[PART 3] CBI CP86 Review - the good, the bad and the ugly for ManCos and SMICs.
Updated: Dec 12, 2019
As the Central Bank begins reviewing the thousands of pages submitted to it for the desk-based review phase of its CP86 thematic review, we gaze a little down the road at what the possible outcomes of the CP86 thematic review could be.
In Part 3 of this blog mini-series, we look at the good, the bad and the ugly outcomes for ManCos and SMICs – regardless of whether or not they receive an on-site visit from the Central Bank.
A good outcome would simply be A ‘Dear CEO’ letter from the Central Bank to all ManCos and SMICs that suggests they are broadly satisfied with the way firms have tackled compliance with CP86. The letter would also identify a handful of areas for incremental improvements to be made across the industry within a suggested timeframe.
Even better if the letter provided clear and direct guidance on certain CP86-related matters, such as the Organisational Effectiveness role. This could be in the form of examples of good practice they would now like ManCos and SMICs to embrace further.
A bad outcome would be a ‘Dear CEO’ letter that expressed disappointment with levels of CP86 compliance and committed the Central Bank to an overhaul of the CP86 guidance to strengthen it in a set number of key areas that gave far less room for interpretation by individual ManCos/SMICs
Having completed its CP86 review, the Central Bank could determine that ManCos and SMICs are in fact, a good distance away from where they need to be.
It could conclude that the CP86 approach of issuing guidance was not sufficiently effective in changing behaviours and that something stronger is now required.
This could mean revisiting CP86 to make it more prescriptive and far less flexible and/or undertaking a rule-making exercise to force ManCos and SMICs to up their game by a specific measure.
Given the time and effort it has taken to get this far with CP86 (from both a regulator’s and industry perspective), starting down the rule-making path is not where anybody wants to be. I'm sure the Regulator would not shy away from this approach if it was the best way to get ManCos and SMICs where they need to be but a 'pushy' Dear CEO letter is a more likely outcome in my opinion.
If turning an on-site CP86 inspection into an opportunity to improve your relationship with the Financial Regulator is of interest to your ManCo and/or SMIC...
...we are holding an invite-only (your name has to be on the list to get in on the day) Breakfast Briefing, 9 October 2019 at Maples Law Firm in St. Stephen's Green. ManCos and SMICs are welcome to attend this complimentary session.
Full details and To register your attendance please go here.