On 28 March 2025, Gerry Cross, Director of Capital Markets and Funds at the Central Bank of Ireland (“Central Bank”), delivered a speech (“Speech”) at a markets in crypto-assets regulation (“MiCA”) industry briefing (“Briefing”) held by the Central Bank.

Director Cross spoke about the importance of innovation in financial services and reflected on the development of blockchain-based technologies over the last number of years, noting the European Commission’s (“Commission”) response to such developments, resulting in the digital finance package, which included MiCA and DORA. Director Cross highlighted the Central Bank’s support for these initiatives, noting the active and leading roles played by the Central Bank in the development and implementation of both pieces of legislation.

Implementation

The Briefing was particularly focused on the implementation of, and authorisations under, MiCA. The Director emphasised that delivering on MiCA in a timely and outcomes-focused way, is a key focus for the Central Bank and supervisory authorities across the EU. Director Cross set out some of the matters that the Central Bank is focusing on, as regards the implementation of MiCA, as follows:

• governance and culture – recalling the “Crypto Winter” in 2022 which resulted from a lack of good governance and poor culture in certain parts of the sector;
• consumer interests – the Director noted the revised Consumer Protection Code (“CPC”) and reminded firms that they must ensure that what they are offering and doing is well aligned with their customers’ reasonable expectations and with their interests. For more information on the revised CPC, see FIG Top 5 at 5 dated 27 March 2025.
  
  

  Additionally, Director Cross highlighted that MiCA will not provide the same level of protection as exists in respect of traditional financial investment products due to the inherently high risks to consumers and investors in some crypto and related services. In that regard, the Director pointed to the warnings to consumers, regarding crypto markets, issued by the Central Bank and by the European Securities and Markets Authority (“ESMA”).

  The Director particularly drew attention to business models where profitability is driven from the heavy marketing, offering and distributing of unbacked crypto to retail customers for speculative purposes. He went on to highlight that where the Central Bank sees higher inherent conduct and investor protection risks in the products offered to customers and investors, it will have higher expectations of a firm’s ability to manage such risks;

• crime and fraud – pointing to the recent theft of crypto-assets in another part of the world, Director Cross emphasised the importance of high levels of security. He also pointed to the importance of effective control of the risk of money laundering and other criminal activity. 

The Director noted that “Consumer and investor protection begins with firms themselves. For the crypto sector to succeed, compliance and a customer centric approach should not be seen as a cost of doing business, but rather, they have the potential to be a competitive advantage.”

Authorisation

Director Cross went on to provide a summary of the Central Bank’s authorisations process under MiCA, for more information, see FIG Top 5 at 5 dated 13 March 2025. He emphasised that the process is based on clarity, transparency, flexibility and predictability for firms seeking authorisation.  

The Director specifically referred to the Central Bank’s two-phased approach, noting that phase one – the key facts document phase – is intentionally heavily front loaded with the aim of maximum flexibility and adaptive engagement for firms so that firms will be well set for an efficient phase two process, with any issues being identified and resolved in advance of formal authorisation. Further, Director Cross highlighted that this approach has also been taken in view of the tight timelines associated with MiCA and the 12 month transitional arrangements.

Director Cross acknowledged that the Central Bank is dealing with a diverse array of firms and noted the significant resource lift associated with MiCA, especially for those firms in the earlier stage of their business. However, he stressed that regulation should not be a barrier to innovation and highlighted the Central Bank’s appreciation for the need for proportionality on its part.

As regards a successful authorisation process, Director Cross highlighted some matters for firms to consider, as follows:

• substantive presence – the Director was keen to point to the opportunity offered by firms investing appropriately in their EU entity seeking authorisation as a crypto-asset service provider (“CASP”) and long term benefits that will stem from their involvement in the development of the crypto-asset system in the EU;
• outsourcing – Director Cross cautioned against outsourcing to the extent that a firm becomes “an empty shell or in a manner that means a core activity and the effective accountability for it are moved outside the firm.”;
• alignment with MiCA and the ESMA Broker Model – the Director emphasised the importance of firms’ business models aligning with MiCA and the ESMA Broker Model and advised that the Central Bank will push strongly against business models that do not adhere to this;
• clarity regarding the activities that authorisation is required for – Director Cross identified the fact that firms are not clear on their full business model and the activities that authorisation is required for; and
• governance and safeguarding – Director Cross reiterated the importance, for the Central Bank, of governance and safeguarding of client assets, regardless of the services, the target customer base or whether the business is retail focused or aimed at institutional client. 

