Regulation and recruitment challenge financial services sector, report shows

Financial Services Ireland, which is a part of lobby group Ibec, suggested the Central Bank should examine its administration of regulation in an effort to make it more simple and streamlined

The report found firms have consistently reported the process of obtaining a licence from the Irish banking regulator to be lengthy and complicated.

Irish financial services firms said regulation red tape and a tight labour market have become barriers for further growth in the sector.

In a report by Financial Services Ireland (FSI), fintech startups in particular said they have been struggling to find skilled staff as Ireland reaches full-employment while they compete with larger firms who are scooping up talent.

FSI director Patricia Callan said other issues, including the housing crisis, are putting pressure on recruitment as well.

The report also found firms have become frustrated with the body of regulations they must comply with.

“Firms recognise that having a well-regulated financial services sector is critical, but meeting the required regulatory standards can be costly and time-consuming,” said the report.

The report found firms have consistently reported the process of obtaining a licence from the Irish banking regulator to be lengthy and complicated.

“Long engagements, with ad hoc communication from the regulator and an uncertain timeframe, serve as a disincentive to firms to take out Irish authorisations,” the report said.

FSI, which is a part of lobby group Ibec, suggested the Central Bank should examine its administration of regulation in an effort to make it more simple and streamlined.

In addition to regulation challenges and recruitment issues, the deterioration in the general investment environment caused by rising interest rates was also impacting the sector.

However, the general findings of the report were positive and showed the majority of respondents expected to increase their headcount and turnover during the next three years.

Meanwhile, the AIB services purchasing managers index for August, a leading industry survey, showed business services, transport, and tourism sectors recorded contractions in activity. 

At the same time, financial services noted a slower uplift in output.