot date (generally T+3 or greater) are to be considered as forward contracts falling within the definition of a derivative, and subject to the EMIR reporting obligation.


On 3 December 2013 the EU Council announced that its Permanent Representatives Committee had agreed the EU Council's position on the draft UCITS V Directive. While it is still liable to change, the agreement enables negotiations with the Parliament to start with the aim of adopting the proposed directive at its first reading. On 11 December 2013, an addendum was published by the EU Council Presidency containing declarations from Member States, including Ireland and the UK, in which they expressed concerns in relation to Article 52(1) of the UCITS Directive and its impact on the use of over-the-counter derivatives that are cleared through central counterparties.


On 20 December the Commission published the text of the delegated regulation it had adopted supplementing the AIFMD regarding RTS for determining types of alternative investment fund managers (AIFMs). The RTS specify the characteristics of AIFMs who manage open-ended alternative investment funds. The Parliament and EU Council now have a 3 month period within which they can object to the delegated regulation.


The United Kingdom had challenged the ability of ESMA to impose a ban on short selling in emergencies. The European Court of Justice's Advocate-General had issued a preliminary opinion siding with the UK however, in January 2014, the European Court of Justice rejecting the UK's challenge and upheld ESMA's ability to impose such bans.


Date Development
24-27 February Date for consideration of revised Insurance Mediation Directive by the Parliament in plenary session
10-13 March 2014 The Parliament plenary session at which it is expected to consider the Omnibus II Directive, the proposed Benchmarks Regulation, MiFID II, MLD4 and the proposed new Wire Transfer Regulation.


1 A full corrigendum to the Regulation was published in the Official Journal of the EU on 2 December 2013, correcting a number of errors in the original version.

2 The 6 banks are AIB, Bank of Ireland, permanent TSB, ACC, KBC Ireland & Ulster Bank and they were requested by the Department to provide data on the restructuring of all mortgages of principal private residences, both in arrears and not in arrears, in their bank on a monthly basis. The data is provided without having gone through the lenders' quality control processes and is unaudited, but it is published by the Department on the basis of the demand for data.

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