Financial Governance: AFME Regulatory proposal
AFME responds to CBI's Consultation Paper 153 on enhancing financial services governance. They appreciate CBI's work on the IAF but suggest amendments for alignment, split responsibilities, and enforcement clarity.
AFME Responds to CBI on Enhanced Governance in Financial Services
The Association for Financial Markets in Europe (AFME) has shared its response to the Central Bank of Ireland's (CBI) Consultation Paper 153, which focuses on enhancing governance, performance, and accountability in financial services. AFME, representing a wide range of European and global participants in wholesale financial markets, welcomes the consultation and appreciates the work done by the CBI on the Individual Accountability Framework (IAF). However, AFME's response highlights areas where amendments or further clarification would be beneficial, such as aligning implementation dates, reconsidering the prohibition on splitting responsibilities, and providing clarity on enforcement expectations. Additionally, AFME suggests that the CBI engage in dialogue with affected firms on the guidance of reasonable steps, further clarify the applicability of Conduct Standards to delegates, and provide more guidance on the IAF's operation concerning individuals based abroad.
Governance and Accountability in Financial Services
The AFME's response suggests several potential changes to the regulation, which could have implications for financial institutions operating in Ireland and potentially other European and global participants in wholesale financial markets. Specifically, the suggested changes relate to aligning implementation dates, reconsidering the prohibition on splitting responsibilities, providing clarity on enforcement expectations, and offering further guidance on the operation of the IAF concerning individuals based abroad.
By aligning implementation dates and reconsidering the prohibition on splitting responsibilities, the CBI could give firms more flexibility and adaptability in applying the IAF to their unique structures and business models. This could lead to more effective governance, enhanced oversight, and increased efficiency in resource allocation.
Additionally, the AFME's suggestions for further clarification and guidance on enforcement expectations and the applicability of Conduct Standards could help alleviate potential competitive disadvantages for international banks in Ireland. This may promote a more level playing field, attract talent, and contribute to a stronger and more vibrant financial services sector in Ireland and across Europe.
Engaging in dialogue with affected firms on the guidance of reasonable steps would allow the CBI to better understand industry concerns and challenges, leading to the development of more targeted and effective regulations. This could result in improved compliance, reduced risk, and a more stable and secure financial services industry.
Furthermore, providing more guidance on the IAF's operation concerning individuals based abroad could help address practical and legal challenges faced by firms, fostering better cross-border cooperation and harmonization of governance standards. This could contribute to a more integrated and efficient European financial market, benefiting both businesses and consumers.
To comply with potential changes resulting from AFME's suggestions, financial institutions should:
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Actively monitor updates and communications from the Central Bank of Ireland.
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Align implementation plans with clarified requirements and adjust responsibilities accordingly.
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Adapt processes and procedures to meet enforcement expectations.
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Engage in dialogue with the CBI and affected firms to understand and comply with reasonable steps.
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Ensure proper understanding and application of Conduct Standards to delegates based on CBI's clarifications.
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Make adjustments to practices and procedures concerning individuals based abroad according to additional CBI guidance.
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