Keynote Speech by Gerry Cross Director, Capital Markets and Funds at Central Bank of Ireland Annual Retail Intermediaries Roadshow - The evolving regulation of financial intermediaries

Introduction

Good morning and welcome to the Central Bank of Ireland’s annual Retail Intermediaries Roadshow. I am delighted to have the opportunity to speak in person with representatives from across this diverse sector. This event is an important one as it allows us to engage together and to exchange views and perspectives.

Role of regulation and the financial system

Financial regulation and supervision, key functions of the Central Bank, are essential components of ensuring a well-functioning financial system.

Delivering on the Central Bank’s four safeguarding outcomes - the protection of consumer and investor interests, the integrity of the financial system, the safety and soundness of firms, and financial stability - guides all our work.

Retail intermediaries play a significant role in a well-functioning financial system. Participants at today’s event provide an important interface between consumers and financial products and services. 

A financial system that works well is vital for citizens, for businesses, and for the economy.

Regulators and the financial industry have significant common ground in supporting these broader outcomes. At the same time, we should not expect there to be a full alignment between industry and regulatory objectives. Consumers need to have good levels of trust and confidence that the financial system is designed to, and will, deliver for them. Regulatory challenge and a robust regulatory framework play an important role in making sure that this is in fact the case. 

I will start my remarks today by speaking broadly about where we are in relation to the outcomes that we seek to achieve. Then I will consider a number of themes related to the role of retail intermediaries in a well-functioning financial system. These include:

• The importance of the sector for consumers;
• The outcomes that the Central Bank sees as important for this sector; and
• Simplification and proportionality in regulation and supervision.

We have also set aside time for a Q&A and I look forward to hearing the questions that you have on the topics that are of most importance to you.

The current landscape

Resilience

Looking across the financial system, substantial progress has been made in recent years in the area of financial resilience. We have seen firms demonstrate resilience in the face of adverse shocks – including Brexit, COVID-19, and the Russian invasion of Ukraine. It is important to continue to secure and maintain this resilience given the continuing volatile and uncertain macro environment.

Operational resilience – the ability of firms and of the financial services sector as a whole to identify, respond to, recover and learn from an operational disruption – remains an increasingly challenging topic. It requires important focus over the coming period.

Operational disruption is a high probability and often high impact risk. As well as threatening a firm’s business, it can significantly negatively impact the interests of clients. Moreover, the interconnections and interdependencies within the financial system create a risk that a problem faced by one firm could be faced by or transmitted to others.

It is important that all intermediaries have plans in place to recover from, and to support their customers during, events of operational disruption. These should of course be appropriate to and commensurate with the size, scale and complexity of their business.

Retail investor participation

A broad general challenge is that in much of Europe, including Ireland, we have relatively high household savings levels but low levels of retail participation in capital markets. The European Commission’s Strategy and Blueprint for Savings and Investment Union (SIU) seeks to redress this balance somewhat and to ensure that EU citizens who wish to do so have better opportunities to invest in capital markets.

Forthcoming consumer research and analysis that will shortly be published by the Central Bank shows that Ireland has low levels of direct retail participation in capital markets. The majority of Irish consumers are not engaging in this type of direct investment opportunity. The reasons for this include issues around accessing information and advice, perceptions of suitability (“it’s not really meant for someone like me”), and levels of financial literacy that need enhancing. 

Experience from other jurisdictions indicates that availability and choice of suitable products, providers and delivery channels; and access to advice and information are factors that support consumers to participate in capital markets. Retail intermediaries have an important role to play in delivering both of these enablers. The Central Bank’s role, including engaging with the industry, to ensure that consumers have confidence that their interests will be secured, is a key component in supporting this outcome. This objective has underpinned our recent reform of the Consumer Protection Code, including the newly articulated obligation to secure customers’ interests. I will say more about this in a few minutes.

