The Central Bank of Ireland outlines its regulatory and supervisory priorities for 2023, published a report on the first annual climate-related financial disclosures of its investment assets for 2023, along with its Climate Action Roadmap, and seeks views on key aspects of the implementation of the Individual Accountability Framework (IAF), including the publication of draft Regulations and guidance, with the comment period ending on June 13, 2023.
The central bank published the Consumer Protection Outlook Report and the Securities Markets Risk Outlook Report, in addition to setting out regulatory and supervisory priorities for 2023, which include the following:
- Providing a clear, open and transparent authorization process through active and constructive engagement with industry and other stakeholders.
- Assessing and managing risks to the financial and operational resilience of firms.
- Progressing actions on the systemic risks generated by non-banks, in particular advancing a macro-prudential framework for non-banks.
- Continuing to oversee the consolidation of the Irish banking sector and associated program of account migration, implement new credit supervision mandates and continue to monitor for emerging risks in relation to distressed debt, investor protection and product governance.
- Consulting and engaging on regulatory developments under the Consumer Protection Framework and Individual Accountability Framework.
- Implementing changes to credit union regulations/guidance arising from the Department of Finance-led Policy Framework Review.
- Consulting on approach to Innovation that will include an exploration of new ways of engagement with innovators and their products.
- Ongoing focus and vigilance around the integrity of the financial system and preventing misuse through detecting and sanctioning market abuse.
- Ensuring that the European Union’s Anti-Money Laundering Action Plan, including the establishment of a single supervisory authority (the Anti-Money Laundering Authority), results in a consistent and robust European Union-wide framework.
- Contributing to progressing European regulation, particularly the review of the Payment Services Directive (PSD2) and the functioning of open banking.
- Implementing new EU regulations on digital operational resilience (DORA) and markets in crypto assets (MiCA).
- Strengthening the resilience of the financial system to climate change risks and its ability to support the transition to a climate-neutral economy.
The report on climate-related financial disclosures sets out information on the climate-related impact of the Central Bank’s investment assets. As part of this disclosure, the Central Bank is setting a long-term target to align its euro-denominated investment assets with the decarbonization objectives of the European Union and the Irish State, in support of the Paris Agreement. The disclosures are an important step towards enhanced transparency, both in relation to climate-related risks and the environmental footprint of investment assets held by central banks in the euro area. In addition, the Central Bank also published its Climate Action Roadmap which sets out its commitment to being a sustainable organization. As part of the Roadmap, the Central Bank has established a Sustainability Taskforce to lead and coordinate on this commitment. It will deliver on its commitments in the wider context of the Government Climate Action Plan, and the obligations on public sector bodies as set out in the Public Sector Climate Action Mandate.
The proposal on the implementation of Individual Accounting Framework notes that the new framework will underpin sound governance across the financial sector by setting out clearly the good practices expected of well-run firms and responsible role-holders. It sets expectations for firms in relation to the clarity and coherence of their governance arrangements, and for individuals carrying out key roles as to the standards of conduct that they are expected to meet. Moreover, the draft regulations and guidance seek to provide clarity in terms of the Central Bank’s expectations for the implementation of three aspects of the framework: the Senior Executive Accountability Regime (SEAR), the Conduct Standards and certain aspects of the enhancements to the Fitness & Probity regime. Thus, to ensure a high quality and consistent implementation of the framework, Central Bank proposed following implementation timeline:
- Conduct Standards including accountability of senior individuals for running their parts of the business effectively to apply from December 31, 2023.
- Fitness & Probity Regime—Certification and inclusion of Holding Companies to apply from December 31, 2023.
- Regulations prescribing responsibilities of different roles and requirements on firms to clearly set out allocation of those responsibilities and decision making to apply to in-scope firms from July 01, 2024.
- Press Release on Priorities for 2023
- CEO Letter on Priorities for 2023 (PDF)
- Press Release on Climate-related Disclosures
- Climate-related Financial Disclosures 2023 (PDF)
- Climate Action Roadmap (PDF)
- Consultation on Individual Accountability Framework
- Consultation Paper (PDF)
Keywords: Europe, Ireland, Banking, ESG, Climate Change Risk, Disclosures, Work Priorities, Basel, Credit Risk, AML CFT, ML TF Risk, Operational Resilience, DORA, MiCA, Transition Risk, Sustainable Finance, Individual Accounting Framework, Central Bank of Ireland
Hasan leads Moody’s Analytics ESG methodology development. He is expert on carbon transition, nature related risks and is a guest lecturer at ESSEC Business school on sustainable finance.
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