Given the contributing role regulation may have on the competitiveness of the funds industry in Ireland and consequently its reputation, what is the regulatory outlook for 2007 and can we expect a measured approach from the Financial Regulator resulting in a positive impact on the Irish funds industry?
Irish Regulatory Outlook
In November 2006, the Financial Regulator issued its Strategic Plan which is a roadmap for Irish financial services regulation until 2009.
The Financial Regulator referred to aspirations shared by it and industry for a financially stable growing economy and a culture which promotes best international standards and the protection of consumers. To achieve this, the Financial Regulator set out its expectations of industry to implement good governance and sound risk management procedures, to willingly engage with it as regulator and most importantly to commit to protect consumers' interests. Equally the Financial Regulator undertook to strive for proportionate regulation based on extensive consultation and regulatory impact analysis, allow time for industry to adjust to regulatory changes and enforce compliance in a reasonable way.
The Financial Regulator expressed confidence that these expectations would be met given the mutual trust between it and its stakeholders to date. Indeed the Financial Regulator's fitness and probity regime which became effective as of the 1st January 2007 for directors and managers of financial services firms is an important cornerstone of this approach.
The Financial Regulator confirmed its approach to the supervision of regulated financial service providers, including managers, administrators and custodians of collective investment schemes, is risk focused based on the nature of the risks inherent in the business of each financial service provider. Consequently the Financial Regulator utilises greater resources in the areas of greatest risk, for example financial service providers providing services to consumers in the State or holding client money in a fiduciary capacity. This approach is evidenced by the Consumer Protection Code which was introduced by the Financial Regulator in August 2006 to ensure such financial service providers comply with conduct of business rules when dealing with consumers and by the Minimum Competency Requirements which became effective as of the 1st January 2007 whereby individuals acting on behalf of such financial service providers are required to...