New Central Bank CP86 Letter

Author: Clerkin Lynch LLP

Date Published 08/12/2022

New Central Bank CP86 Letter

On 7th December 2022 the Central Bank of Ireland (the “Central Bank”) issued a “Dear Chair” Letter (the “Letter”) as a follow up to its thematic review of the governance, management and effectiveness of fund management companies following its reforms of the area, often generically referred to as CP86, the consultation that initiated significant related reforms. The letter includes an expectation that its contents be discussed and given due consideration by boards.

The letter primarily cites the results of a survey conducted in June 2022 to monitor the evolution of issues pertaining to governance and structure in fund management companies and provides commentary on related considerations. As such it highlights market trends such as the 90% decline in the number of self-managed companies in Ireland, the growth of the third party management company industry and the extent to which MiFID services are now provided by management companies with related added authorisations. It also highlights areas where it is of the view further improvement or review is required including:

-the appointment of a chief executive officer. While 67% of management companies have now appointed a person to this role, which represents an increase of 50%, the Central Bank expresses the view that all but the smallest entities should make such an appointment.

  •  The number of directorships held by individuals is a cause of concern and is to continue to be monitored.


  • The level of employment in management companies has increased significantly and should continue to be monitored for appropriateness based on the nature, scale and complexity of businesses, especially for third party management companies. Interestingly the Central Bank has launched a separate consultation paper on the capital requirements for management companies.


  • The tenure of independent directors should be monitored as part of the review of board composition since concerns may arise regarding the independence of directors in place for over ten years.


  • While some progress has been made on increasing diversity to boards this remains a topic to be given consideration.

Clerkin Lynch have issued a series of articles on various aspects of CP86 which are available to give more detailed insights and guidance on compliance with related matters.