12Feb2019

Brexit Stakeholder Event

When 12 February 2019 8:30 AM
Where Central Bank of Ireland, North Wall Quay, North Dock, Dublin, D01 F7X3

Brexit Stakeholder Event - summary of issues discussed

The Central Bank of Ireland (the Central Bank) hosted a Brexit stakeholder event on 12 February 2019. The event consisted of a panel of senior representatives of the Central Bank, co-chaired by Ed Sibley (Deputy Governor, Prudential Regulation) and Derville Rowland (Director General, Financial Conduct).

Particular focus was given to Brexit-related issues such as preparedness and cliff-edge impacts.

Preparedness Issues

Panel members provided an overview of the issues regarding Brexit preparation work in each of their sectors. Topics addressed included authorisation of new business in Ireland in respect of bank, asset management and insurance firms, as well as cliff-edge effects, the European regulatory landscape, and mitigations in place which aim to ensure that the risks of a no-deal Brexit can be avoided.

The panelists outlined several cliff-edge risks in the event of a no-deal Brexit and disorderly withdrawal from the EU. It was noted that the Central Bank had been working on Brexit preparations since before the 2016 Brexit referendum and preparations are advanced. Much of the work involves engaging with firms to ensure that they have the appropriate level of preparedness in place and also working with National Competent Authorities and with the European Supervisory Authorities, to minimise future risks.

Changing nature of the Irish financial services sector

Panel members highlighted the changing nature of the Irish financial services system. The increase in new authorisations (and expansion of new lines of business for existing authorised entities) are resulting in an increased quantity and range of business activities being undertaken here. Panel members noted the importance of having credible and trusted regulatory frameworks, especially as the financial services sector expands in Ireland. Central Bank representatives stressed that the uplift in applications for authorisations is not diluting the rigorous assessments that firms are subject to.

Post-Brexit landscape

Discussions focused on the future regulatory and financial services landscape following Brexit. It was noted that there are mitigations and measures in place to ensure that the cliff-edge risks of a disorderly Brexit would be minimised. Some of the sharpest risks around delegation of portfolio management to UK investment managers have been dealt with by the signing of the MoU between ESMA and FCA/PRA. The risks around contract continuity in the insurance sector would be dealt with through the Irish Government’s intention to introduce legislation that will allow a temporary run-off regime for existing insurance policies.

The loss of the UK’s regulatory expertise in the EU will present a challenge to Ireland and will require increased engagement on Ireland’s part in relevant EU and international fora. The panelists also pointed to particular policy areas that require determined effort to see further progress, such as the Capital Markets Union.