European Work

Director Cross gave an overview of the work that the Central Bank is engaged in, as regards MiCA, at a European level, for example its engagement with the European Banking Authority and ESMA supervisory communities. He also cited the Central Bank’s engagement with peer national competent authorities on a bilateral basis, facilitating a convergent approach to the application of MiCA.

Conclusion

The Director concluded by stating that firms seeking authorisation as a CASP should focus on good quality submissions, timely engagement with the Central Bank, full alignment with MiCA and the ESMA Broker Model Opinion, an openness to reflect on feedback and a clear commitment to their Irish and European presence. 

On 26 March 2025, the Financial Services and Pensions Ombudsman (“FSPO”) published its Overview of Complaints for 2024 (“Overview”). The Overview  provides a summary of the complaints made to the FSPO and reports the trends and patterns in complaints made.

6,185 complaints were received in 2024, with 22% of complaints relating to customer service issues, which was the conduct most complained of.

Some of the main statistics set out in the Overview are as follows:

Insurance

The insurance sector complaints represented 29% of all complaints received, and accounted for the second largest category of complaints received. This is a significant increase compared to the 1,446 complaints received in this category in 2023.   The Ombudsman notes that “ Much of this increase relates to complaints about customer service and responsiveness.”

The largest number of insurance complaints received related to motor insurance (754 complaints), followed by private health insurance (247 complaints) and then travel insurance (216 complaints).

More than a quarter of insurance complaints received in 2024 concerned claim handling (499 complaints) followed by complaints concerning the rejection of a claim (372 complaints). Maladministration (242), customer service (223) and refusal to give a product / service (138) also featured in the top 5 conducts complained about in 2024, as was the case in 2023.

Banking

There were 3,404 banking complaints in 2024, representing 55% of all complaints received, however, it is worth noting that this figure has decreased since 2023. The majority of banking complaints concerned bank accounts (1,787), followed by mortgages (760) and then other consumer credit (442). This trend remains unchanged from 2023.

Customer service was the conduct most complained of in 2024, covering a broad range of issues, such as, communications, complaint handling, account access issues and the failure to provide information. Complaints regarding disputed transactions and maladministration were the second and third most common conducts featuring in complaints.

With specific reference to number of complaints received related to disputed transactions in banking, the FSPO notes that this reflects a continuing increase in fraud.

Investment Complaints

The FSPO received 411 investment related complaints in 2024, an 11% decrease from the 461 classified as investment complaints in 2023. Investment complaints accounted for 7% of all complaints received in 2024, as was the case in 2023.

The conducts most complained of in the investment sector were maladministration (139 complaints) and customer service (87 complaints) followed by mis-selling (67 complaints) improper management of funds (40 complaints) and incorrect advice (30 complaints).

Pensions

348 complaints were received concerning the pension sector.   The conducts most complained of in relation to pensions were maladministration (206 complaints) and calculation of pension benefit (50 complaints), followed by refusal to give product / service (25 complaints) failure to provide information / correct information (23 complaints) and customer service (15 complaints).

Outcomes

5,907 complaints were closed in 2024, at a monetary value of €5.7 million, and the outcomes of the complaints included the following:

• 1,407 complainants were settled through mediation, with the value of those settlements totalling €4,271,372;
• €1,001,573 was paid to complainants by providers to settle complaints during the FSPO’s formal investigation process; and 
• the combined value of compensation directed in legally binding decisions following the formal investigation process was €308,750.

Quick Resolution and Reduction of Complaints

The Ombudsman stated that:

“It is clear from the complaints received in 2024 that some providers have been very successful in reducing the number of complaints received by the FSPO in relation to their services."

However, the Ombudsman went on to point out that:

"Those providers who have not succeeded in reducing the number of complaints being submitted to this office should take note of the changes and improvements successfully implemented by providers in their sector and consider what they can do to achieve similar results."

In the Overview, the Ombudsman encourages providers of financial services and pension products to adopt an approach of seeking, where possible, to resolve complaints quickly with their customers. He further noted that  it was clear that many of the consumers making complaints to the FSPO could have had their complaints addressed by their provider, at an earlier point in time.

1. Central Bank Spotlight on the use of Asset Intensive Reinsurance – Insurance Newsletter March 2025

In the third week of March 2025, the Central Bank of Ireland (“Central Bank”) published its March 2025 Insurance Newsletter (“Newsletter”).

Much of what is covered in the Newsletter has recently been the subject of updates in the FIG Top 5 at 5, such as:

• the Central Bank’s Regulatory & Supervisory Outlook Report;
• the Central Bank’s new supervisory approach;
• the revised Consumer Protection Code;
• the reporting of registers of information under DORA;
• the pre-approval control function demographics report; and
• the establishment of the dedicated fitness and probity unit. 

