Banking industry calls for regulatory reset to protect competitiveness, investment and growth
- New BPFI report pinpoints range of measures to help achieve uniform application of EU rules for firms operating in Ireland
- Proposals address key issues including impact of gold-plating EU regulations on Irish based firms and the development of local single rule book to cut undue complexity and provide greater clarity
Tuesday 2nd September 2025 – A new report published today by Banking & Payments Federation Ireland (BPFI) is calling for the rebalancing of banking regulation both at a domestic and wider EU level. The report, Regulating for Growth – A Roadmap for Simplification, highlights the need to protect Ireland’s status as a leading global financial hub by improving the regulatory environment, cutting costs for businesses and positioning the banking sector to deliver on investment gaps.
In line with the EU-wide push on regulatory simplification, the report sets out measures to steamline and create a more uniform application of EU rules to ensure Irish-based firms can compete fairly across the bloc, ultimately safeguarding the sector’s competitiveness while supporting the long-term stability of the financial system.
The report, which has been submitted to the Central Bank of Ireland and the Department of Finance, comes as the Government prepares to publish its Action Plan on Competitiveness and Productivity, and the development of a new Ireland for Finance Strategy.It also follows the publication of the EU Commission’s Competitiveness Compass, a roadmap to revive Europe’s economic growth and the establishment by the ECB of a taskforce to report on regulatory simplification later this year.
Key recommendations within the report focus on addressing issues such as the gold-plating of EU rules, (where Irish regulations go above and beyond the requirements of European standards) which can deter international investment and places Irish based firms at a competitive disadvantage; the need for a ‘local single rulebook’ to bring greater clarity to supervisory expectations for firms operating in Ireland; and a more transparent and consistent approach to ‘proportionality’ or how rules are applied depending on a firms size and risk profile. The report also proposes longer-term structural changesincluding a call for legislative change to explicitly introduce and formalise a competition mandate for the Central Bank of Ireland.
Speaking on the publication of today’s report Brian Hayes, Chief Executive, BPFI said: “The banking sector in Ireland fully recognises the financial stability and resilience that has been hard won by firms and our regulators since the global financial crisis. After a decade and a half of intense EU regulatory reform however it is time for a reset. As highlighted by our report today, what we want to see is a common EU rule book applied consistently and proportionately across the Single Market. It is equally important to note that this report does not argue for deregulation – no bank operating in Ireland is arguing for light touch regulation. We also fully recognise that national discretions, capital add ons and gold plating are not unique to Ireland. They remain a feature of EU fragmentation.”
“With Europe’s competitiveness under mounting pressure there is now a clear consensus across the EU, from both public and private sectors, that overly complex regulation is diminishing EU growth. The former President of the ECB Mario Draghi could not have been clearer in his Report on Competitiveness last year, in recognising the €800bn annual investment gap that is needed for the EU. A competitive Europe needs a competitive banking sector able to deliver capital where it is needed. Crucially, this debate on EU regulatory simplification is not happening in a vacuum and has also to be placed in the context of UK and US changes which cannot leave Europe’s economy and banks in a less competitive position.”
“Ireland needs to place itself very much front and centre in this debate. As the 5th largest financial services centre in the EU we need a regulatory environment that is fit for the future and which ensures our financial institutions can retain their competitive edge on the global stage”
“An overly complex regulatory environment can act as an “internal tariff” against EU firms. The IMF estimates[1] that the EU’s internal barriers are equivalent to a tariff of 44% for manufacturing and 110% for services. Between 2019-24 the EU Banking package issued approximately 13,000 new regulations and guidelines equating to 15,000 pages of rules and a doubling of regulations from the previous five years.”
“It is within this context we have developed today’s report which ultimately calls out the need for a uniform application of the EU single rulebook for Irish based firms and in doing so provides a range of proposals in terms of how this can be achieved”.
“Ireland’s financial services sector has been a cornerstone of the national economy for decades, attracting global investment and providing thousands of high-skilled jobs. With the publication of the Government’s Action Plan on Competitiveness and Productivity imminent, and a new Ireland for Finance strategy under development, now is the time to align regulatory reform with broader economic objectives. The simple fact is if Ireland wants to maintain its position as a leading global financial hub, we must act decisively to streamline our domestic regulatory framework, avoid unnecessary gold-plating of EU rules, and reduce the cost pressures facing firms here.”
