Financial Services Regulatory Update – September 2024 Round Up

Government Legislation Programme: Autumn 2024

On 18 September 2024, the Government published its Legislation Programme for the Autumn 2024 session (here). Key pieces of legislation relating to financial services include:

• Finance (Provision of Access to Cash Infrastructure) Bill 2024 (here) (Bill has completed Dáil Éireann, Second Stage): Bill seeking to ensure that sufficient access to cash is available in the State, and that any further evolution of the cash infrastructure will be managed in a fair, orderly, transparent and equitable manner.
• Financial Services and Pensions Ombudsman (Amendment) Bill 2023 (here) (Bill currently before Dáil Éireann, Third Stage): Bill amending the Financial Services and Pensions Ombudsman Act 2017 to account for the decision in Zalewski v Adjudication Officer and Workplace Relations Commission [2021] IESC 24 (see our briefing here).
• Credit Review Bill 2024 (here) (Bill has completed Dáil Éireann, First Stage): Bill to provide for the establishment of a body to be known as “An tSeirbhís um Athbhreithniú Creidmheasa”, and to provide for related functions.
• Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill (Heads of Bill in Preparation): Bill to amend the Criminal Justice Act 2010 to ensure “crypto-asset service providers” come within the scope of Ireland’s anti-money laundering and countering the financing of terrorism (“AML/CFT”) regime (ahead of the pending coming into application of the Markets in Crypto-Assets Regulation (“MiCA”), which is to apply in full from 30 December 2024).
• Health Insurance (Amendment) Bill (Heads of Bill approved in September 2024): Bill to amend the definition of “high-cost claims credits” in the Health Insurance Act 1994; to amend the Health Insurance Act 1994 to specify the amount of premium to be paid from the Risk Equalisation Fund in respect of certain classes of insured persons; to make a consequential amendment to the Stamp Duties Consolidation Act 1999; and to provide for related matters.
• Asset Covered Securities (Amendment) Bill (Heads of Bill in Preparation): Bill to amend the Asset Covered Securities Act 2001 to allow for the carrying on of asset covered securities business by credit institutions that are not restricted to the carrying on of asset covered securities business only, and to provide for related matters.

CBI updates Q&As on the Minimum Competency Code 2017

The Central Bank of Ireland (“CBI”) has published an updated Q&A document (here) on the Minimum Competency Code 2017 (the “MCC 2017”) and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48 (1)) Minimum Competency Regulations 2017.

The MCC 2017 sets out minimum professional standards for persons providing certain financial services, in particular when dealing with consumers. The aim is to ensure that consumers obtain a minimum acceptable level of competence from individuals acting for or on behalf of regulated firms in the provision of advice and information and associated activities in connection with retail financial products.

Significantly, the CBI recently published an Addendum (here) to the MCC 2017 that will recognise sustainability knowledge and competence as part of the Code, and that seeks to ensure that anyone advising on or selling sustainable financial products and services is appropriately qualified to do so, with effect from 1 January 2025.

Consultation on National Discretions contained in the ESAP Legislative Package

On 6 September 2024, the Department of Finance launched a consultation (here) on national discretions contained in the EU legislative package establishing the European Single Access Point (“ESAP”). Once in operation, the ESAP will offer a single access point for public financial and sustainability-related information about EU companies and investment products.

The ESAP package, which comprises the ESAP Establishing Regulation, the ESAP Omnibus Amending Directive and the ESAP Omnibus Amending Regulation, entered into force on 9 January 2024, and is due to be transposed into Irish law by 10 July 2025.

The consultation by the Department of Finance runs until 1 November 2024.

Addenda to the CPC 2012 and the CCMA 2013

The CBI has published an Addendum (here) to the Consumer Protection Code 2012 (the “CPC 2012”) and an Addendum (here) to the Code of Conduct on Mortgage Arrears 2013 (the “CCMA 2013”), making amendments arising from the introduction of the European Union (Credit Servicers and Credit Purchasers) Regulations 2023 (the “Credit Servicing Regulations 2023”).

For more information on the Credit Servicing Regulations, which transposed the EU Credit Servicing Directive, see our earlier briefing here.

Final Milestone in LIBOR Transition

On 30 September 2024, the 1-, 3- and 6-month synthetic USD LIBOR settings ceased permanently after their final publication on 30 September 2024. Until now, the UK Financial Conduct Authority (the “FCA”) required ICE Benchmark Administration Limited (“IBA”) to continue to publish the 1-, 3- and 6-month USD LIBOR settings in synthetic form.

The cessation of the last remaining LIBOR settings is the final milestone in the transition away from LIBOR and will mark the end of LIBOR overall.

EBA’s 2024 Transparency Exercise

On 9 September 2024, the European Banking Authority (“EBA”) announced (here) that it has launched its 2024 EU-wide transparency exercise. The transparency exercise provides comprehensive data and visualisation tools, with the aim of enhancing transparency and confidence in the resilience and stability of the EU financial system. The exercise complements the EBA’s bi-annual stress tests, and uses supervisory reporting data to provide a picture of banks' capital strength, risk exposures and asset quality.

