IRELAND: Address by Deputy Governor Matthew Elderfield to the Irish Funds Industry Association

Monday October 22 2012

On 12 September 2012, Mr Matthew Elderfield addressed the Irish Funds Industry Association Conference in Dublin. The key message was that that getting the regulatory framework right for investor protection is important for the reputation of the IFSC and the success of the funds industry.

Mr Elderfield discussed how Europe will be the main driver of the regulatory framework for the funds industry in Ireland. However, there is also a domestic regulatory framework in place that is not derived from EU law and which in many cases predates it. The implementation of the AIFMD provides an opportunity to revisit this framework. Mr Elderfield reiterated that the Central Bank of Ireland is working hard on AIFMD implementation with the goal of providing certainty to industry as soon as possible. Gareth Murphy, from the Central Bank of Ireland, is chairing a working group on AIFMD implementation involving representatives from the Department of Finance and industry.

There will also be a public consultation on proposals very shortly; this process provides an opportunity to revisit the domestic framework for non-UCITS funds.

Mr Elderfield went on to state that the Central Bank believe it is important to use the implementation of the AIFMD as an opportunity for a systematic rethink of Ireland’s non-UCITS regime. Their approach will be informed by the principals included in the Taoiseach`s strategy for the international financial services sector, namely the need to carefully re-examine the case for domestic standards which exceed EU requirements, in terms of establishing that they are in the public interest. The Central Bank is prepared to retain additional domestic standards if they believe the public interest test is met. But their starting point is of a rigorous case-by-case reassessment of the existing domestic framework to see whether these domestic requirements need to be retained.

The introduction of the directive also provides an opportunity to revisit the promoter regime for non-UCITS. The AIFMD now imposes significant requirements on fund managers, which would appear to meet many of the objectives of the current domestic promoter framework. It is thought that there may be scope for the Central Bank to provide additional guidance on what they expect of directors when a fund runs into financial or operational difficulties. In that context, they plan to consult on proposals to remove the current promoter regime at least for qualifying investor non-UCITS.