INTRODUCTION

On 11 March 2022, in a press release and speech by Derville Rowland, Director General, Financial Conduct, the Central Bank detailed its consumer and investor protection priorities for 2022. Against a backdrop of global shocks, including the war in Ukraine, Ms Rowland spoke about the role of financial services regulation in building resilience, anticipating risk and protecting citizens. Seven key areas of focus for 2022, were highlighted.

1. THE IMPORTANCE OF RESILIENCE

A key message from the Central Bank is that a resilient system has the capacity to respond to shocks large and small, and to innovate appropriately over time.

MACROPRUDENTIAL FRAMEWORK FOR FUNDS

Banks and insurers have respectively benefitted from Basel III and Solvency II 2022 regulatory frameworks. Development of an equivalent macroprudential framework for investment funds is a priority for regulators. During the pandemic, the investment funds sector showed operational resilience in some areas and vulnerabilities in others.

CYBER RESILIENCE

Operational resilience of the financial sector, including supervision of technology-related change and cyber resilience, are a key focus for the Central Bank given their potential impact on firms and their customers, and the risks for financial stability. On 1 December 2021, the Central Bank published cross-industry operational resilience guidelines (the Guidelines) for regulated financial service providers (RFSPs). The Guidelines, which were preceded by an industry consultation process (CP140) earlier that year, set out a recommended approach for ensuring operational resilience through the management of disruptive events under the three pillars of (i) identify and prepare; (ii) respond and adapt; and (iii) recover and learn. The Guidelines, which are additional to and do not supersede RFSP governing regime rules, should be applied by RFSPs on a proportionate basis taking account of a firm's nature, scale and complexity. For further information please see the William Fry Client Briefing December 2021. 

2. THE CHANGING FINANCIAL SERVICES LANDSCAPE

AUTHORISATIONS

The Central Bank will continue to operate a forward-looking approach to the authorisation of financial services firms, being clear about its expectations to prospective and applicant firms. The experience of the Central Bank has shown that:

  • where the authorisation process is done well, it mitigates risks which can emerge in supervision; and
  • firms that required significant guidance or work to get to a point of authorisation are also the firms that later present compliance issues.

INNOVATION HUB

A review of the functioning of the Innovation Hub, which is a contact point between fintechs and their incumbents and the Central Bank on innovation, will be conducted in 2022.

BANKING SECTOR CHANGES

The Central Bank is focussed on ensuring that customers are protected and treated fairly throughout the Ulster Bank and KBC withdrawal from the Irish market. On 25 June 2021, the Central Bank published a "Dear CEO letter" setting out expectations of firms in the changing retail banking landscape.

3. DRIVING FAIR OUTCOMES FOR CONSUMERS AND INVESTORS

REPORTS

The Securities Markets Risk Outlook was published in February 2022 and the Consumer Protection Outlook Report was published in March 2022.

DISTRESSED DEBT

Firms must ensure lenders have suitable supports in place to help borrowers.

DIFFERENTIAL PRICING

A ban on differential pricing in the home and private motor insurance market will apply from July this year. New customer discounts will continue to be permitted to the customer subject to clear and informative disclosure. Insurance firms will also have to provide enhanced information to customers seeking to switch providers.

CONSUMER PROTECTION CODE

Publication of a discussion paper is expected to follow the conclusion of a root-and-branch review of the code, which is currently underway. It is expected that the discussion paper will be published over the summer.

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