The results of the transparency exercise will be published at the end of November 2024, together with the release of a risk assessment report.

Credit Union Resolution Levy / Phase 3 of the Credit Union (Amendment) Act 2023

On 24 September 2024, the Minister for Finance announced (here) that the levy rate for the Credit Union Institutions Resolution Fund for 2025 has been set at 0% and that Phase 3 of the Credit Union (Amendment) Act 2023 is effective as of 30 September 2024.

Key provisions commenced in Phase 3 include:

• credit unions can engage in loan participation and loan syndication;
• credit unions can refer members to another credit union where they are unable to provide a service; and
• credit union boards will be allowed to review plans and policies every three years, instead of annually.

Consultation on National Discretions under CCD II

On 19 September 2024, the Department of Finance published a consultation (here) on the national implementation of the revised Consumer Credit Directive (“CCD II”).

CCD II was published in the Official Journal of the EU on 30 October 2023. EU Member States have until 20 November 2025 to transpose the CCD II, with measures to apply from 20 November 2026.

The majority of CCD II provisions will be transposed on a fully harmonised basis across the EU. However, the Directive contains certain national discretions, affording each EU Member State a discretion as to whether or not to adopt the discretionary provision in question.

The Department of Finance’s consultation runs until 16 October 2024. Submissions can be made via the portal here.

Relatedly, the Department of Finance has published a regulatory impact analysis (here) of CCD II.

Authorisation Guidance for Retail Credit Firms / Home Reversion Firms

The CBI has published a guidance note (here) on completing an application for authorisation as a “retail credit firm” or a “home reversion firm” under the Central Bank Act 1997 (as amended).

More information is available via the CBI’s portal here.

EBA issues Revised List of ITS Validation Rules

On 12 September 2024, the EBA released an updated list of validation rules (here) with regard to the implementing technical standards (“ITS”) on supervisory reporting. This update specifically identifies the rules that have been deactivated due to inaccuracies or the potential for IT issues. Competent authorities across the EU are advised that data submitted in compliance with the ITS should not be formally validated against the deactivated rules.

Delay to Launch of Eurosystem Collateral Management System

The Governing Council of the European Central Bank (“ECB”) has decided to reschedule the launch of the new Eurosystem Collateral Management System (“ECMS”) to the first half of 2025 (see details here). The ECMS will be a unified system for managing assets mobilised as collateral in Eurosystem credit operations. Once in operation, it will replace the existing individual collateral management systems belonging to the national central banks of euro area countries.

EIOPA consults on Proposed Technical Standards following Solvency II Review

On 1 October 2024, in accordance with the Solvency II review process, the European Insurance and Occupational Pensions Authority (“EIOPA”) launched a series of consultations on draft RTS and draft ITS as regards proposed changes to the prudential framework for insurance and reinsurance undertakings in the EU.

The consultations relate to the following proposed technical standards:

• draft RTS on liquidity risk management plans (here);
• draft RTS on the criteria for the identification of exceptional sector-wide shocks (here);
• draft RTS on undertakings under dominant or significant influence, or managed on a unified basis (here);
• draft RTS on relevant insurance and reinsurance undertakings with respect to the host Member State’s market (here); and
• draft ITS on scenarios for best estimate valuations for life insurance obligations (here).

Each consultation by EIOPA runs until 2 January 2025.

Next Steps for the Selection of CTPs by ESMA (in accordance with MiFIR)

On 30 September 2024, the European Securities and Markets Authority (“ESMA”) issued a press release (here) containing additional details on the selection of consolidated tapes providers (“CTPs”) for bonds, shares and ETFs, in accordance with the criteria provided for under the Markets in Financial Instruments Regulation (“MiFIR”).

ESMA will launch the selection procedure for the CTP for bonds on Friday 3 January 2025.  ESMA intends to adopt a reasoned decision on the selected applicant within 6 months of the launch (i.e. by early July 2025).

In June 2025, ESMA will launch the selection procedure for the CTP for shares and ETFs with the objective to adopt a reasoned decision on the selected applicant by the end of 2025.

In December 2024, prior to the launch of the first CTP selection procedure, ESMA will publish a feedback statement to its prior consultation (here), which will include final draft technical standards related to the CTP selection procedure.

CBI issues Process Clarification in the light of ESMA’s Guidelines on ESG Funds’ Names

To facilitate orderly implementation of ESMA’s Guidelines on Funds’ Names using ESG or Sustainability-related Terms (here) (see our briefing here), the CBI has established a streamlined filing process for UCITS and AIFs seeking a change of name, and for updates to fund prospectuses, supplements and SFDR annexes based on the requirements of the ESMA Guidelines. Fund managers will be required to certify compliance with ESMA’s Guidelines via an attestation that must be submitted to the CBI with the request seeking a change of name of the UCITS or AIF.