However, of particular note, in this edition of the Newsletter, is a financial resilience spotlight on the use of asset intensive reinsurance (“AIR”), an outline of which, follows, below.

Area of Focus

Due to the growing use of AIR, it has become an area of focus, internationally, for regulators. The Central Bank has observed that Ireland accounts for a large portion of outgoing life reinsurance from the EU to non-EU jurisdictions, mostly the UK and Bermuda.  Accordingly, the Central Bank has stated that this is an area that it will continue to monitor and will also support EIOPA’s work on risk transfers, the latter being one of EIOPA’s focus areas for 2025.

Benefits and  Risks

The Central Bank notes that reinsurance can be a useful tool for firms in managing risk and capital, but that this brings risks also, such as an increase in counterparty default risk and potentially concentration risk, depending on the structure.

The Central Bank highlights the importance of the reinsurer having control and oversight as to how the assets backing the reinsured liabilities are invested. Without such oversight, the Central Bank notes potential risks, some of which are as follows:

• the collateral may be invested in lower quality and / or less liquid investments that potentially do not adhere to the prudent person principle in Solvency II;
• the collateral may be invested in assets that are difficult to value or not publicly traded, for example, private debt, private equity; and
• there could be connections between the reinsurer’s credit rating and the value of the collateral assets.

If the reinsurer were to default or be downgraded, the Central Bank notes the possibility that it could lead to the cedent being forced to take back on the liabilities, leading further to the possibility that the collateral assets that are recovered are not sufficient to cover the insurers’ liabilities to policyholders. This would be detrimental to consumers.

The Central Bank addresses how such risks can be mitigated, and in that regard, reminds firms to have regard to the following:

• the Central Bank’s guidelines on recovery plans; and
• the Central Bank’s guidance on intragroup transactions.

Additionally, the Central Bank encourages firms to engage with it early where there is a plan to enter into material and / or complex reinsurance arrangements, explaining that firms should have regard to EIOPA’s opinion on risk mitigation techniques. Further, the Central Bank reminds firms that changes to reinsurance and / or retrocession agreements that are deemed material require pre-notification to the Central Bank as a change of business notification.

Data Request

In order to deepen its risk analysis regarding AIR, the Central Bank has stated that it will issue a data request to a sample of less than 20 life (re)insurance firms in Q2 2025. The data request forms part of the Central Bank’s on-going supervisory assessment of counterparty and investment risks.  The Central Banks hopes that this will result in:

• a more accurate assessment of the materiality of AIR;
• the extent to which AIR is collateralised and how the collateral assets are invested and monitored; and
• to confirm how reinsurance counterparty risk would impact the firms regulated by the Central Bank, and the actions available in that scenario.

Firms selected as part of the data request can expect to hear from the relevant supervisory contact in April 2025.

2. EIOPA issues technical advice on capital requirements for crypto-assets under Solvency II

On 27 March 2025, the European Insurance and Occupational Pensions Authority (“EIOPA”) published its technical advice (“Advice”) to the European Commission (“Commission”) on standard formula capital requirements for investments in crypto-assets.

The Advice follows on from a public consultation, conducted by EIOPA, on the draft advice, launched in October 2024. For more information, see FIG Top 5 at 5 dated 31 October 2024.

The EU’s regulatory framework for (re)insurers has, so far, not had specific provisions on crypto-assets with the result that (re)insurers currently classify their crypto assets without a consistent approach. This raises concerns about the risk sensitivity of these practices and the level of prudence associated with them.

In the interests of a harmonised approach, as well as the prudent and proportionate treatment of crypto assets, EIOPA is proposing the introduction of a blanket 100% capital requirement across all crypto holdings, regardless of their balance sheet treatment or whether the exposure is direct or indirect.

EIOPA is of the view that such an approach would adequately reflect the high risks associated with crypto investments without creating unnecessary complexity or imposing additional reporting requirements on (re)insurers at a time when their investments in crypto-assets are still modest in size.

Next Steps

EIOPA has stated that a possible broader adoption of crypto-assets may, however, require a more differentiated approach at some stage in the future. The treatment of crypto holdings under Solvency II should therefore be reviewed in the future in light of market developments and regulatory approaches in other sectors.

The Commission will now consider EIOPA’s technical advice in the review of level 2 provisions of Solvency II.

