Finance industry representatives have warned the Central Bank that it could deter banks coming into the market in the Brexit exodus if it imposes plans for workers in the industry to gain at least six months' supervised experience for each financial product they may be involved in.
The Central Bank is set to outline new rules on minimum competency requirements for financial firms dealing with consumers next month, having put its existing code, introduced in 2011, out to consultation last November.
The incoming rules are designed to reflect existing and incoming European Union rules, including guidelines from the European Securities and Markets Authority for knowledge and competence surrounding complex investment products under the Markets in Financial Instruments Directive II, which is effective from January.
The Banking and Payments Federation Ireland said in a submission to the Central Bank, obtained by The Irish Times, that applying a "one-size six-month minimum standard" irrespective of the complexity of financial products "is disproportionate and will have a range of unintended consequences".
“Based on a literal interpretation of the proposal, in order for an individual to meet the minimum standards for all [eight] retail financial products covered by MCC [minimum competency code], that person would need to work under supervision for a period of four years,” the federation submission said. “This does not seem proportionate, practical or reasonable.”
Passporting regime
The lobby group warned that the code, if introduced as planned, would set more onerous requirements in this area than other EU jurisdictions, increase barriers for oversees firms seeking to enter the Irish market, and “conflict with the current passporting regime” for financial services across the EU.
Irish authorities say they have clinched deals with more than a dozen London-based banks and finance houses to move some of their operations to Dublin in preparation for Brexit.
Kieran Donoghue, the head of international financial services at IDA Ireland, said these included “one American bank” with each firm looking at offices ranging in size from 10 to 500 staff.
The Bank of England has told financial firms to provide it with details of their Brexit plans by July 14th and to be ready for all possible outcomes, including a hard Brexit.
The proposals would restrict movement of staff and place a “significant administration burden” on financial firms.
“The consequences for the industry would be significant, with a particular impact on branches or offices where there are small numbers of staff,” it said. “It would be difficult if not impossible to supervise promoted staff in new roles, especially where only one of that role exists, eg branch manager, team leader. There may be negative impacts for consumers if firms find that they are unable it provide a full range of services.”
The federation highlighted that firms are already bound by the Central Bank’s fitness and probity regime to ensure that staff have the required competence and skills for relevant functions, whether gained through training or experience.
A spokeswoman for the Central Bank said the bank plans to publish the outcome of this consultation “in the coming weeks”, she said.
