SENIOR EXECUTIVE ACCOUNTABILITY REGIME
The Senior Executive Accountability Regime (SEAR) will go live on 1 July 2024.
In advance of that date, the Central Bank has published updated Guidance on the Individual Accountability Framework together with the final regulations (Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Senior Executive Accountability Regime)) Regulations 2024) (the SEAR Regulations).
The SEAR Regulations will apply from 1 July 2024, save for the provisions in respect of non-executive directors, which will apply from 1 July 2025.
For more information, read our latest insights here: IAF/SEAR Update: Central Bank publishes final Guidance and SEAR Regulations
CONSUMER PROTECTION CODE
The Central Bank of Ireland's consultation paper (CP 158) on reforms to its Consumer Protection Code (and its planned replacement with new ‘Conduct of Business' Regulations which will also incorporate, among other codes, the Code of Conduct on Mortgage Arrears) closes for comment on 7 June 2024.
The Central Bank plans to publish its Feedback Statement, final draft ‘Conduct of Business' Regulations and final draft ‘Standards for Business' Regulations (part of the Individual Accountability Framework) at the end of Q4 2024. The Regulations will be signed into law shortly afterwards, with a 12-month transition period, meaning that the new framework will come into force around end Q4 2025/early Q1 2026.
For more information, read our insights here:
- Consumer Protection Code Reform: Central Bank launches 3-month consultation
- Individual Accountability Framework: Central Bank consults on Business Standards as part of CPC review
- NPL Update: Dear CEO Letter on Early Mortgage Arrears
MARKETS IN CRYPTO-ASSETS REGULATION
The EU Markets in Crypto-Assets Regulation (MiCA) applies from 30 December 2024, save for Titles III and IV (the framework for stablecoins (asset-referenced tokens and e-money tokens)) which will apply from 30 June 2024.
As MiCA is a regulation rather than a directive, it will be directly effective in Ireland without the requirement for transposing legislation.
More detail on the work by ESMA and the EBA on regulatory and implementing technical standards and guidelines is set out in the EU Financial Regulation section of this Horizon Scanner.
From an Irish perspective, the Central Bank plans to run an industry event in July 2024, setting out its authorisation and supervisory expectations for in-scope firms, and will formally launch its expectations afterwards. It plans to open its “authorisation gateway” in Q3 2024.
Gerry Cross, the Central Bank's Director for Financial Regulation, Policy and Risk delivered a speech on 29 May 2024 in which he gave a flavour of the key authorisation and supervisory expectations that firms will need to meet.
From an authorisation perspective, the focus will be on transparency in the application process, firms being well prepared and appropriately resourced to engage in the assessment process; firms understanding the Irish regulatory environment, firms having a “strong local autonomy”, and (particularly in the case of firms with retail-facing business models) having a strong focus on securing customers' interests.
From a supervisory perspective, full control over client assets will be a key theme, as will the need for firms to have appropriate “substance” in Ireland (with a knowledgeable board, high quality governance and strong risk management arrangements). As expected, AML will be a key concern, as will the robust identification and management of conflicts of interest.
The Central Bank issued a notice earlier in May 2024 on the impact of MiCA on those with existing virtual asset service provider (VASP) registrations. VASPs that are registered and authorised as such before 30 December 2024 can continue to operate until the earlier of a 12-month period or the grant or refusal of an authorisation as a crypto-asset service provider (CASP). A registered VASP that does not seek CASP authorisation by 30 December 2025, or whose application for CASP authorisation is refused, will need to cease operating.
New CASP applicants, or VASPs applying for CASP authorisation, will undergo the same Central Bank assessment. The assessment period is expected to take at least 10 months, and the Central Bank has asked intending applicants who are not already authorised as VASPs to focus on their CASP applications over the coming months, rather than seeking a VASP application at this stage.
CORPORATE GOVERNANCE CODE
As mentioned by our Corporate and M&A Group here, Euronext Dublin is consulting on the proposed introduction of an Irish Corporate Governance Code, with a closing date of 14 June 2024. At the moment, the UK Corporate Goverance Code applies to companies with primary equity listing on Euronext Dublin, supplemented by the Irish Corporate Governance Annex.
Companies that have a primary listing on Euronext Dublin will be subject to the Irish Code when it is issued. However, if a company is dual-listed in Ireland and the UK, it will be able to elect to follow either the Irish Code or the UK Code. The Irish Code is expected to apply to accounting years commencing on or after 1 January 2025. Companies that report on a calendar year basis will therefore be expected to comply with the Irish Code for the year ending 31 December 2025.
The draft Irish Code is based on the UK Code and retains the comply-or-explain approach, adjusted for the specifics of the Irish market and legal framework (including the wider EU regulatory regime).
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.