BPFI Report On Regulating For Growth – A Roadmap For Simplification

On 2 September 2025, the Banking & Payments Federation Ireland (BPFI) published a report titled Regulating for Growth – A Roadmap for Simplification.

This calls for the rebalancing of banking regulation both at a domestic and wider EU level and highlights the desire to protect Ireland's status as a leading global financial hub by improving the regulatory environment, cutting costs for businesses and positioning the banking sector to deliver on investment gaps.

The BPFI explains that the purpose of the report is to articulate the industry's views and expectations regarding regulatory simplification. The BPFI aims to foster a collaborative dialogue with the Central Bank of Ireland (Central Bank) and the Department of Finance, with the shared objective of ensuring Ireland not only retains its position but is also strategically positioned for sustained growth into the future.

Background

This report is set against the backdrop of the Draghi Report on the future of European competitiveness and the Letta Report on the future of the Single Market, which emphasise that an overly complex or fragmented regulatory landscape can hinder economic growth, stifle innovation, and reduce the EU's attractiveness as a place to do business.

The report also follows the publication of the EU Commission's Competitiveness Compass, a roadmap to revive Europe's economic growth and the establishment of a task force to report on regulatory simplification later this year by the ECB.

BPFI President Brian Hayes highlights that the debate on EU regulatory simplification is not happening in a vacuum and should be considered in the context of UK and US changes which cannot leave Europe's economy and banks in a less competitive position.

Report

The report outlines areas where Ireland can contribute to the broader EU simplification agenda, including by addressing specific challenges within its own financial regulatory framework.

The report has been submitted to the Central Bank of Ireland and the Department of Finance and comes as the Government prepares to publish its Action Plan on Competitiveness and Productivity, and the development of a new Ireland for Finance Strategy.

Key BPFI messages

A competitive Europe needs a competitive banking sector that can deliver capital where needed.

• The BPFI's national simplification efforts directly support these broader European ambitions, serving as a tangible example of local initiatives reinforcing the EU's strategic goals.
• The report does not argue for deregulation. Genuine resilience and competitiveness in the financial sector stems from efficient compliance with risk-based and proportionate regulation, not deregulation.
• National discretions, capital add-ons and gold plating are not unique to Ireland. They remain a feature of EU fragmentation.
• Introducing in legislation a competition mandate for the Central Bank, alongside its existing primary objectives of financial stability and consumer protection, would place an explicit legal duty on the Central Bank to consider and balance these objectives in all its regulatory, supervisory, and policy-making activities.
• Between 2019 and 2024, the EU Banking package issued approximately 13,000 new regulations and guidelines, equating to 15,000 pages of rules and a doubling of regulations from the previous five years. The cumulative impact of layered regulations is rarely assessed comprehensively at the EU level, leading to potential overlaps, inconsistencies, and unintended consequences that hinder genuine cross-border integration and efficient resource allocation across the Union.
• Current EU processes for developing financial services legislation often prioritise addressing perceived risks through detailed, prescriptive rules, without sufficient explicit and upfront consideration for their complexity, proportionality, or overall impact on the competitiveness and growth of the EU financial sector.
• The achievement of a simplified but robust regulatory framework demands an ongoing agile mindset embedded across all supervisory practices and integrated into every stage of future regulatory development (both domestically and at the EU level).

BPFI key principles on simplification and what it can achieve

• Harmonisation and Consistency: Simplification can drive greater convergence and consistency across the EU Single Market, including in supervisory judgment, to foster a more level playing field and enhance competitiveness.
• Emphasis on Proportionality: Simplification should ensure regulation and supervision are proportionate to a firm's size, complexity, and risk.
• Regulatory Certainty and Precision: A clear, precise, and predictable regulatory framework can encourage investment and prevent uncertainty from deterring firms investing across the EU.
• Enhanced Supervisory Efficiency: Simplification can optimise supervisory practices, enabling regulators to focus resources on material risks and improving overall effectiveness across the EU.
• Uncompromised Outcomes: Simplification can strengthen financial stability, resilience, and consumer protection through the fostering of smarter, more efficient regulation.
• Reducing Regulatory Burden: Simplification can reduce overall regulatory burden and compliance demands, freeing up resources for productive activities and growth across the EU.

Key recommendations from the report

1. Levelling the playing field by addressing issues such as the gold-plating of EU rules.
2. Developing Ireland's supervisory approach including addressing the need for a 'local single rulebook' to bring greater clarity to supervisory expectations for firms operating in Ireland.
3. Implementing a more transparent and consistent approach to 'proportionality' or how rules are applied depending on a firm's size and risk profile.
4. Longer-term structural changes and collaboration, including a call for legislative change to explicitly introduce and formalise a competition mandate for the Central Bank of Ireland.

