Ireland needs to overhaul its funds regime to protect investors, Central Bank of Ireland deputy governor Matthew Elderfield told the Irish Funds Industry Association today.

Getting the regulatory framework right for investor protection is important for the reputation of the IFSC and the success of the funds industry, he said.

“Our concern is one of investor protection along a number of dimensions: ensuring that the investment that is available has an appropriate risk profile for the type of customer involved; ensuring adequate disclosure to investors so they can make an informed choice about risk; addressing operational risks related to valuation or protection of assets, and reducing the risk of fraud and other financial crime problems.”

Funds may be different from other financial services sectors, but it is still vitally important to get the right regulatory framework in place so that investor protection is assured, Mr Elderfield told the conference.

“This will improve the reputation of Ireland as an international financial services sector and support the success of the funds industry.”

With the implementation of new EU-wide legislation related to the Alternative Investment Fund Managers Directive (AIFMD), regulators across Europe are looking at how they harmonise the legislation with their existing regimes for non-Ucits funds. Mr Elderfield told the IFIA the implementation of the AIFMD provided an opportunity for a systematic rethink of Ireland’s non-UCITS regime.

Alternative investment funds, which are separate to Ucits funds, refer mainly to hedge funds and private equity funds. Most non-Ucit funds use the qualifying investor fund structure. Ireland is a major centre for both retail Ucit funds and alternative investment funds. Last month the total assets under administration in Ireland passed the €2 trillion mark.

The Government is acutely aware that regulatory developments in Europe pose both opportunities and challenges for the industry, Taoiseach Enda Kenny told the IFIA conference.

Mr Kenny said the Government would continue working closely with all stakeholders to ensure the best representation for Ireland in European negotiations.

“We remain committed to ensuring that the legal, regulatory and tax environment in which the funds industry operates is supportive of Ireland’s hard earned reputation as a centre of excellence in both the traditional and alternative segments,” he added.