The Central Bank and the Financial Regulator recently published their Strategic Plan (the “Plan”) for the period 2010 to 2012, which sets out both organisations’ operations under the newly enacted Central Bank Reform Act, 2010 (the “Act”).     

The Plan reflects the structural changes made to macro- and micro-level financial regulation within Ireland pursuant to the Act. Under the Act the newly formed Central Bank of Ireland (the “Bank”) will be directed by a single unitary board called the Central Bank Commission. The stated primary focus of the Plan is the resolution of the banking crisis through the adoption of an assertive risk-based approach to regulation underpinned by a credible threat of enforcement.

The Plan consists of two main parts. Part A describes the context in which the Plan was prepared and outlines the significant challenges faced by the newly restructured Bank. Part B articulates the high level goals envisaged and how those goals will be implemented, as well as articulating certain organisational issues of the Bank.

The placing of the banking system back on a solid footing, thereby facilitating the strengthening of the overall Irish economy, is acknowledged as being the major challenge and task to be addressed over the lifetime of this Plan. The major new measures and initiatives featured in the Plan include:

• a refocused approach to strengthening the financial system including a new approach to financial stability assessment;
• the development of a new regulatory model with an enhanced supervisory capacity for the detection and correction of problems with a proactive and challenging approach;
• interacting with the new EU supervisory bodies;
• transposing new, evolving international reforms, including EU Directives, for the insurance, banking and funds industries;
• building on consumer protection including a review of the Consumer Protection Code;
  greater attention in economic research; and
• moving towards a 100% charge back arrangement on the costs to industry to reduce the cost to the taxpayer.

The Strategic Plan also states that it will assess the requirement for compulsory mortgage indemnity insurance in the context of the Government’s Working Group on Mortgages.

A significant increase in resources, including recruitment of staff with the necessary skills and experience is acknowledged as being an essential prerequisite to the operation of such an intensive supervisory regime and this is something that is stated by the Governor as being well underway.

For further information, please contact John Larkin.