Further detail

1. Maximum harmonisation for a level playing field

Irish regulations that "gold-plate" some EU rules, creating unique domestic burdens that can put local firms at a competitive disadvantage, can deter new entrants or encourage existing firms to relocate. BPFI recommendations include:

• Commit to transparent and faithful application of EU regulations, avoiding introducing additional domestic rules in areas covered by EU requirements, and transparently articulating how/why EU requirements are insufficient in the Irish context where additional rules are applied.
• Clarify and adhere fully to home/host principles in relation to EEA Branches – Ireland's role as a regulatory host country for EEA branches is crucial for its financial services ecosystem. However, the current supervisory approach to these inward branches diverges from the established 'home and host' principles, creating unnecessary complexities. For example, while the Central Bank's legitimate focus as host Regulator is on AML/CFT and Conduct of Business, its practices frequently extend beyond these areas. This includes instances of:
  • Unnecessary Local Requirements: For example, the requirement for specific Pre-Approved Controlled Functions (PCFs) for inward EEA branches despite the fitness and probity standards explicitly excluding inward EEA branches from their scope.
  • Duplicative Oversight: Applying full Irish outsourcing requirements to all branch activities, leading to duplication with home regulator standards and additional "gold-plated" measures.
    • Broadened Incident Reporting: Challenging firms to report all operational incidents, even those primarily relevant to the home Regulator.
    • Additional Local Reporting: Requiring supplementary local regulatory reports (e.g., OSII reporting, localised PSD2 issues) that could be aligned with home regulator or consistent EU requirements.

• Publication of clear, consolidated principles and guidance in relation to Fitness & Probity (F&P) requirements in the context of international groups – F&P requirements for local PCFs for branches of EEA firms and restrictions on dual-hatting make it challenging for international banks to operate a streamlined governance structure. BPFI proposals include:
  • Harmonised Interpretation of Senior Roles: A collaborative review and more nuanced interpretation of dual-hatting and multiple role holdings, aligning more closely with prevailing practices and supervisory expectations across other major EU financial centres, particularly for internationally integrated groups.
  • Recognition of Mitigating Controls: Greater recognition of the efficacy of robust internal governance frameworks, dedicated support teams, and sophisticated intra-group or third-party outsourcing arrangements as effective mitigants for any perceived risks associated with senior individuals holding multiple responsibilities, including those operating internationally.
  • Publication of Guiding Principles: The creation and publication of clear, consolidated principles and guidance by the Central Bank that speak to these issues (e.g., dual-hatting, international PCFs). These principles should transparently reflect the CENTRAL BANK's views on permitting such arrangements, outlining the criteria and safeguards that, when met, would allow for greater flexibility while maintaining robust oversight.

2. Supervisory Approach

An inconsistent, unpredictable supervisory approach can create an unnecessary administrative burden for both firms and the regulator. An undue focus on process rather than the underlying risk, as well as lack of practical application of proportionality, contributes to a challenging operating environment. BPFI recommendations include:

• Developing and maintaining a comprehensive, easily navigable and consolidated local single rulebook for all CENTRAL BANK-specific requirements and expectations. This would bring together circulars, "Dear CEO" letters, guidance, and policy statements into a single, accessible online resource.
• Expanding the "Regulatory and Supervisory Outlook" to include more detailed annual thematic guidance notes enabling proactive preparation and enhancing compliance.
• Establishing clearer feedback mechanisms to enhance the learning loop between the CENTRAL BANK and firms, enabling more targeted improvements.
• Other actions – non-exhaustive
  • Review Board Sign-off Expectations: Review and clarify the CENTRAL BANK's expectation regarding the scope of local legal entity Board sign-off for non-mandatory areas.
  • Discontinue Non-Mandated FinReps: Discontinue the requirement for investment firms to submit quarterly and annual FinReps not mandated by IFR.
  • Review Monthly Metrics: Review and potentially discontinue the requirement for firms to submit Monthly Metrics.
  • Integrate Enria Report's F&P Learnings into Wider Supervisory Practice.
  • Advance Agenda Provision: Ensure supervisory teams provide a clear agenda well in advance of all PRISM engagement meetings and other significant interactions.
  • Publish F&P SLA Guidelines: Create and publish clear F&P SLA guidelines, especially for/in relation to prospective applicants from abroad.
  • Establish Central Regulatory Calendar: Explore establishing a central regulatory calendar for better visibility on planned regulatory visits/ engagements, aligning and coordinating with other supervisory authorities (e.g. the ESAs) as appropriate.
  • Comprehensive CENTRAL BANK Guideline Review: Conduct a comprehensive review of all CENTRAL BANK guidelines to identify overlaps with EU Directives/Regulations, Standards, and Guidelines for redundancies and obsolescence.
  • Publish Guideline Withdrawal Plan: Publish a clear plan and timeline for the withdrawal of national guidelines superseded by new EU regulations.
  • Develop Sunset Clause Policy for Existing Guidelines: Develop a policy that mandates a review and potential withdrawal of existing national guidelines upon new relevant EU regulations.
  • Provide Rationale for Regulation that Goes Beyond EU Requirements: For any "gold-plating," provide a clear rationale detailing the specific risk addressed and why EU standards are insufficient.
  • Embed Automatic Review Clauses in New Domestic Regulations: Ensure all new regulations incorporate explicit review clauses, mandating a formal assessment of their effectiveness, proportionality and continued relevance after a predetermined period.
  • Establish a Regular Obsolescence Review Process for All Existing Regulations: Implement a systematic, periodic review process across the entire existing regulatory framework to identify regulations, guidelines, or requirements that have become obsolete, redundant (due to EU-level harmonisation or market evolution), or no longer proportionate to the risks they were intended to address.
  • Develop a Transparent Framework for Regulatory Withdrawal: Create and publish a clear, transparent framework and timeline for the withdrawal or amendment of regulations identified as obsolete or disproportionate during these reviews.
  • Link Obsolescence Reviews to EU Developments: Systematically integrate the monitoring of new EU legislation and guidelines into the obsolescence review process, ensuring that national requirements are promptly withdrawn or adapted when superseded or made redundant by EU-level harmonisation.
  • Regulatory Resourcing and Talent Alignment: Continue to cultivate an appropriate technical skillset within the regulator that aligns with emerging growth areas in the financial services sector, ensuring the regulator possesses the necessary expertise to engage effectively with, supervise and understand evolving business models and technologies.