The CBI has issued process clarification regarding fund name changes and updates to pre-contractual documentation (guidance available here).

ESMA’s Guidelines were published on 21 August 2024, and will apply from 21 November 2024 for new UCITS and AIFs. For UCITS and AIFs that existed prior to 21 November 2024, the Guidelines will apply from 21 May 2025.

CBI updates SPV Documentation

The CBI has published updated guidance (here) relating to special purpose vehicles (“SPVs”), including registration guidelines for special purpose entities (“SPEs”) (here), notes on the completion of quarterly reporting (here), and FAQs (here).

Industry Bodies issue Statement on EMIR 3

A number of industry bodies, including the Alternative Investment Management Association (“AIMA”), the European Banking Federation (“EBF”), the European Fund and Asset Management Association (“EFAMA”), the Futures Industry Association (“FIA”), and the International Swaps and Derivatives Association (“ISDA”), have published a statement (here) regarding the application of EMIR 3. The statement expresses concern at the lack of clarity regarding the effective date of application for some EMIR 3 provisions, and urges the European Commission and the European Supervisory Authorities (“ESAs”) to issue a communication clarifying that market participants are not expected to comply with Level 1 provisions under EMIR 3, prior to the date of application of associated Level 2 technical standards.

CBI issues FAQs on MiCA

On 10 September 2024, the CBI made available FAQs (here) on MiCA. The webpage contains information on the process for seeking authorisation as a crypto-asset service provider (“CASP”) under the new regime.

MiCA becomes fully applicable from 30 December 2024. For more information see our MiCA briefing (here) and our “Ireland as a Location for Crypto-Asset Service Providers 2024” briefing (here).

Technical Standards under MiCA

On 30 September 2024, the European Commission adopted a Delegated Regulation (here) containing RTS specifying the requirements, templates and procedures for the handling of complaints relating to asset-referenced tokens (“ARTs”) under MiCA.

In addition, on 24 September 2024,  Implementing Regulation (EU) 2024/2494 (here) was published in the Official Journal of the EU. The Implementing Regulations contains ITS on the application of MiCA with regard to standard forms, templates and procedures for the cooperation and exchange of information between competent authorities, the EBA and ESMA.

EU promotes “AI Pact”

The AI Act entered into force on 1 August 2024 (see our briefings here and here). Certain provisions of the AI Act are already applicable. However, certain requirements (such as those relating to high-risk AI systems, among other provisions) will only become applicable at the end of the 24-month transitional period.

In this context, the European Commission is promoting the “AI Pact”, which seeks industry’s voluntary commitment to anticipate the AI Act, and to start implementing its requirements ahead of the legislative deadline.

More information is available here.

Selected Consultations, Discussion Papers, Speeches and Reports Published

CBI – Fitness and Probity Individual Questionnaire Template (here)

Department of Finance – Consumer Sentiment Banking Survey: August 2024 (here)

EBA – Work Programme 2025 (here)

ECB Survey of Monetary Analysts: Aggregated Results: September 2024 (here)

EIOPA – Single Programming Document 2025-2027 (here)

European Commission – “The Future of European Competitiveness: A Competitiveness Strategy for Europe” (report by Mario Draghi) (here)

International Capital Markets Association (“ICMA”) – ICMA Quarterly Report: Q4 2024 (here)

ISDA – ISDA in Review (incorporating link to updated ISDA OTC Derivatives Compliance Calendar): September 2024 (here)

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McCann FitzGerald regularly publishes briefings on topics relevant to financial services, among other briefings. You may be interested in the following briefings:

• Artificial Intelligence Liability Directive – Time to catch up (here)
• Bend, don’t break: Flexible State Pension options introduced (here)
• Case C-768/21 – Land Hessen: Data protection authorities are not obliged to exercise corrective powers in all cases of infringement (here)
• Clear High Court recognition of the media’s right of access to court records (here)
• Employment Permits Act 2024 – Reform to the Employment Permits Process (here)
• EU Digital Operational Resilience Act: are you in scope of the new requirements? (here)
• High Court finds plaintiffs are ‘time-barred’ from joining Google in defamation action concerning YouTube (here)
• ICCL designated as Ireland’s first qualified entity under the Representative Actions Act 2023: what to expect (here)
• Ireland as a Location for Crypto Asset Service Providers 2024 (here)
• NIS 2 implementation by October 2024: Government publishes General Scheme of National Cyber Security Bill (here)
• Proposed Changes to Broadcasting Codes and Rules (here)
• Recent Supreme Court case considers unfair dismissal (here)
• Report on the Taxation of Share-based Remuneration in Ireland (here)
• Tracker Mortgages and the FSPO: Court of Appeal reverses High Court and Clarifies Deference Owed to the Ombudsman (here)
• Welcome Clarifications for Sales by Mortgagees (here)