By Russell Burke, Senior Associate Consultant at fscom
Nearly 50 payments and e-money firms have chosen Ireland as their European base, including some of the biggest global names in the fast-growing sector.
This should come as no surprise because Ireland represents a very attractive market. Among its many benefits, it offers a corporate tax rate of 12.5%, a well-educated English-speaking workforce, flexible infrastructure, and a reputation for openness to technology firms.
As a result, we expect more and more payments firms to continue to establish their European bases here. But, before they do, they will need to become regulated. This means making an application for authorisation which will be assessed by the regulator, the Central Bank of Ireland (Central Bank).
At fscom, I have advised many firms and helped them to gain authorisation and, after that, to meet the Central Bank’s ongoing expectations around regulatory compliance. This week, fscom has launched a free-to-download guide which takes firms through the authorisation process in detail, while this blog summarises that process and offers some top tips for a successful application.
Seeking authorisation: a six-step process
The timeframe between applying for authorisation and receiving a decision will vary depending on the quality of the application in relation to the standards laid out by the Central Bank. But, in general, for well prepared applications, a decision should typically come within about nine months of submission. Before applying, firms should ensure they are seeking the appropriate and correct authorisation for the payment and/or e-money services they intend to provide. Once applicants are satisfied with the authorisation they will be seeking, the authorisation process then follows these six key steps:
- Pre-application meeting: Applicants will attend a meeting with the Central Bank, after filling in a Key Facts Document which summarises the main components in the application, at least five working days in advance.
- Making an application: Firms must apply by electronically submitting the Central Bank’s application form and the relevant supporting material.
- Key Information Check: The Central Bank will then check that the material submitted contains the key information and documentation required to proceed to the assessment phase. If anything is missing, the application will not be accepted for the assessment phase. It is common for the Central Bank to return applications at least once before moving into the full assessment phase.
- Assessment phase: The regulator conducts a formal assessment of the application against regulatory requirements, then issues a list of questions (known as comments) to the applicant. The initial round usually contains at least 50 questions, which the applicant must respond to in a timely manner. This phase typically lasts for up to 90 working days with the clock ‘pausing’ while the Central Bank is waiting for an applicant to respond to comments.
- Notification of assessment: If the firm addresses all comments and the Central Bank assesses it favourably, it will issue a letter setting out its intention to authorise the applicant as long as any outstanding requirements are resolved and advises of any conditions of authorisation that may be imposed. Applicants have 21 days to make representations on any of these requirements and conditions.
- Notification of decision: Once any pre-authorisation requirements are satisfied and any proposed conditions accepted, the Central Bank will officially confirm that it has authorised the firm and that it can commence the provision of the regulated payment and/or electronic money services for which permission was sought.
Key areas of focus for the regulator
The authorisation process is lengthy and errors can cause delays or even sometimes outright rejection, which means starting again at considerable time and expense. So, it is well worth preparing properly to get it right first time. One way to do that is to look at the key areas garnering most comments from the Central Bank in previous applications. These include:
- Heart and mind: The regulator will need to see clearly in an application that the vast majority (if not all) of the board members and other Pre-approval Controlled Function (PCF) role holders will be based in Ireland and have the capacity and availability to undertake their specified roles.
- Safeguarding: The Central Bank will want to see confirmation of the opening of an account for safeguarding consumer funds with a reputable credit institution, or appropriate alternative arrangements, before it grants authorisation.
- Wind down plan: The Central Bank will expect to see a wind down plan in place to ensure an orderly cessation of services in the event of a closure, including details of what indicators might trigger an exit from the market and the governance around its execution. We recommend including this plan in the documentation supporting the application, otherwise you will be asked to provide one later.
- Operational readiness: The Central Bank wants to see that firms will be able to promptly get into a state of operational readiness once the assessment phase of the application process begins.
- Interviews: The regulator will usually interview the proposed CEO, CCO, Board Chair and possibly other PCF role holders. These interviews should not concern suitably qualified and experienced candidates – so applicants should ensure their staff do meet these qualifications.
Want to know more about getting authorised and fscom’s advice to help you to navigate that process effectively? Download our free guide to authorisation today here.