Central Bank warns that regulatory landscape is set to change across EU

The regulatory landscape is set to change across the EU on the back of developments to create a single European banking supervisor, the deputy governor of the Central Bank Matthew Elderfield told a conference in Dublin yesterday.

He urged the Irish funds industry to contribute to this process by “offering constructive ideas to address the changing regulatory priorities of the post financial crisis world and by maintaining high standards of practice in the Irish market that ensure a continued reputation for high standards of investor protection”.

It is vitally important that Ireland gets the right regulatory framework in place so that investor protection is ensured, which will ultimately improve the reputation of Ireland as an international financial services centre and the success of the funds industry in this country, he added.

There are roughly €1.2tn of assets under management by funds domiciled in Ireland.

Moreover, the sector employs 12,000 people. “One statistic that is not so readily available and required a bit of digging around, is the number of investors in Irish regulated funds or funds supported by Irish funds administrators. There are in fact 1.3m such investors — a very significant number indeed.”

Mr Elderfield said there was a chance to revisit Irish and European regulation covering the funds industry — making improvements where appropriate.

At a supervisory level this means ensuring robust arrangements are in place for the authorisation of new products.

However, there is a raft of legislation coming from the EU that can at times seem “overwhelming” but the Central Bank has a team in place to deal with these proposals.

“The need for engagement is immediate and pressing — and in the short term Ireland will have a central role to play as presidency of the EU in the first half of 2013,” said Mr Elderfield.

“This will be a big responsibility and will involve a number of complicated and high profile portfolios, such as banking union and MIFID II.

“And in the funds industry there will also be important portfolios, including UCITS V and UCITS VI,” he said.

Moreover, Europe should drive reform of money market funds to lower the risk of investor runs in this area of the so-called shadow banking sector, said Mr Elderfield.