The BPFI Report Regulating for Growth – A Roadmap for Simplification can be downloaded here.
Key recommendations from the report include:
Unlevel playing field/Gold-plating – where Irish regulations “gold-plate” some EU rules, creating unique domestic burdens that can put local firms at a competitive disadvantage, can deter new entrants or encourage existing firms to relocate.
- Commit to transparent and faithful application of EU regulations, avoiding introduction of additional domestic rules in areas covered by EU requirements, and transparently articulating how/why EU requirements are insufficient in the Irish context where additional rules are applied.
- Clarify and adhere fully to home/host principles in relation to EEA Branches – Ireland’s role as a regulatory host country for EEA branches is crucial for its financial services ecosystem. However, the current supervisory approach to these inward branches diverges from the established ‘Home & Host’ principles, creating unnecessary complexities.
- Publication of clear, consolidated principles and guidance in relation to Fitness & Probity requirements in the context of international groups – F&P requirements for local PCFs for branches of EEA firms and restrictions on dual-hatting make it challenging for international banks to operate a streamlined governance structure
Supervisory Approach – approach can be inconsistent, unpredictable, and create an unnecessary administrative burden for both firms and the regulator. An undue focus on process rather than the underlying risk, as well as lack of practical application of proportionality, contributes to a challenging operating environment.
- Develop and maintain a comprehensive, easily navigable and consolidated local single rulebook.
- Expanding the “Regulatory and Supervisory Outlook” to include more detailed annual thematic guidance notes enabling proactive preparation and enhancing compliance.
- Establishing clearer feedback mechanisms to enhance the learning loop between the CBI and firms, enabling more targeted improvements.
Proportionality – a “one-size-fits-all” approach that applies complex regulations to all firms not taking account of firm’s size, complexity, and risk profile, leading to an unduly burdensome and inefficient outcome for smaller institutions, placing them at a competitive disadvantage relative to their larger peers and discouraging new market entrants.
- Review Irish outsourcing guidelines which impose stricter notification, due diligence and risk assessment demands than the EBA guidelines.
- Review climate risk expectations for Less Significant Institutions as current approach uses requirements designed for Significant Institutions which may not be suitable for less complex institutions.
- Review/remove Client Asset Rule application to credit institutions, which imposes a significant, disproportionate burden given their different risk profiles and existing banking regulations which achieve similar outcomes and asset protection.
Structural reforms – longer-term structural reforms and strategic initiatives that require the active leadership and collaboration of the Department of Finance, European Commission and relevant EU regulatory authorities.
- Initiation of legislative changes by the Department of Finance to explicitly introduce and formalise the competition mandate for the CBI, alongside its existing primary objectives of financial stability and consumer protection. This would require a clear articulation in relevant legislation, placing an explicit legal duty on the CBI to consider and balance these objectives in all its regulatory, supervisory, and policy-making activities.
- Implementation of a formal, time-bound “regulatory pause” on the introduction of non-critical new financial services legislation by the European Commission, in conjunction with EU co-legislators to address the near-constant stream of new directives, regulations, and implementing technical standards to which the European financial services sector is subjected. The cumulative impact of these layered regulations is rarely assessed comprehensively at the EU level, leading to potential overlaps, inconsistencies, and unintended consequences that hinder genuine cross-border integration and efficient resource allocation across the Union.
- Formalise and significantly strengthen the integration of “simplicity by design” principle in the development of all future financial services, legislation, delegated acts and guidelines by the European Commission and EU regulatory authorities. Current EU processes for developing financial services legislation often prioritise addressing perceived risks through detailed, prescriptive rules, without sufficient explicit and upfront consideration for their complexity, proportionality, or overall impact on the competitiveness and growth of the EU financial sector.
ENDS/
Note: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland. Together with its affiliates, the Federation of International Banks in Ireland, and the Fintech & Payments Association of Ireland, BPFI has over 110 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace.
Contact:
Fiona Murphy, Head of Communications, fiona.murphy@bpfi.ie or Jillian Heffernan, Director of Communications, jillian.heffernan@bpfi.ie
[1] IMF (2024), Europe’s Choice: Policies for Growth and Resilience. Accessible at: https://www.imf.org/en/News/Articles/2024/12/15/sp121624-europes-choice-policies-for-growth-and-resilience#:~:text=The%20hard%20truth%20is%20that,trade%20barriers%20between%20US%20states.
