AIB, Bank of Ireland and PTSB face €6.5m rise in regulatory fees

AIB, Bank of Ireland and Permanent TSB face having to pay an extra €6.5 million between them this year to cover the cost of being regulated by the Central Bank of Ireland.

This has emerged from the Central Bank’s guide to funding regulations for 2016, which shows that its budget for regulating the financial sector will rise by 8 per cent to €148.3 million.

At present, the cost of regulating the financial sector is split 50-50 between the firms and the Central Bank, with some exceptions.

For example, AIB (including EBS), Bank of Ireland and PTSB, who were covered by the Government’s eligible-liabilities guarantee scheme from 2009, pay all of the cost of their regulation, while credit unions have their fees capped at €1.4 million a year.

The domestic banks will pay €29.9 million between them this year, up from €23.4 million. This is the biggest contribution by any category of firms.

Insurers will pay €17.4 million, up €2.2 million on 2015, while securities and investment firms, as well as investment fund service providers, must pay €12.4 million, up from €10.7 million previously.

At the other end of the scale, some 39 moneylenders will pay €391,000 between them, while 13 bureaus de change will pay €12,000.

In total, the various firms are being asked to pay €79.1 million to cover their share of the cost of regulation in 2016, a rise of 19.5 per cent.

Opposition

The regulator had previously proposed recouping all of the cost from the companies but this met with opposition from the firms and the Central Bank settled on the old formula for this year.

However, it is understood it will move to recouping all of its costs on a phased basis over the next few years, starting in 2017 by charging firms 65 per cent.

Insurance Ireland chief executive Kevin Thompson has raised concerns about this move, citing issues around the cost of the Central Bank's defined-benefit pension scheme.

“Insurance Ireland wants a strong regulator for customer protection and to realise the growth potential of the sector but the industry cannot be tied into unlimited cost increases,” he said.

“The industry’s contribution of 50 per cent of funding is already increasing next year. The funding model has to be accompanied by an agreement on service standards and cost efficiencies. This is in addition to finding a resolution to the challenge of funding a defined-benefit pension scheme.”

The Central Bank said this year’s increased budget reflected the growth of the sector and number of firms and funds regulated, notably in the International Financial Services Centre.

It also cited the additional mandates it had taken on and the complexity of the regulations it is tasked with supervising and enforcing.