Central Bank Focus Areas for E-money and Payment Firm Applications

On 9 April 2024, the Central Bank of Ireland ("CBI") published its Expectations for Authorisation of Payment and Electronic Money Institutions and Registration of Account Information Service Providers ("CBI Expectations"). These are intended to bring better clarity, transparency and predictability for applicant firms looking to be authorised as payment institutions, electronic money institutions or account information service providers (together, "Firms").

Poorly planned applications can often lead to authorisation process delays and increased costs for applicant Firms. Helpfully, the CBI Expectations set out the top five challenges experienced by Firms during the authorisation process. This update will examine how Firms can prepare their applications to overcome or avoid these challenges.

Inadequate Preparation 

The CBI Expectations note that inadequate preparation and incomplete applications are among the most common issues faced by applicant Firms. Ensuring that the Firm is adequately prepared before engaging with the CBI on a potential authorisation and, particularly at the point of submission, are key to avoiding application delays.

Firms should ensure that, before submitting their Key Fact Document and attending their initial CBI meeting, they have prepared a clear outline of their proposal which explains the regulated services the Firm will provide and gives an overview of its products, operating model and target market, and demonstrates an understanding of the application requirements and a capability of meeting the Firm's regulatory obligations from the point of authorisation.

While the assessment stage of any application is an iterative process, providing a high quality and detailed application can minimise the number of queries raised. There is often a conversation early on around resourcing, who needs to be hired and when. The CBI notes that Firms which have identified senior individuals early in the application process often progress more quickly. The rationale is that in the CBI's experience these Firms generally submit a more complete application and these individuals are often well-positioned to discuss the Firm’s proposed risk management frameworks; proposed business model and governance; and to address CBI feedback.

Lack of Clarity and Changing Business Models

The CBI has noted an inability to properly describe the proposed business model and customer offering or a lack of detail regarding the products offered; the processes through which they will be delivered; or underlying assumptions as common reasons for prolonged application processes. To help iron out the details of the proposal, the CBI encourages Firms to engage with its Innovation Hub early to help ensure that the authorisation proposal can be clearly articulated before engaging with the authorisation team.

Substantial changes in the proposed business model during the application process are also liable to cause the CBI to raise further comments and queries, which will result in substantial delays. Firms can alleviate these risks by having a clear and detailed business plan prepared from the outset, and by making senior appointments who understand the Firm's business early in the authorisation process. Firms should also consider whether their proposed business model requires more than one type of authorisation and, if so, take steps to seek all required authorisations to avoid delays. 

The CBI Expectations note that the CBI often experiences delays by Firms in responding to queries or providing requested clarification which slow down the process. Inordinate delays in responding to a request for information or a query from the CBI within 60 business days will lead to an application becoming dormant.

It is therefore important that Firms work closely with their advisors to promptly prepare adequate responses to the questions and comments raised by the CBI and respond within any deadlines provided.