Home Knowledge Central Bank Publishes 2024 Regulatory and Supervisor Outlook

Central Bank Publishes 2024 Regulatory and Supervisor Outlook

On 29 February 2024, the Central Bank of Ireland (Central Bank) published its 2024 Regulatory and Supervisory Outlook (RSO), setting out the Central Bank’s view on the key trends and risks facing the financial sector, along with the regulatory and supervisory priorities it has set in the context of those risks.

The Central Bank will publish an RSO annually to complement sector-specific supervisory feedback typically issued through publications, consultative forums and conferences. The 2024 RSO is the first such annual report.

The RSO was published with the related Central Bank Governor’s Financial Regulation priorities letter to the Minister for Finance dated 23 January 2024 (Letter).

The Letter sets out the Central Bank Governor’s views on the macro-financial environment, the financial services landscape, and the Central Bank’s financial regulation priorities for the year ahead, including:

  • Working with the Department of Finance on priority policy areas including continuing implementation of the Retail Banking Review; access to cash; the National Payments Strategy; the completion of the 2030 Funds Review and the National Financial Literacy Strategy.
  • Putting in place a revised and modernised Consumer Protection Code to ensure consumers are protected in a more digitalised financial services sector.
  • Continuing to progress work both internationally and domestically to address systemic risks from the non-bank sector and deepening analysis and understanding of macroprudential risks in this sector.
  • Implementing the Individual Accountability Framework (including within the Central Bank’s supervision of firms) and supporting external stakeholders to embed the new standards.

The Central Bank’s overarching supervisory objective is to ensure a stable, resilient, and trustworthy financial sector, operating sustainably in the best interests of consumers and the wider economy.

The Central Bank’s approach to supervision continues to be a risk-based one and in the Letter the Central Bank commits to continue improving its authorisation processes, ensuring there is clarity, predictability and transparency for firms looking for authorisation while maintaining the high standards the public expects for regulated providers of financial services.

The Global Macro Environment

The Central Bank has cited the high-interest rate environment, inflation, illiquid asset price corrections amid tighter financing conditions, geopolitical uncertainties, the extent of elections across the globe, the cost-of-living crisis, climate change, technology, and the rapid pace of digital innovation (including artificial intelligence developments), social and demographic factors and use of social media as some of the macro-environmental factors driving risk in the financial system.

The Governor of the Central Bank highlights that the Central Bank will “continue to focus on ensuring that regulated firms are proactive and effective in identifying, mitigating and managing the risks to consumers and investors” throughout its work to address these challenges.

Pipeline EU legal and regulatory measures to strengthen financial regulation

  • Digital Operational Resilience Act (DORA) addresses digital operational risk in the financial sector and Markets in Crypto Assets Regulation (MiCA) introduces a new European regulatory framework for crypto assets. Please see recent William Fry updates here and here;
  • The EU AI Act. Please see a recent William Fry update here;
  • Replacement of the existing Payments Service Directive 2 (PSD2) with a new Directive and Regulation (PSD3/PSR). For further information please see our update here;
  • The European Single Access Point (ESAP) – a single point of access to public financial and non-financial information to give companies more visibility towards investors;
  • A new Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) legislative package reforming the existing AML Framework;
  • The Retail Investment Strategy designed to enhance protections for consumers and retail investors;
  • Other changes at a sectoral level (e.g. Solvency II review and Basel III reforms).

Risk Outlook

The Central Bank’s risk outlook is grouped broadly into the following risk-related themes:

  • the macroeconomic and geopolitical environment; comprising inflation and interest rate risks, asset valuation and market risks, liquidity and leverage risks and credit and counterparty risks
  • the way regulated entities operate and respond to today’s changing world; comprising consumer and investor detriment risks, operational risks and resilience, risk management practices and risk transfer and data deficiencies and modelling risks.
  • risks driven by longer-term structural forces at play; consisting of climate and other environmental-related risks, financial crime risks and strategic risks.

These risks have shaped the Central Bank’s financial regulation and supervision priorities for 2024 resulting in six overarching supervisory priorities, supported by more detailed supervisory strategies for each of the financial sectors within the Central Bank’s remit. This allows the Central Bank to give firms further detail on its expectations of their sector and what the sector can expect in terms of focused supervisory work.

Supervisory Priorities

The six supervisory priorities are aimed at achieving proactive risk management and a consumer-centric approach by the leadership of firms, so that firms are resilient to macro-environment challenges, and are positioned to appropriately respond to change. They include:

1. Proactive risk management and consumer-centric leadership of firms.

Central Bank’s expected outcome: The leadership of regulated entities take a proactive and forward-looking approach to managing the risks and uncertainties facing their organisations and their customers. This would see regulated entities adapting their approach to take account of:

  • the scale and complexity of their business models
  • the changing operating environment; and
  • the heightened risks and uncertainties facing firms while actively considering their customers’ interests.

2. Firms are resilient to the challenging macro environment.

Central Bank’s expected outcome: Regulated entities are resilient and well-prepared for macro environment risks, including the impact of potential interest rate rises, economic uncertainty and further deterioration in asset values. The Central Bank expects firms to adequately prepare for, mitigate and be aware of the potential consequences for their customers of shocks caused by greater uncertainty and heightened risk.

3. Firms address operating framework deficiencies.

Central Bank’s expected outcome: Deficiencies identified in the governance, risk management and control frameworks of regulated entities are addressed to ensure they are effective, both in the current environment and into the future. A holistic approach to operational resilience and implementing robust Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) controls as the financial system evolves and risk levels rise will be important in this context.

