The regulatory regime applicable to banksi The regulator
The Central Bank is responsible for the prudential regulation and conduct of business of financial institutions in Ireland, and was established under the Central Bank Act 1942. This legislation has been subject to extensive amendment since its enactment.
From November 2014, banks have been subject to EU-wide regulation under the SSM. On 29 October 2013, the two regulations comprising the SSM were published in the Official Journal of the European Union. The first, conferring specific tasks on the European Central Bank (ECB) in relation to the prudential supervision of credit institutions, came into force five days later, and the second, amending the regulation governing the operation of the European Banking Authority, came into force on 30 October 2013. The ECB assumed its supervisory role on 4 November 2014.ii Objectives
The Central Bank is required to ensure proper and effective regulation of financial institutions and markets, to ensure that the interests of consumers are protected and to ensure the stability of the financial system overall.
In the context of the regulation of financial institutions and markets, the objective of regulation in Ireland is to minimise the risks of systemic failure or insolvency of an institution by ensuring compliance with prudential and other requirements.
The Central Bank is responsible for developing rules governing the authorisation of financial services providers and for the continuing supervision of the entities that it has authorised (including as part of the SSM).iii Legislation in respect of the regulation of financial institutions
The primary legislation in respect of the regulation of banks is the Central Bank Acts 1942 to 2018.
Building societies and credit unions are primarily regulated under the Building Societies Act 1989 and the Credit Union Act 1997 respectively.
In addition, certain guidelines and codes have been issued by the Central Bank with which regulated entities are obliged to comply. For example, the Central Bank's Consumer Protection Code sets out conduct of business requirements applicable to banking services (and other types of financial services) provided in Ireland.iv Legal structures of banks
Most banks are established as limited liability companies, although in the past, the Central Bank has authorised banks established as unlimited companies with limited liability holding companies. Building societies and credit unions are typically constituted as mutual societies.