Central Bank of Ireland Review of Delegation by Fund Management Companies

The Irish funds sector has grown substantially since CP86 was published in 2016, with assets tripling to €5.6 trillion and authorized funds rising 50% to 9,000, supported by 121 FMCs.
Following a review of delegation practices across FMCs, the Central Bank's Feedback Report endorses the delegation and outsourcing model, recognizing the access to specialized expertise, global investment capabilities and operational efficiencies it brings to investors.
Despite the benefits, delegation raises supervisory challenges, and the Central Bank found that FMCs generally operate "effective delegation frameworks," provided they retain ultimate responsibility and sufficient resources to oversee delegated activity.
The Report sets out supervisory expectations across five key areas, Governance, Portfolio Management, Risk Management, Delegate Oversight and Data Capabilities, identifying both good practices and areas requiring enhancement.
FMCs are expected to benchmark their own policies and delegation frameworks against the Central Bank's findings and put a time-bound plan in place to close any gaps by year's end, ahead of a broader review of the FMC guidance that may bring further regulatory change.

Key Takeaways