Dáil Éireann Debate, Thursday - 17 January 2019
65. Deputy Michael McGrath asked the Minister for Finance his views on whether it is necessary to review section 48(1) of the Central Bank (Supervision and Enforcement) Act 2013 and the investment firms regulations 2017 in view of the expected rise in the use of private pensions by workers in the coming years; and if he will make a statement on the matter. [2219/19]
View answerSection 48(1) of the Central Bank (Supervision and Enforcement) Act 2013 (the Act) gives the Central Bank of Ireland the power to make regulations for the proper and effective regulation of regulated financial service providers.
The benefit of Section 48(1) is that it allows the Central Bank to make detailed and technical sector specific Regulations. The approach adopted in Section 48 was agreed following extensive discussion with the Attorney General’s Office. The Central Bank’s discretion in making Regulations is limited to setting standards and procedures, which is appropriate to its role as a regulatory authority. Regulations made under Section 48 must be effective and proportionate having regard to the nature, scale and complexity of the regulated entities. Furthermore, consultation provisions are set out in Section 49 of the Act, which require, amongst other things, that the Central Bank consult with me as Minister for Finance before making regulations.
Prior to this Act, the Central Bank already had extensive powers to set out detailed regulatory standards across a number of areas, including consumer protections, client assets, account switching and related party lending. However, providing the Central Bank with the power to make Regulations, the Central Bank now has the means to put these requirements on a statutory basis, thereby underpinning the importance of compliance and allowing for a commensurate level of sanctions, as a breach of the Regulations is a prescribed contravention and subject to the Administrative Sanctions Procedure.
The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms) Regulations 2017 (the 2017 Regulations) apply to MiFID investment firms and to certain investment business firms authorised under the Investment Intermediaries Act 1995. These Regulations were introduced by the Central Bank to give full effect to the Markets in Financial Instruments Directive II (MiFID II), which was transposed into Irish law by S.I. 375 of 2017.
The 2017 Regulations, for example, include the client asset regime that applies to MiFID firms and Investment Intermediary firms which are based in Ireland. Ireland invoked the Member State discretion under MiFID II that allows for gold-plating of the client asset requirements as set out in the Directive. This means we have a client asset regime in Ireland that is over and above what is required at European level.
The 2017 Regulations along with the additional provisions imposed on investment firms based in Ireland due to MiFID II are only in effect since 3 January 2018.
Regarding the proposed implementation of an automatic enrolment pension system which will lead to a rise in private pensions by workers, my colleague the Minister for Employment Affairs and Social Protection, Regina Doherty, has primary responsibility in this area. However, I have been informed that the detailed evidence building and consultation processes required to deliver an automatic enrolment system is now being undertaken within an initial project planning phase. This will involve an investigation of the potential organisational models for delivery and the likely costs involved. It will also include an assessment of whether a trust-based model, under a Master Trust regime, or a contract-based model will be pursued and whether additional levels of regulation will be required.
Until this work is completed and a preferred model chosen, it is not possible to confirm the specific operational structure and design characteristics of the automatic enrolment system.
