Out-Law News | 21 Oct 2020 | 8:52 am | 2 min. read
The Central Bank of Ireland (CBI) is adding three new roles to its list of pre-approval controlled functions (PCFs), as well as splitting the existing PCF role for fund management companies into six separate functions.
The CBI said the new roles were being introduced due to the increasing importance of and reliance on IT by regulated financial services providers (RFSPs), as well as the changing landscape of Ireland’s banking sector caused by Brexit.
The three new PCFs are chief information officer (PCF-49), head of material business line (PCF-50) and head of market risk (PCF-51).
The chief information officer role applies to all regulated firms, except credit unions, and will apply where the RFSP has a high or medium high prudential impact risk, or where IT is a key enabler or core element of the firm’s business model.
“Impacted RFSPs will need to assess the requirement for a new chief information officer PCF-49 role and assess whether such a position already exists which meets the substance of the role and complete the in-situ return, or whether the size or complexity of the RFSP’s business warrants its introduction,” said financial services regulation expert Aongus McCarthy of Pinsent Masons, the law firm behind Out-Law.
Meanwhile, the ‘designated person’ role (PCF-39) currently required to be held by designated persons for fund management companies is to be split into six separate roles to be labelled PCF-39A to F.
The six roles are aligned to the six managerial functions set out in the CBI’s UCITS regulations, alternative investment fund rulebook, and fund management companies guidance: capital and financial management; operational risk management; fund risk management; investment management; distribution; and regulatory compliance.
Affected RFSPs will have to submit a list of the individuals performing each role and submit it through an in-situ return to the CBI within six weeks of the amending regulations coming into effect on 5 October 2020.
However, individuals already working in one of the new PCF roles when the regulations came into effect are not required to seek CBI approval to continue.
The material business line and market risk roles will be applicable to banks and other 'credit institutions', within the meaning of the 2014 EU (Capital Requirements) Regulations.
Heads of material business line will manage business lines within banks with gross total assets equal to or in excess of €10 billion (£9 billion) or accounted for 10% or more of gross revenue. Heads of market risk should be appointed where the credit institution holds €500m or more of risk-weighted assets, or trades €100bn of notional derivatives.
The CBI said firms should carry out quantitative assessments to see if they meet the criteria, and if so, put new appointments forward for pre-approval. The approved individual would remain in the role until they left it, even if the quantitative criteria then fluctuated.
The CBI said individuals can occupy two PCF roles, and there was no requirement for a PCF to be in existence if the size or complexity of a firm’s business did not warrant it. It reminded firms that it was the function rather than a job title which determined if someone fell under a PCF category.
The announcement follows a consultation on the proposals which took place earlier this year.
04 Mar 2020