Senior Central Bank officials defended their approach to the authorisation of financial firms at a meeting of the bank's commission last month, when questions were raised about a perception that securing regulatory approvals in the Republic is more difficult than in other countries.
The executives also told members of the commission, or board, at the regular monthly meeting on March 1st that there has been no let-up in the level of applications since the 2016 Brexit vote, according to minutes of the gathering, published on Tuesday.
While the minutes did not refer to any individual firms, the meeting came shortly after it emerged that British fintech Revolut had dropped plans to use an e-money licence secured from the Central Bank in favour of a full banking licence awarded in Lithuania late last year to expand services in the Republic.
A number of financial firms, both those active in the State and looking at the market, have privately complained in recent years that the regulatory pendulum has swung too far from the pre-crash days when the regime was “principles based” rather than “rules based”.
Risky behaviour
One of the government-commissioned reports into the financial crisis, written by Finnish academic and finance expert Peter Nyberg, concluded in 2011 that the regulatory authorities during the boom – comprised of the then-separate institutions of the Central Bank and the Financial Regulator – were aware that banks were engaging in risky behaviour ahead of the recession but did little to stop it.
The Central Bank's director of credit institutions, Mary-Elizabeth McMunn, and director of consumer protection Colm Kincaid briefed the commission at last month's meeting on the bank's authorisations work.
The executives were questioned by commission members about "some external impressions that securing authorisation in Ireland can be more onerous than other jurisdictions, and whether there was benchmarking undertaken", according to the minutes.
Models
They responded that the bank “applies EU standards and norms” to its authorisation process, but was seeking to be “forward-looking in its approach” to try to ensure the financial system had “resilient firms that can cope with changing circumstances”.
“Features and challenges of the authorisation mandate over recent times have been high volume levels, new business models, high variability in business models and increasing complexity in product offerings, and new entrants inexperienced in regulatory risk and compliance,” the minutes of the meeting said.
“The growth and complexity of the financial sector has continued apace since 2018, enabled by significant numbers of authorisations and driven by Brexit, fintech and new mandates. Pipeline levels have remained consistently high and not all applications convert to supervised firms.”
