Cost of regulation has doubled since 2009, Central Bank says
The cost of financial regulation has more then doubled since 2009, the Central Bank has said. The figure has grown from €60.2m in 2009 to €139m last year.
Around half that cost is funded from within the industry, but it is proposed that this should increase to full industry funding. The exception will be the credit union sector, where plans are under way to have its contribution increased to 50pc.
It is estimated that this year, €67m will be paid by the Central Bank to meet regulation costs.
The Department of Finance and Central Bank yesterday launched a public consultation on the proposed move to full industry funding. The paper warns that the cost of regulation is likely to increase further over the coming years, putting further pressure on the taxpayer.
"The financial services sector in Ireland has experienced a period of unprecedented regulator challenge and change since the economic crisis of 2008," the paper said.
"The Central Bank and industry have responded to the proliferation of legislative regulation by increasing the level of resources devoted to regulatory and compliance matters resulting in an increase in costs.
"Costs in the period since the crisis have accordingly risen from a lower base of €60.2m in 2009 to €139m in 2014 in order to fulfil the mandate of protecting consumers and safeguarding stability."
As well as the impact on the financial services sector and across individual firms, the consultation will also assess any potential impact on consumers.
The paper argues that full industry funding would increase the reserves held by the Central Bank, benefiting the Exchequer.
Under the current arrangement, there are anomalies. For example, the Central Bank recovers its full supervisory costs in respect of AIB, Bank of Ireland and Permanent TSB. But other credit institutions and industry sectors contribute 50pc, with the exception of credit unions, whose contributions are capped at about 8pc. But the Central Bank is phasing in a move to 50pc industry funding for the credit union sector by gradually increasing the cap upwards from next year.
"It is prudent to elicit views on a move to 100pc funding of the cost of financial regulation and its potential introduction in 2016, not only because of pressure on public finances but also from a transparency point of view, ie charging financial service providers directly for the full cost of their supervision rather than, in effect, the general public paying for approximately 50pc of such costs," the consultation paper states.
The consultation period runs from yesterday until September 25.