Banking Sector Compliance Issues Emerge as Major Concern for Irish Regulators
The Central Bank of Ireland has published its Regulatory and Supervisory Outlook 2024, highlighting the increasing importance of proactive risk management and a consumer-centric approach in the banking sector. The report outlines six key priorities for regulators, focusing on ensuring firms are resilient in the face of economic uncertainty and geopolitical tensions.
Key Challenges Facing the Financial Sector
The financial sector is facing a complex and rapidly changing environment, characterized by:
- Macroeconomic and geopolitical drivers: Global economic trends, trade policies, and international relations
- Firm-level responses to market changes: How regulated entities adapt to changing market conditions
- Long-term structural forces: Shifts in technology, demographics, and societal values
The report identifies three broad themes that drive these challenges:
Risks Driven by the Macroeconomic and Geopolitical Environment
- Economic uncertainty and volatility
- Geopolitical tensions and their impact on global markets
Risks Driven by How Regulated Entities Operate
- Firm-level risk management practices
- Response to market changes and regulatory requirements
Risks Driven by Longer-term Structural Forces
- Technological advancements and their impact on financial services
- Changing consumer behavior and expectations
Central Bank Priorities for 2024
The Central Bank’s priorities for 2024 include:
- Implementing a revised Consumer Protection Code: Enhancing protections for consumers in the banking sector
- Progressing work on systemic risks from the non-bank sector: Identifying and mitigating risks posed by non-bank financial institutions
- Continuing to address macroprudential risks: Managing risks that could threaten the stability of the financial system
Governor Gabriel Makhlouf emphasized the need for vigilance in light of the changed macro policy and risk landscape, stating that the financial system must be resilient in the face of challenging and uncertain operating conditions.
Conclusion
The publication of the Regulatory and Supervisory Outlook 2024 marks an annual report setting out the Central Bank’s view on key trends and risks facing the financial sector, along with its regulatory and supervisory priorities. The report aims to provide firms with a clear understanding of the Central Bank’s expectations and what they can expect in terms of focused supervisory work.