I propose to take Questions Nos. 41 and 56 together.
Every year, in order to cover the costs of financial regulation, the Central Bank prescribes levies to be paid by entities subject to such regulation. The Central Bank had briefed industry representatives a number of weeks ago that it was proposing significant increases in those levies in 2015. The proposed increases were driven by a proliferation of legislative regulation and corresponding regulatory activity, a need to meet a shortfall from 2014's levies and an increase in staff pension costs arising from Financial Reporting Standard 17, coupled with prevailing low yields on the bond market.
The Central Bank's original proposals have since been revised to partially mitigate those increases as per a statement of 30th September 2015 published on the Central Bank's website. The revised proposals significantly reduced the increase in pension costs charged to the regulated sector in 2015 which is instead spread over coming years thereby easing the burden on financial services sector firms this year.
It is important to note that a robust regulatory environment benefits the financial services industry by promoting stability, a level playing field and facilitating prudent development and innovation. A well regulated financial services sector also benefits consumers, industry, and the economy at large. In order to ensure a well regulated financial services sector the Central Bank must be sufficiently resourced, particularly in terms of staff who are key to an effective regulatory regime. Pensions are a standard component in financial regulation costs given their link to staff costs.
Under Section 32D of the Central Bank Act 1942, the Central Bank is required to seek my approval for the Regulations prescribing industry levies. Following the publication of the Central Bank's revised proposals, which significantly reduced the pension element of the 2015 levies, I approved the Regulations prescribing the 2015 levies on 7 October last.