1. Delegated Regulations and Implementing Regulation  on RTS and ITS under MiCA published in OJEU

On 31 March 2025, five delegated regulations containing regulatory technical standards (“RTS”) and one implementing regulation containing implementing technical standards (“ITS”), under the regulation on markets in crypto-assets (“MiCA”) were published in the official journal of the European Union (“OJEU”), as follows:

1. Delegated Regulation (EU) 2025/300 with regard to RTS on information to be exchanged between competent authorities. This Delegated Regulation was adopted by the European Commission (“Commission”) in October 2024.  For more information, see FIG Top 5 at 5 dated 17 October 2024;
2. Delegated Regulation (EU) 2025/305 with regard to RTS specifying the information to be included in an application for authorisation as a crypto-asset service provider (“CASP”). This Delegated Regulation was adopted by the Commission in October 2024;
3. Implementing Regulation (EU) 2025/306 laying down ITS with regard to standard forms, templates and procedures for the information to be included in the application for authorisation as a CASP. This Implementing Regulation was adopted by the Commission in October 2024;
4. Delegated Regulation (EU) 2025/413 with regard to RTS specifying the detailed content of information necessary to carry out the assessment of a proposed acquisition of a qualifying holding in an issuer of an asset-referenced token. This Delegated Regulation was adopted by the Commission in December 2024. For more information, see FIG Top 5 at 5 dated 19 December 2024; 
5. Delegated Regulation (EU) 2025/414 with regard to RTS specifying the detailed content of information necessary to carry out the assessment of a proposed acquisition of a qualifying holding in a CASP This Delegated Regulation was adopted by the Commission in December 2024. For more information, see FIG Top 5 at 5 dated 19 December 2024;  and
6. Delegated Regulation (EU) 2025/422 with regard to RTS specifying the content, methodologies and presentation of information in respect of sustainability indicators in relation to adverse impacts on the climate and other environment-related adverse impacts. This Delegated Regulation was adopted by the Commission in December 2024. For more information, see FIG Top 5 at 5 dated 19 December 2024.

Next Steps

The five delegated regulations and the implementing regulation will enter into force on 20 April 2025, being 20 days after their publication in the OJEU.

2. ESMA publishes guidelines on suitability requirements and format of periodic statement for portfolio management activities under MiCA

On 26 March 2025, the European Securities and Markets Association (“ESMA”) published its guidelines (“Guidelines”) on certain aspects of the suitability requirements and format of the periodic statement for portfolio management activities under the regulation on markets in crypto-assets (“MiCA”).

ESMA published its final report on the Guidelines in December 2024, for more information, see FIG Top 5 at 5 dated 19 December 2024.

The Guidelines apply to competent authorities and crypto-asset service providers (“CASPs”) where they provide, as relevant, advice on crypto-assets or portfolio management of crypto-assets. The Guidelines seek to promote greater convergence in this regard. The aim of the Guidelines is to establish consistent, efficient and effective supervisory practices within the European System of Financial Supervision (“ESFS”) and to ensure the common, uniform and consistent application of the provisions of MiCA, as relevant.

The Guidelines set out the requirements applicable to the format of the periodic statement to be provided by CASPs providing portfolio management of crypto-assets, in accordance with Article 81(14) of MiCA.

ESMA has stated that it anticipates a strengthening of investor protection by identifying a number of important issues, set out in the Guidelines, and ensuring that CASPs comply with regulatory standards.

Next Steps

The Guidelines apply from 25 May 2025. National competent authorities are required to notify ESMA whether they comply, do not comply but intend to comply, or do not intend to comply with the guidelines, by 25 May 2025. Financial market participants are not required to report whether they comply with the guidelines.

On 1 April 2025, the European Central Bank (“ECB”) published an opinion (“Opinion”) on the proposal (“Proposal”) for a regulation as regards a shorter settlement cycle under the Central Securities Depositories Regulation (“CSDR”). The Proposal would amend Article 5(2) of CSDR.

The European Commission (“Commission”) published the Proposal on 12 February 2025, for more information, see FIG Top 5 at 5 dated 20 February 2025.

The Opinion comes on foot of requests received in March 2025, by the ECB, from the European Council and the European Parliament.

In the Opinion, the ECB welcomes the Proposal’s objective of reducing the maximum duration of the settlement cycle, as regards certain transactions in transferable securities, from two business days to one business day after the trade date - referred to as T+1.

The Opinion highlights the necessity of fast, efficient and reliable settlement as an essential precondition for the development of the savings and investment union – a matter noted by the Commission in the Proposal.

In addition, the Opinion acknowledged that a move to T+1 would improve the efficiency and resilience of post-trade processes, which would, in turn, further promote settlement efficiency in the EU.

Finally, the Opinion noted that a move to T+1 would align the EU with other major jurisdictions where similar reforms have been carried out, and any associated impacts due to such misalignment would be reduced.