In a speech made earlier this week to the Institute of International and European Affairs, Central Bank of Ireland Deputy Governor Cyril Roux made mention of some of the post Brexit vote fallout that is now underway in the UK.
The Central Bank of Ireland acts as the financial regulator for the country.
Cyril Roux, Central Bank of Ireland
Specifically, Mr. Roux confirmed that there has been a material increase in the number of authorisation queries from UK licensed firms since the UK referendum.
Apparently, an increasing number of FCA regulated brokers and other financial institutions are nervous about how Brexit will be effected, and whether or not regulatory passporting to the rest of Europe will remain in place. Not taking any chances, those FCA regulated brokers are looking now to receive parallel licensing in EU jurisdictions, with Ireland being an obvious choice given Dublin’s proximity to the UK, and the use of English.
According to Mr. Roux:
Many of these engagements have been preliminary in nature. But several have moved in the pre-application or application phase and this is likely to continue in the coming months as UK firms prepare for the possibility of a loss of passporting rights into the EU.
In his address Mr. Roux seemed to be encouraging the practice. He stated that:
Potential applicants will find the Central Bank to be engaged, efficient, open, and rigorous.
As far as London based firms remaining totally in the UK while holding a Central Bank of Ireland license in order to serve EU clients, Mr. Roux said that outsourcing and insourcing are acceptable – but only up to a point. One may outsource activities, but one may not outsource responsibility. A firm may not outsource to the extent that it is effectively hollowing out its regulated activity.
Mr. Roux concluded his remarks by saying that the Irish financial sector is set to grow, and quite possibly to a significant extent. And, that as regulator, the Central Bank is committed to meeting the challenge.
A transcript of Mr Roux’s full speech can be seen on the Central Bank of Ireland website here.