Section 32D of the Central Bank Act provides that, with the approval of the Minister for Finance, the Central Bank Commission may make regulations requiring regulated firms to pay a levy in respect of the cost of regulation.
The Central Bank is moving on a trajectory that will see all regulated financial firms, with the exception of Credit Unions, paying 100% of the cost of regulation by 2024. The paper outlining this approach “Funding the cost of regulation” is available at the following link. In order to achieve the move to full industry funding, I recently approved the Central Bank to increase the proportion of financial regulation costs to be recovered from firms on a phased basis to 100% by 2024.
In relation to the credit union sector, I approved an exception which will see the cost of the levy to that sector being increased on a phased basis to 50% to be reached by 2021, at which time a review of the impact on the sector and a public consultation regarding increasing the levy beyond 50% will take place. Since 2004 the amount of the Industry Funding Levy payable by each credit union has been capped at a rate of 0.01% of total assets.
There is no estimate at present for the cost of regulation of the financial industry by the Central Bank for 2019, however, the 2018 cost was €213 million. Based on existing funding from industry for 2018, moving to 100% funding for that year, by reducing the subvention, would have meant estimated savings of €68 million for 2018. In 2018, Credit Unions paid €1.6 million towards the cost of their regulation under the Industry Funding Levy. Therefore, Credit Unions currently contribute approximately 8% to the cost of their regulation.
Full details of the Funding of Financial Regulation activities is available in the Central Bank of Ireland Annual Report 2018 available at: http://centralbank.ie/docs/default-source/publications/corporate-reports/annual-reports/2018-central-bank-annual-report.pdf?sfvrsn=17 The aforementioned paper "Funding the cost of regulation" is available here: https://www.centralbank.ie/docs/default-source/regulation/how-we-regulate/fees-levies/industry-funding-levy/funding-the-cost-of-financial-regulation.pdf?sfvrsn=6