saying it will mean a significant increase in levies; will put Ireland at a competitive disadvantage vis-à-vis other financial centres; and could create "additional financial problems" for credit unions.

Consultation
As part of its consultation process on "Impact-Based Levies and Other Levy-Related Matters", the Central Bank invited regulated institutions to respond to its proposals.

Risk-based supervision means that firms whose failure would pose most risk to the economy or to consumers are subject to the highest levels of supervision and that resources are allocated accordingly. It also means the riskier the institution, the greater the contribution they must make to funding the Central Bank. The impact-based levy is expected to apply from 2013.

While many respondents agree in principle with the Central Bank’s move to a risk-based approach, some have questioned its framework of determining this, PRISM (Probability Risk and Impact SysteM).

Bank of Ireland, for example, said an entity’s residual risk would be a “more appropriate basis” for assessing the level of regulatory supervision.

Attracting more objections was the proposed increase in the cost of regulation, with the Irish Insurance Federation putting potential increases as high as 300 per cent.

Business development
In this respect Financial Services Ireland (FSI) said the approach risks "influencing firm behaviour and business development". It gave the example of a cross-border life insurer currently deemed as "low risk" that would pay €27,086 a year; if it were to develop its business and move to a high risk category its levy would increase by 500 per cent.

Industry also hit out at plans to introduce an application fee on firms seeking authorisation, with FSI describing such an approach as “out of line” with those in other jurisdictions.