Looking Ahead: Irish Developments
NON-PERFORMING LOANS / TRANSPOSITION OF THE CREDIT SERVICING DIRECTIVE
Transposing regulations from the Department of Finance for the EU Credit Servicing Directive are awaited (the transposition deadline specified in the Directive is 29 December 2023). In the meantime, the practicalities of how to manage combined portfolio transactions have been the subject of ongoing consideration by the market following confirmation from the Department of Finance in June 2023 that it is planning for two parallel frameworks: the Directive’s framework would apply to post-transposition sales and servicing of NPLs originated by EU banks, with the existing framework continuing to apply to the sale and servicing of performing loans, pre-transposition NPLs originated by EU banks, and the sale and servicing of NPLs originated by non-bank lenders.
CONSUMER PROTECTION CODE (CPC)
We had expected to see the consultation paper from the Central Bank on its planned changes to the CPC before the end of 2023, following its October 2022 discussion paper and its August 2023 update on the CPC review.
However, indications from the Central Bank at its Financial System Conference on 8 November 2023 were that the consultation paper is likely to be published early in Q1 2024 instead. From the perspective of the upcoming Individual Accountability Framework (IAF), the consultation paper is very keenly awaited as the Business Standards under the IAF will be set out in the CPC (the Business Standards will apply to all regulated financial service providers (RFSPs) albeit the Central Bank may apply the standards differently as between different classes of RFSPs).
For more information on the upcoming CPC consultation, read our insights here: CPC Update: Revised 2024 CPC Regulations to be updated again in 2025. We will publish insights on the key themes from the CPC consultation and the likely impacts for our clients when the consultation paper is published.
INDIVIDUAL ACCOUNTABILITY FRAMEWORK (IAF)
While the Central Bank confirmed in November 2023 that the application of the senior executive accountability regime (SEAR) to (I)NEDs will be deferred until 1 July 2025, this was the only change to the Central Bank’s planned implementation timetable for IAF/SEAR.
29 December 2023 remains a key date for the operationalisation of the IAF:
- Conduct Standards: the Common Conduct Standards and the Additional Conduct Standards will apply from end-December 2023 (the relevant provisions of the IAF Act will become operational on 29 December 2023). As mentioned above, the Business Standards will be set out in the revised Consumer Protection Code, which will be the subject of a Central Bank consultation in early Q1 2024.
- New certification requirement under the Fitness & Probity regime: this will apply from end-December 2023 (the relevant provisions of the IAF Act will become operational on 29 December 2023 and the related regulations which formed part of CP 153 are expected to come into force around the same time).
- Holding companies to be subject to the F&P regime: this will be from end-December 2023 (the relevant provisions of the IAF Act will become operational on 29 December 2023 and the related regulations which formed part of CP 153 are expected to come into force around the same time).
A feedback statement on the June 2023 consultation on changes to the Central Bank’s Administrative Sanctions Procedure is awaited (the consultation closed on 14 September 2023).
Read more:
- IAF/SEAR Update: Central Bank publishes Feedback Statement, updated Regulations and Guidance
- Update for Funds and Fund Management Companies: Central Bank publishes Feedback Statement on CP153
- Insights from the Central Bank’s Administrative Sanctions Procedure (ASP) Consultation.
Our experienced IAF/SEAR team comprises specialists from across the firm, including from our Financial Regulatory Group, Litigation, Dispute Resolution and Investigations Group, Asset Management and Investment Funds Group, Insurance Group and Employment Group. We use our significant knowledge and experience of the regulatory and enforcement environment to provide strategic advice and support to our clients as they manage the transition to the new IAF and beyond.
MARKETS IN CRYPTO-ASSETS REGULATION (MICA)
MiCA’s optional grandfathering period allows EU Member States to permit entities already providing crypto-asset services in their jurisdiction to continue providing those services from 30 December 2024 until as late as 1 July 2026.
One of the questions posed in the Department of Finance’s public consultation on the limited national discretions under MiCA (which ran from 9 August to 15 September 2023) was whether Ireland should allow the transitional period and, if so, for how long. A feedback statement is awaited from the Department on that consultation.
ESMA wrote to the EU Council’s Economic and Financial Affairs Committee in October 2023, highlighting its concerns about potentially extensive use of the grandfathering option, asking Member States to reduce that period to a maximum of 12 months, and asking Member States to confirm to the European Commission and ESMA (preferably by the end of 2023) whether they will do so. We have not yet seen a response from the Department of Finance on that point.
NATIONAL PAYMENTS STRATEGY
The Department of Finance is expected to publish its public consultation on the National Payments Strategy 2024 before the end of the year.
This follows the publication by the Department of the Terms of Reference for the National Payments Strategy in June 2023 arising out of the recommendations in the November 2022 Retail Banking Review Report that legislation be developed requiring banks to provide ‘reasonable access to cash’ (with the aim of keeping access to cash at December 2022 levels for the time being), and that the Department lead on the development of a National Payments Strategy in 2024.
The Strategy, once developed, will “…set out a roadmap for the future evolution of the entire payments system, taking account of developments in digital payments, cash usage and how future changes should be made to the legislative criteria relating to Access to Cash”…. It will also take account of the EU legislative landscape, including the proposals on instant euro payments, revisions to the Payment Services Directive, and the possible digital euro.
The Strategy is expected to contain three key themes:
- A payments roadmap (focused on the future evolution of the entire payments system, including digital payments, instant payments, payments fraud, data collection and sharing, and open banking).
- Cash acceptance (both public and private, and whether there should be a legislative requirement in relation to the acceptance of payment methods by certain classes of firms, sectors, or sub-sectors and whether it should be Government policy that public bodies should accept or facilitate the acceptance of cash).
- Cash access (focusing on the impact of the introduction of the reasonable access to cash criteria). Note that the Government has also been mandated to draft ‘Access to Cash’ legislation following the Retail Banking Review Report, and this is on the current Government legislation programme.
The consultation is expected to last eight weeks, with a subsequent report and strategy paper to be published sometime in late Q2/Q3 2024.