4. Firms manage change effectively.

Central Bank’s expected outcome: Regulated entities keep pace with changes in the financial system and consumer needs and expectations through the well-managed evolution of their business strategies. Cyber security, data security and the maintenance of customer trust, including the ethical use of customers’ data, will require investment and focus by firms.

5. Climate change and Net Zero transition are addressed.

Central Bank’s expected outcome: Regulated entities improve their response to climate change and enhance their role in the transition to a Net Zero economy. The Central Bank commits to undertaking specific initiatives related to understanding the materiality of the flood protection gap in Ireland and scrutinising and mitigating the risk of greenwashing in the promotion and sale of financial products to investors.

6. The Central Bank enhances how it regulates and supervises.

Central Bank’s expected outcome: The Central Bank continues to improve and transform its approach to regulation and supervision to ensure that it can carry on fulfilling its mission and mandate in a rapidly changing financial ecosystem. This will be aided by continued investment in its supervisory approach to be more data-driven, agile and scalable.

Sectoral Focus

Against the backdrop of the increasing scale and complexity of regulated firms, growth in certain sectors and consolidation in others, the Central Bank’s supervisory strategy, focus and activities consider the specific circumstances of each sector. In the RSO, the Central Bank has helpfully set out trends, risks and vulnerabilities specific to each financial services sector.

For each sector covered, a Key Risk Overview is provided, which describes the key risk topics the Central Bank considers to be most material from a supervisory perspective over a two-year time horizon. Sectoral risk overviews are detailed and feature the following key sectors:

Banking sector – Banks’ abilities to manage their asset and liability risk, credit risk (including vulnerable asset portfolios), operational risk and consumer protection are seen by the Central Bank as fundamental.  Banks will be subject to a thematic review on engagement with borrowers in, or facing, early arrears. Assessment of Banks’ implementation of ESG supervisory expectations and remediation actions, and their progress towards enhancing ESG disclosures is also on the supervisory agenda.

Payment Institutions and Electronic Money Institutions sector – The supervisory priorities concerning this sector include addressing deficiencies in safeguarding, governance, risk management and control frameworks, conduct and culture, business models, operational resilience and outsourcing. These issues might arise, for example, in cases where such a firm’s rates of growth and ambition have outpaced the firm’s operational, governance, compliance and risk management capabilities. For further information please see our related update here.

Retail Credit Firms and Credit Servicing Firms sector – The Central Bank will look at how such firms engage with borrowers in, or facing, early arrears (under a thematic review). Other supervisory activities will include the robust authorisation process for new/transitional Retail Credit Firms and the implementation of the EU Credit Servicing Directive. The Central Bank will engage with firms concerning their operational capacity ensuring that firms have the necessary processes and controls in place to engage with borrowers and manage loan books. These firms will also be challenged to resolve distressed debt.

Insurance and Reinsurance sector – There will be a supervisory focus on the integration of climate change and sustainability considerations by (re)insurers and, in particular, firms’ assessment of the materiality of their climate risk exposures, as outlined in the climate guidance issued by the Central Bank in March 2023. Please see our briefing here for further information. The Central Bank will concentrate on or commence several reviews, including reviews on:

  • Reserving assumptions in light of higher inflation and interest rate scenarios.
  • Governance and underwriting in sectors or business lines which have grown or changed in risk profile.
  • Adequacy of governance arrangements where third-country branches are used to conduct regulated functions or activities.
  • Oversight of critical outsourcing relationships and maturity of operational resilience frameworks.
  • Targeted reviews on consumer protection risk management frameworks, health insurance renewal process, and customer service.

Asset Management and Investment Funds sector – Risks in the funds sector reflect structural vulnerabilities in parts of the sector such as leverage and liquidity mismatches, the impact of market volatility, market conduct risks, and the degree of interconnectedness with the wider financial system and economy. Key supervisory activities will relate to and include risk-based scrutiny and approval of prospectus applications, fund applications, fund service provider applications and new trading venues, European Securities and Markets Authority (ESMA) initiatives (e.g. on the Sustainable Finance Disclosure Regulation and the Depositary Peer Review), EU Green Bond authorisations, thematic reviews and assessments, artificial intelligence (AI) and market abuse. For further information on the Asset Management and Investment Funds sector please see our February 2024 update here.

MIFID Investment Firms – The Central Bank will conduct risk assessments on (i) compliance and risk resourcing and effectiveness and (ii) IT and operational risk frameworks. There will also be a focus on the application of the Markets in Financial Instruments Directive (MIFID) II marketing and advertising requirements, and the integration of sustainability requirements in firms’ suitability assessments and product governance processes.

Other sectors included in the RSO and not covered in this briefing include credit unions, high cost credit providers and the retail intermediary sector.


Included in the RSO are some topic-specific sections (called Spotlights) which cover topics such as Consumer Protection, Artificial Intelligence and Financial Crime.

Please see the Central Bank press release for further information on the RSO and the Knowledge section of our website for other related briefings, insights and thought leadership.

Contact Us

Our cross-sectoral Financial Regulation specialists can assist you with any regulatory queries. For more information, please contact Shane Kelleher, Hilary Rogers, Patricia Taylor, any member of the Financial Regulation team or your usual William Fry contact.


Contributed by Jane Balfe