Introduction
On 14 December 2015, the Central Bank of Ireland (the "Central Bank") published its programme of themed inspections (the "Programme"), reflecting its supervisory priorities for 2016 and anticipating areas of emerging risk.
The Programme highlights the areas identified by the Central Bank where it feels regulated entities may need to raise compliance standards.
Overview of the proposed themes
The Programme, which supplements the Central Bank's day to day supervisory work, will focus on 12 areas, building on the supervisory work in 2015 in the areas of cyber-security, operational risk and pricing of investment funds:
- Outsourcing Arrangements – service level agreements and operational arrangements with outsourcing providers for Investment Firms, Fund Managers and Fund Service Providers;
- AIFM's adherence to Programme of Activities – review of AIFM's adherence to their programme of activity;
- Risk Function – risk culture within firms including governance arrangements, risk ownership and responsibility;
- Investment funds – analysis of the production costs of investments funds;
- Financial Indices – use of financial indices as eligible investments for UCITS investments funds;
- Director Time Commitments – Continued focus on various issues with director time commitments;
- Client Assets – Review of Client Asset Management Plans (CAMP) for investment firms;
- Information Technology Risk – resilience of firms' IT systems;
- Suitability assessment of clients – review of suitability assessments undertaken by Investment Firms;
- Conduct – information provided to clients on an on-going basis;
- Hedging Arrangements at share class level for investment funds – Review of hedging arrangements at share class level for investment firms; and
- Market Integrity – the practices of firms when dealing with insider information and their compliance with Market Abuse Regulations.
The Central Bank has indicated that the underlying theme for many of these areas is the need to strengthen firms' culture of regulatory compliance. It has also highlighted that it is increasing its inspection activities on firms which are designated as low impact under PRISM. In addition, the Central Bank has stated that it is developing further its data analytics to sharpen the focus of supervisory resources.
Next Steps
We would advise regulated entities to bear the above areas in mind when designing their compliance plans.
Dillon Eustace is available to assist in drafting, reviewing or updating firms' policies and procedures in relation to the areas above. For further information please contact a member of our Regulatory and Compliance Team or your usual Financial Services contact.
A copy of the Programme is available via the following link:
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.