Insights

Following stakeholder consultation, the Central Bank of Ireland (CBI) has published ‘Guidance for (Re)Insurance Undertakings on Climate Change Risk’. The following are the key areas outlined for re(insurers) to integrate climate change risk: Appropriate Governance, Materiality Assessment, Scenario Analysis, Strategy & Business Model, Risk Appetite & Risk Management and Reporting.

Over the last few years the ECB have published a series of guidance and best practice publications in the Climate and Environmental (C&E) risk area. These publications and best industry practices indicate that while banks have made progress in incorporating climate-related risk, there is a high level of inconsistency in certain practices and also areas for improvement.

The Central Bank of Ireland has reminded firms of their obligations to align the governance and oversight of MGA arrangements with the outsourcing requirements set out in Solvency II for Critical or Important Functions or Activities.

The Central Bank of Ireland (“CBI”) set out their findings and expectations for Payment and E-Money firms in its “Dear CEO” letter published January 20, 2023. Rather than issuance of specific additional or “new” expectations, it is a re-affirmation of the out regulatory expectations of authorised Payment and E-Money institutions already set out in the December 2021 letter in the same vein. A year on from that letter, it is clear that the CBI believes the industry has a lot more to do.

The Central Bank of Ireland introduced pre-emptive recovery planning requirements in 2021 and all (re)insurance undertakings have been required to have a recovery plan in place since 31 March 2022. Following submission of the first set of recovery plans by High and Medium-High Impact firms, the Central Bank carried out a thematic review and the main observations were communicated to firms.

In May 2022 the European Commission issued a public consultation to gather evidence for its review of the second EU Payment Services Directive (2015/2366), and to inform its continuing work on open finance. The consultation forms part of the Digital Finance Strategy and the Retail Payments Strategy which aims to conduct a comprehensive review of the application and impact of PSD2 to assess whether legislation remains fit for purpose.

Final guidelines on common procedures and methodologies for the supervisory review and evaluation process for investment firms, along with final draft Regulatory Technical Standards on Pillar 2 add-ons for investment firms are published.

The Central Bank of Ireland has announced that the countercyclical capital buffer (CCyB) rate on Irish exposures is to be maintained at 0.5 per cent.

How Grant Thornton can help you to estimate scope emissions for companies that do not report these metrics and incorporate these into banks’ Climate & Risk Quantification framework.

In line with the EU’s ‘Financing Sustainable Growth’ Action Plan 2018, the European Commission adopted a number of delegated acts which will impact (re)insurance undertakings and insurance distributors. These changes will apply from 2 August 2022.

The Central Bank published the Cross Industry Guidance on Operational Resilience in December 2021 expecting firms to be in a position to evidence compliance within two years. It has now issued an Operational Resilience Maturity Assessment to firms in all sectors to assess the level of preparedness in the financial services industry.

This is the first article from Grant Thornton in our series on the Central Bank of Ireland (Central Bank)’s recovery plan Requirements. This introductory article provides an overview of the key requirements of the legislation, the timelines involved and main topics included in your recovery plan.