Turning for a moment inward to look at the Central Bank itself, the OECD recently carried out a review of the Central Bank’s financial consumer protection supervisory functions against the G20/OECD High-level Principles on Financial Consumer Protection, the international standard in this space. The OECD concluded[1] that the Central Bank is aligned with international principles, and has appropriate policies and practices in place to identify risks and improve outcomes for consumers.

At the same time, the OECD identified areas where we could further strengthen our financial consumer protection supervisory functions. These findings tell us that, while we have achieved much in terms of our core mandate of protecting consumers, we must also broaden our sights and ensure that we are proactively embedding the consumer experience and consumer perspective into our approach. As a regulator that is committed to continuous improvement, this will continue to be a focus for us in 2026.

Role of retail intermediaries

At the Central Bank, we recognise the very important role that retail intermediaries play in the Irish financial services market for consumers.

In numerical terms, the retail intermediaries sector is one of the largest financial sectors in Ireland relative to the overall number of regulated financial service providers operating here, and the significant proportion of Irish consumers that use their services. The sector is of particular economic and social importance as it is a key distribution channel for insurance, pensions and investments, and mortgage products.

The sector comprises around 2,500 regulated firms, including a large number of small businesses servicing customers across every county in Ireland. The sector is very diverse and also includes large intermediaries servicing hundreds of thousands of customers. While many retail intermediaries hold multiple licences allowing them to facilitate consumer access to a range of product types, some focus on particular parts of the market such as insurance, mortgages, or investments.

This extensive network of intermediaries helps to ensure that consumers throughout the State can access the financial products and services they need for their day-to-day lives.

At a time where many financial services have moved online – something which brings many benefits and which many intermediaries have engaged with - intermediaries also allow consumers that prefer a face-to-face and personal service to choose to access financial services in this way. We see the wider societal benefits that this brings.

Consumers can be overwhelmed by the different product options available, and may find the level of technical jargon, or complexities of the products in the market, off-putting. We recognise that intermediaries help to bridge that gap, navigating consumers through the many options available, giving tailored advice, based on an understanding of their clients’ circumstances.

By providing access and choice to consumers, and helping them to navigate the range of financial products and services available, retail intermediaries play a key role in ensuring that the financial system is fulfilling one of its basic functions – providing useful and suitable financial products and services to ordinary people.

Looking to the future, the sector’s continued contribution to quality financial inclusion, and the core outcome of financial wellbeing for consumers is ever more important given the increasingly complex and ever-changing world that we operate within.

There is also a significant amount of consolidation occurring in the sector, and the Central Bank will continue to monitor this through our current strategic cycle. By further enhancing our understanding of consolidation and its impact for firms and consumers, we can adapt our supervision and engage with the sector in a meaningful way as it evolves.

Outcomes that the Central Bank sees as most important for this sector

Next, I want to address a number of outcomes that the Central Bank sees as a priority for this sector. Overall, we aim to ensure a well-functioning and accessible financial system where sustainably profitable, resilient, well-run firms have securing client interests at the core of their culture. Consumer should have availability and choice, and be empowered to make effective decisions to meet their financial needs. They should be able to access a range of products suitable for and supportive of their financial wellbeing and offering good value. Innovation and competition within the financial services market are important in this regard.

All firms in the distribution chain have important roles to play in this, working together to secure consumers’ interests and provide value for money. In their role as the client-facing advisor, retail intermediaries represent a particularly important part of this system. Consumers rely heavily on their intermediary. This means that they should have confidence that the firm they use will perform competently and professionally, will deploy the appropriate level of expertise, and that it will always act so as to secure the customer’s best interests. Consumers can suffer poor outcomes when firms do not meet these expected standards, which could result in firms providing poor advice or recommending an unsuitable product that is not aligned to the consumer’s needs and circumstances. 

Consumer Protection Code

In terms of the regulatory framework, you will hear more later today about the recent revisions to the Central Bank’s Consumer Protection Code which will come into force in March 2026. Our review of the Code included extensive engagement with industry, with other organisations and with individuals. I want to expressly and warmly thank this sector for your valuable contribution to that process.

