The Central Bank’s Regulatory and Supervisory Outlook 2025 outlines key themes, risks and supervisory priorities that will shape the Irish financial services industry in 2025.   It highlights the need to balance opportunities like digitalisation and innovation with challenges like geopolitical tensions, political reorientations, dilutions of net zero commitments, and growing regulatory divergence across climate change, financial regulation, crypto regulation, AI, data privacy and DEI policies.

The Report highlights 11 key risk areas: operational resilience and financial crime are areas of elevated risk.  Increased reliance on third parties, the growth of technology-led frameworks, ineffective control and immature risk cultures are highlighted as key drivers of risk growth.

The Report identifies 6 supervisory priorities, 5 of which are cross-sectoral.  Those cross-sectoral priorities cover proactive risk management and consumer-centric leadership; operational and financial resilience; addressing deficiencies in governance, risk management and control frameworks; managing change effectively; and addressing climate change / net zero.

The sixth priority is enhancing how the CBI regulates and supervises.  In addition to the revised Consumer Protection Code (CPC) (due for publication shortly, with a 12-month transition period), the extension of the Senior Executive Accountability Regime to INEDs and the upcoming Standards for Business under the Individual Accountability Framework (IAF), key focus areas include effective DORA implementation, assurances that regulated firms’ have robust risk management capabilities and practices, preparing for the EU AI Act, MiCA implementation, financial crime (also a focus of the Innovation Sandbox Programme), deploying appropriate enforcement mechanisms and addressing climate and environmental challenges.  Regarding fitness and probity (F&P), work will continue on embedding the recommendations of the Enria review, including the operationalisation of a new F&P Unit, publication of a new F&P Assessment Approach and an upcoming consultation on Guidance on F&P Standards.

Operational resilience is a CBI focus area across all regulated firms.  Other notable focus areas include:

Banks

The focus will be on strategic oversight by boards of culture, governance and risk management; improvements to consumer risk frameworks; banks’ ability to aggregate and report data; adequate resourcing of local entities that are part of international bank groups; ensuring effective remediation actions to address gaps in meeting ECB supervisory expectations on climate and environmental risks; reviews of credit risk management and loan origination; and whether banks are meeting CBI expectations re regarding distressed debt management.

Payment and E-Money Firms

The CBI cautions that ambition shouldn’t outpace strength of governance, risk management and internal controls.  Safeguarding remains a key focus area, as is conduct risk, AML / CFT and consumer protection.  The CBI is concerned about insufficient local presence/decision-making by international groups operating in Ireland, and insufficient focus on conduct and consumer protection risks at board level.

Retail Credit Firms

The CBI sees some over-reliance on group structures and decision-making powers, with occasional lack of clarity on how group strategy translates to Irish entities.  The importance of a substantive presence in Ireland is reiterated.  There’ll be a targeted review of executives’ responsibility for strategy, governance and risk management.  The focus on engagement with distressed borrowers, and operational capacity in light of loan sales, will continue.

Securities Markets

Supervision will focus on robust outsourcing and IT risk management frameworks, sustainable finance disclosures in prospectuses, and a supervisory approach to EU Green Bonds and ESG bonds.

Investment Firms

Investment firms, focus areas include conflicts of interest; implementation of the CRD and IFD remuneration frameworks; disclosure standards under SFDR; maturity / effectiveness of governance and controls; product governance; client asset arrangements; complaints handling; disclosures regarding innovative products; marketing / advertising communications; enhancing regulatory returns; and embedding enhanced social media monitoring capabilities.

Legal and Regulatory Backdrop

The Report highlights the key EU and Irish legal and regulatory developments which will influence the operations of regulated firms.  The European Commission’s approach is shaped by the European Commission Work Programme 2025 and the European Competitiveness Compass.  Focus areas include operational resilience/DORA, the AI Act, MiCA, the operationalisation of the new EU Anti-Money Laundering Authority, the upcoming communication on Savings and Investment Union, the omnibus simplification agenda, Basel III, the European Accessibility Act, ESAP, the Instant Payments Regulation and PSD3/PSR, the Insurance Recovery and Resolution Directive and the Solvency II review, MiCA, the Retail Investment Strategy, the SFDR review and the Listing Act.

From an Irish perspective, key areas are the Access to Cash Bill, the revised CPC, changes to the credit union lending framework, implementing the recommendations in the Funds Sector 2030 Report, the IAF, operationalising the National Payments Strategy, and the new National Literacy Strategy.

Related Insights

Central Bank introduces its New Supervisory Approach

Central Bank’s Regulatory & Supervisory Outlook 2025: Funds Sector Impact

CBI Regulatory and Supervisory Outlook Report 2025 – Insurance

To discuss the Report in more detail, please get in touch with your usual contact in our Financial Regulation, Asset Management and Investment Funds and Insurance groups.