3. Proportionality

A "one-size-fits-all" approach that applies complex regulations to all firms not taking account of a firm's size, complexity, and risk profile, leading to an unduly burdensome and inefficient outcome for smaller institutions, placing them at a competitive disadvantage relative to their larger peers and discouraging new market entrants. BPFI recommendations include:

• Review Irish outsourcing guidelines which impose stricter notification, due diligence and risk assessment demands than the EBA guidelines and in particular:
  • Achieve Maximum Harmonisation with EBA: Fully align CENTRAL BANK outsourcing guidance with EBA principles, simplifying notification processes, revisiting due diligence requirements and adopting a more principles-based approach to risk assessments.
  • Recognise Risk-Based Proportionality: Differentiate the treatment of intra-group and intra-entity outsourcing, acknowledging their lower inherent risk, and align on delegation/sub-custody definitions with the EBA.
  • Streamline Fund Administrator Requirements: Revise outsourcing guidelines for Fund Administrators to be genuinely risk-based and proportionate, consolidating guidance, narrowing the scope of in-scope activities, and introducing more efficient, two-tiered approval processes with fast-track options.
  • Eliminate Duplication and Inconsistency: Rationalise outsourcing-related reporting by harmonising data templates across regulators (including DORA), exploring single register submissions and issuing integrated national guidance that clarifies overlaps and terminology.
  • Drive Towards a Unified Outsourcing Framework: Actively pursue the development of a single, comprehensive, EU outsourcing framework that applies across the EU Single Market. This unified approach would significantly enhance consistency, eliminate ambiguity, and serve as a singular authoritative reference point for firms, thereby streamlining compliance and fostering a genuinely level playing field.
  • Optimise Assurance: Introduce proportionality for assurance requirements, reducing dual obligations for internal audit and compliance, and decoupling reviews from new migrations to allow for more agile, outcomes-focused assurance.

• Review climate risk expectations for Less Significant Institutions as current approach uses requirements designed for Significant Institutions which may not be suitable for less complex institutions.
• Review/remove Client Asset Rule application to credit institutions, which imposes a significant, disproportionate burden given their different risk profiles and existing banking regulations which achieve similar outcomes and asset protection.

4. Structural reforms

Longer-term structural reforms and strategic initiatives that require the active leadership and collaboration of the Department of Finance, European Commission and relevant EU regulatory authorities. BPFI recommendations include:

• Initiation of legislative changes by the Department of Finance to explicitly introduce and formalise the competition, competitiveness and sustainable growth of the financial services sector statutory mandate for the Central Bank, alongside its existing primary objectives of financial stability and consumer protection.
• Formalise and significantly strengthen the integration of "simplicity by design" principle in the development of all future financial services, legislation, delegated acts and guidelines by the European Commission and EU regulatory authorities.
• Implementation of a formal, time-bound "regulatory pause" on the introduction of non-critical new financial services legislation by the European Commission, in conjunction with EU co-legislators to address the near-constant stream of new directives, regulations, and implementing technical standards to which the European financial services sector is subjected.
• Adoption by the Department of Finance of a robust policy for the timely transposition and maximum harmonisation of all EU directives, ensuring national legislation is in force by the stipulated deadlines. Concurrently, the Department of Finance should commit to the principle of maximum harmonisation during transposition, ensuring precision and clarity in the national legal text.

EU regulatory simplification reforms

While the BPFI's primary focus is on actionable simplification within the Irish regulatory landscape, it recognises that a meaningful and long-lasting shift requires addressing fundamental structural issues at the EU level.

The BPFI contributes to the broader EU-wide simplification agenda, as championed by the European Banking Federation (EBF) and fully endorses the EBF's high-level structural reforms and strategic initiatives, which aim to reshape the architecture and guiding principles of financial regulation across the EU.

For further information on the BPFI report please see here.

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