One of our key objectives in amending the Code has been to ensure that customers are at the heart of the culture, strategy and business models of financial services firms - including retail intermediaries.

This is addressed through a new securing customers’ interests standard which is designed to ensure that their clients’ interests are always at the heart of firms’ business and focuses on outcomes rather than detailed rules. The securing customers’ interests obligation is supported by carefully considered guidance.

We hope that this will help firms to understand the things they need to consider, the actions they need to take, and the mindset they should have towards their customers. We think that this regulatory approach will deliver significant benefits. We have seen that many of the decisions that firms must make are in circumstances where detailed rules do not apply. When firms internalise the outcome, when their business decisions are guided by the need to secure their customers interests, the outcomes are materially improved.

Supervisory approach

At the Central Bank, we also continue to improve and transform our approach to supervision to continue to ensure we fulfil our mission in a rapidly changing financial ecosystem. Our new supervisory framework, effective since January 2025, remains risk-based and seeks to be increasingly outcomes-focused. It has evolved to deliver a more integrated approach to supervision, drawing on all elements of our mandate (consumer and investor protection, safety and soundness, financial stability and integrity of the system). This positions us better as an organisation to meet our objectives of ensuring consumers of financial services are protected in a changing and increasingly complex and interconnected financial landscape.

Retail intermediaries are one of the sectors regulated and supervised by the Central Bank under our new supervisory framework, with each sector supervised in an integrated, holistic way, with a multi-year supervisory strategy that is refreshed annually to ensure emerging risks are considered. The priorities for the Central Bank in this sector include:

• That retail intermediaries are correctly seen to be highly competent and professional, able to provide high quality advice and to meet their customers’ needs. Firms should deliver this consistently,  securing their customers interests.
• That they operate remuneration models that avoid undue conflicts of interest, are clear, fair and transparent, and deliver optimal results for customers. Consumers should fully understand how services are paid for and the amount that they are paying. Receipt of commission payments should not impair intermediaries’ obligations to serve consumers best interests.
• That they are operationally resilient, including against cyber risk. This includes of course, larger intermediaries who provide products that are essential in the day-to-day lives of consumers, and serve a significant proportion of the population.
• And that the sector as a whole provides potential investors who may wish to participate in capital markets with access to a full range of good quality investment products that meet their investment needs.

Unregulated Activities

Another area of focus for the Central Bank is unregulated activity. This has been a problematic issue. Because of the way some firms have approached this issue, individuals have lost money. More generally, overall confidence that the system works consistently in individuals’ best interest is likely to have been impacted.

Consumers need real clarity and confidence as to what is regulated and what is not regulated. Products that are outside the scope of regulation do not benefit from the protections afforded by the regulatory regime.

Where regulated firms engage in both regulated and unregulated activities, there is real risk that consumers may misunderstand both the risks and the protections when accessing unregulated products or services.

The so-called “halo” effect is real and powerful. Consumers see a financial firm that is regulated by the Central Bank and they, rightly, believe that this is important. They don’t expect there to be caveats on that quality mark.

Remember, under the revised Consumer Protection Code it is a regulated firm’s responsibility to ensure that it secures its customers’ (and potential customers’) interests at all times.

The revised Code requires regulated firms to ensure that their customers or potential customers do not understand an activity to be, or to carry the protections of, a regulated activity where this is not the case.

Our new guidance sets clear expectations on the use of branding and other marketing tools. Were a regulated firm to deploy its brand in the sale of non-regulated products or services, the risk of confusion could be material.

This risk of confusion is materially heightened where the unregulated product has similar features to regulated products. We have seen this in the recent past with certain unregulated investment products. Such products may be complex and come with the significant risk of investor loss.

