Clearing House Group Minutes - Department of Taoiseach

2. Minutes and Matters arising
The Minutes of the meeting of 27 January 2011, as circulated, were agreed.
Tim Hennessy updated the meeting on the Statutory Audit Directive (SI 220 of 2010).
Arranged by D/EJI, DIMA attended a meeting along with D/Finance and Central Bank of
Ireland representatives. DIMA's strong preference is for re/insurance companies to be
exempted from the public interest entity ('PIE') definition - the UK and Luxembourg which
are competing international insurance centres opted for this exemption in their
implementation of the Directive. Mr Hennessy suggested that the D/EJI had gold plated the
implementation by requiring two independent directors per the SI as opposed to one within
the Directive. The D/EJI appeared unwilling to amend the SI to exempt re/insurance
companies from the PIE definition but seemed willing to address the confusion caused by the
definition of 'independent director' and to look at the appropriateness of the SI for captive
re/insurers.
Mr Hennessy expressed concern at the compounding impact of regulation / legislation. In the
case of SI 220 there is duplication and inconsistency with the CBI Corporate Governance
Code of 2010 (the 'Code'). The CBI Code is effective from 1 January 2011 with transitional
provisions to 30 June 2011. Despite this industry still awaits the FAQ's from CBI - the delay
in clarification is making it difficult from a practical perspective for companies to progress
their implementation until issues which required clarification are addressed by CBI.
Referencing the discussions at previous meetings on the proposed regulatory guidelines for
the implementation of the 3rd AML Directive, Gary Palmer noted that a number of
significant issues still remained. Noting that the funds industry was an internationally disintermediated
industry the issues around the reliance on third parties and what
activity/information must be undertaken by Irish industry companies was of particular
concern. It was reported that a meeting to include the Department of Finance, the Central
Bank and industry representatives had been scheduled where it would be important to ensure
the conclusion of a framework that provided for an internationally focussed industry,
especially in the light of the challenges posed by the prevailing negative sentiment towards
Ireland.
David Fagan told the meeting that there has recently been a range of new regulatory measures
affecting the industry such as CP41, new Fitness and Probity proposals, SI220 etc. While
these may all make sense individually he felt that it is important that some forum is created to
look at the cumulative impact of these, consistency between them and the communication
around them.
Willie Slattery expressed concern and disappointment that there had been no consultation on
the Audit Directive. He saw no obvious rationale as to why there had been no such
consultation. He stressed that the international financial services industry were fighting to
protect employment and that promulgating legislation in this way was unreasonable
behaviour. He was also concerned with Ireland‟s rating downgrades and specifically the
impact of another downgrade, the possibility of junk status and a potential default rating. He
believed that the regulatory terms now being applied in the domestic banking sector were
over reaching unreasonably into the international financial services sector.
Breda Power told the meeting that the Department of Jobs, Enterprise and Innovation had
specifically consulted with the Funds Industry on the Audit Directive. It had also had a