Dáil Éireann Debate, Tuesday - 8 February 2022
249. Deputy Ged Nash asked the Minister for Finance the number of electronic money institutions licences that were authorised by the Central Bank in 2020 and 2021; the total and average length of time it is taking the Central Bank to assess these applications from the date of submission; if the Central Bank is adequately resourced to handle the volume of applications in tabular form; and if he will make a statement on the matter. [6197/22]
View answerThe authorisation and supervision of financial service firms such as electronic money institutions is the responsibility of the Central Bank of Ireland, as competent authority of such entities.
It should be noted that the approval or refusal of applications made by any firm to the Central Bank of Ireland is not a matter which the Minister or the Department of Finance has any role or involvement in.
I have been informed by the Central Bank of Ireland that it operates a transparent and robust process for applicants seeking authorisation. This process is an important part of the Central Bank’s work to protect consumers and investors, and to ensure the proper functioning of the financial system.
The Payment Services Directive (PSD) and the revised Payment Services Directive (PSD2) established common rules in relation to certain types of electronic payments, such as credit transfers, direct debits, card payments, and mobile and online payments and therefore allows for authorisation of different firms types in this sector. The main business models of these firms are; Electronic Money Institutions (EMIs), Payment Institutions (PIs), Account Information Service Providers (AISPs) and Payment Institution Service Providers (PISPs). There has been a 138% increase in applications processed and authorised in this sector since the legislation came into effect in 2018.
In 2020, the Central Bank authorised 8 such firms, the breakdown of which is below:
- 5 EMI's
- 2 PI's
- 1 AISP
In 2021, the Central Bank authorised 3* firms under PSD2, the breakdown of which is as follows:
- 2 PI's
- 1 AISP
*Other firms reached an advanced stage of the authorisation process but, ultimately chose not to take up the licence.
For applicants applying for authorisation under PSD2, the Central Bank commits to a 90-day assessment service standard in providing an authorisation outcome. The assessment period will be stopped and restarted where the firm does not provide the necessary information to perform the assessment or do not meet the authorisation requirements as set out in PSD2 and relevant European Banking Authority Guidelines. Therefore, the average length of time for the assessment is driven by the firm’s ability to meet the regulatory expectations, which are published on our website.
To date the Central Bank has experienced a varied timeframe to reach authorisation decisions. The timeframe is heavily influenced by the scale and complexity of the business model a firm is attempting to operationalise as well as its level of preparedness and the quality of its engagement with the Central Bank. In a number of cases, the Central Bank have experienced firms continuing to evolve their business model within the live authorisation assessment, which makes the assessment process longer, but which represents a firm using its discretion to change its proposed business model in line with its own business objectives.
The Central Bank provides feedback to ensure that all firms are clear on their authorisation status and their pathway through the authorisation process. The authorisation framework is designed to encourage early and frequent engagement in order to support firms in their preparations for authorisation and operate an effective and efficient authorisation assessment.
The authorisation process is an iterative process. It includes stages which enable firms to approach the Central Bank at the preliminary (or speculative) phase to gain information and guidance about the process. This is particularly the case in new and emerging sectors where applicants may be less informed as it allows them to understand what is required to be granted authorisation and to take the necessary steps to prepare an application that could meet approval.
The most productive engagements arise from firms who are well prepared for such pre-application exchanges. The standards applied by the Central Bank are also a reason why firms continue to apply to be authorised in Ireland as they demonstrate credibility and trustworthiness.
There is an onus on firms to submit rigorous and credible applications to allow a proper and timely assessment to take place Where there are deficiencies in certain areas, or ambiguity around the proposed business, it can take time for the firm and its advisors to furnish information or to put in place measures which brings them in line with the expected standards.
As the financial services sector continues to evolve at rapid pace, the Central Bank anticipates a continuing increase in authorisation applications, including from innovation in the sector.
The Central Bank of Ireland's new Strategy is designed to ensure it can meet the challenges of a changing world and deliver on its mission and vision.
With regard to resourcing for authorisations, I would highlight the strategy includes that the Central Bank’s leaders and the Central Bank Commission will assess and regularly review the status of, and resources deployed to deliver, the Central Bank's strategic objectives.