What this means is that under the revised Code it is unlikely to be possible for regulated firms, under the same or similar branding, to offer products or services which are unregulated and which bear similarity to regulated products or services, as they are unlikely to be able to demonstrate that the risks of confusion have been effectively mitigated.

We will engage further with the sector in 2026 on the topic of unregulated activity. We will be focusing on how firms are meeting these expectations. We will seek to better understand relevant governance and decision-making as well as a firm’s culture and strategy, and how offerings are likely to be perceived and understood by clients. Firms must be able to demonstrate the steps taken to secure customers interests and deliver the right outcomes.

Simplification and Proportionality

The final topic I want to speak about is simplification and proportionality. There has been a lot of focus at European level on the simplification of regulation, including financial regulation. Simplification is an agenda the Central Bank welcomes and is actively considering. Regulators should always be open to reviewing existing frameworks, and seeing if we can deliver the same outcomes in simpler ways. At the same time, current rules are there for a reason. Simpler standards does not mean lower standards. Far from it in fact. Simplification is about achieving the same important outcomes in a more straightforward manner if and where that is possible. 

Simplification includes making sure regulation is outcomes focused and workable. It therefore requires engagement with stakeholders – both regulated firms and users of financial services. I have already mentioned the recent revisions to our Consumer Protection Code. In carrying out our strategic review of the Code, being open and engaged, and gathering feedback from those impacted, was a key priority for us, and that feedback is reflected in particular in the guidance that accompanies the revised Code.

Simplifying also means rigorously applying the principles of necessity and proportionality. In terms of proportionality, we recognise that regulatory requirements impose compliance costs on firms, and such costs are generally passed on to customers. Therefore, such rules should seek to achieve their objective in a way that is cost-effective and proportionate. Requirements should be proportionate in terms of achieving the outcome sought without being unduly burdensome or costly. Proportionality has been and continues to be at the heart of our approach to high quality regulation.

I want to highlight some of the steps the Central Bank is taking to enhance our proportionate supervisory approach for intermediaries.

Streamlined authorisation for sole traders becoming single director companies

We are currently working on a new, streamlined authorisation process for sole traders who propose to become single director companies. Under this new approach, we hope that applicants will complete a short form designed to simplify the process while ensuring that all key requirements remain in place. We anticipate that this new approach will recognise that the key people, business model and operations of the sole trader remain unchanged, and therefore, a more efficient process is appropriate. If a sole trader is seeking to amend their business model or add an additional authorisation, it will be required to go through the full authorisation process.

This initiative is part of our ongoing commitment to reducing unnecessary administrative burdens while maintaining strong standards of oversight and consumer protection.

Fitness and Probity

Following the Central Bank’s recent CP160 Consultation on Fitness & Probity, we expect to make a number of amendments to the fitness and probity regime and in doing so we will seek to take account of the nature and scale of retail intermediary firms.

Industry communications

As demonstrated by our recent industry report setting out the findings of our thematic review of retail intermediaries’ fair versus limited analysis of the market,² we aim to ensure that industry communications are delivered in a straightforward manner. Rather than seeking to impose additional rules or requirements on firms, these communications are intended to assist and support firms by clarifying our expectations around existing rules and regulations in a simple, meaningful way, instead of creating an additional burden.

We call out where we see good standards of compliance across the sector, but also where improvements are needed. We also identify good practices which we have observed within firms, as we know that an important way to raise standards across a sector is for firms to learn from each other. We will continue to assess how we can deliver our supervisory findings in an effective manner that works for everyone.

These are just a few examples of how we are seeking to deliver smarter, simpler regulation. By smart regulation, I mean regulation that is proportionate, targeted on outcomes, and adaptive to changing circumstances.

Our approach will continue to evolve as needed for the retail intermediaries sector. It will do so so that it can most effectively support the delivery of the outcomes which I believe we all share: a well-functioning financial system supporting the economy and the financial wellbeing of citizens.

Many thanks for your attention. I now look forward to our Questions and Answers.