Nicholas Blake-Knox
Managing Partner
Ireland
Background and scope of the review
On 23 July 2026, the Central Bank of Ireland (the 'Central Bank') published its feedback report on its review of delegation in the Irish funds sector (the 'Report'). This advisory summarises the Report's key findings and recommended actions for fund management companies ('FMCs').
The Central Bank's review (the 'Review') focused on governance, oversight arrangements and the effectiveness of control frameworks in managing delegated activities at FMCs. It consisted of the following main elements:
- a quantitative data request issued to all FMCs seeking information on the scale and structure of delegation arrangements;
- a qualitative survey seeking detailed information on governance, oversight and monitoring practices; and
- a combination of desk-based reviews and on-site inspections involving a significant number of Irish-authorised FMCs and the funds they manage.
One of the main considerations of the Review was to ensure a representative assessment across the sector to include all types of FMC operating models.
Overall findings
The Central Bank’s overall conclusion is that FMCs generally operate effective delegation frameworks in accordance with regulatory requirements, safeguarding outcomes and evolving supervisory expectations. However, the Review also identified a number of FMCs which require certain elements of their governance arrangements and operating models to be enhanced. Areas identified for improvement include board independence, over-reliance on group level committees, resourcing concerns, lack of contingency planning and limitations with data access. A small number of FMCs were assessed to have fallen materially short of expectations and are now subject to time-bound risk mitigation programmes to remediate identified deficiencies.
Key observations by theme
The Report describes delegation practices across five themes – Governance, Portfolio Management, Risk Management, Delegate Oversight, and Data Capabilities – identifying, for each, examples of good practice as well as areas requiring enhancement:
Governance
What 'good' looks like
- Established frameworks with diverse, experienced boards and clear reporting lines.
- Local committees providing regular challenge of delegate performance, review of delegate reporting and escalation of delegate-related issues.
- Leveraging group expertise while maintaining clear local accountability.
Areas requiring enhancement
- Insufficient board independence; excessive group influence or directors serving beyond best-practice tenure limits.
- Under-resourcing (insufficient seniority of Designated Persons or excessive role accumulation).
- Over-reliance on group committees limiting local challenge.
- Informal governance practices leading to inconsistent decision making and poor oversight.
Portfolio management (PM)
What 'good' looks like
- Regular delegate engagement with detailed performance analysis and clear escalation pathways.
- Appropriate contingency planning for delegate termination scenarios.
- Commensurate levels of substance and resourcing for retained PM activities.
Areas requiring enhancement
- Lack of suitable autonomy in oversight/decision-making over delegated PM activities.
- Unstructured approaches lacking documented procedures, performance standards or regular monitoring.
- Limited wind-down/transition planning where a third-party PM cannot continue.
Risk management (RM)
What 'good' looks like
- Where retained, RM is established as a core function, enabling independent oversight, risk limits setting and compliance monitoring.
- Independent verification of delegated risk activities, via shadow checks, real-time data access, pre-trade controls.
Areas requiring enhancement
- Governance/risk measures need strengthening where delegates support core RM activities. Insufficient RM resourcing in some FMCs.
- Lack of robust independent challenge or real-time data access with reliance solely on delegate reporting.
Delegate oversight
What 'good' looks like
- Risk-based due diligence using Due Diligence Questionnaires and traffic light scoring to prioritise resources.
- Regular SLA/KPI reporting on delegate performance, operational status and compliance.
- Targeted annual on-site visits assessing delegate capabilities and controls.
Areas requiring enhancement
- Reliance on group processes rather than direct FMC assessment of delegates.
- Insufficient local FMC management representation at group delegate oversight committees.
- Insufficient involvement of Designated Persons and Operational Risk functions in delegate oversight.
Data capabilities
What 'good' looks like
- Increasing use of data as a strategic asset; data improvement programmes among larger firms.
- Automated reporting/business intelligence tools supporting management information and compliance dashboards.
- Formal data policies and dedicated data resources where proportionate to the firm's scale or complexity levels.
Areas requiring enhancement
- Fragmented data integration in some FMCs requiring manual reconciliation across systems.
- Delegates handling pre/post-trade controls including overriding internal risk limits.
- Lack of contingency arrangements for data loss or interruption.
Next steps
FMCs are expected to conduct a gap analysis against the Report’s supervisory expectations and observations and where gaps are identified, put in place a board-approved time-bound plan by year-end 2026.
The Central Bank notes that the sector faces an increasingly complex operating environment driven by regulatory change, evolving investor expectations, geopolitical shifts and technology enhancements. In response, the Central Bank has signalled the following planned actions:
- FMC Governance Review: A review of FMC governance arrangements will be conducted in 2026, incorporating enhancements to the delegation framework, and incorporating the following:
- Simplification of guidance: The Central Bank intends to simplify the existing FMC Guidance and strengthen the pre-approved controlled function framework for FMCs.
- Enhanced governance requirements; and
- Consideration of the proportionate application of the Individual Accountability Framework ('IAF') and Senior Executive Accountability Regime ('SEAR') to the funds sector.
What this means for FMCs - recommended actions
All FMCs should treat the Report as requiring prompt attention, and the Central Bank expects the following:
- Board-level review: FMC boards should review the Report’s contents in full and assess alignment of current delegation arrangements against the supervisory expectations set out.
- Gap analysis: Conduct a formal gap analysis against the Report’s findings across the five thematic areas, identifying where current governance, oversight, resourcing, or data capabilities fall short of the standards described.
- Documented remediation plan and board sign-off: Prepare a documented compliance and remediation plan addressing any gaps in operational, resourcing, and governance arrangements regarding delegation, ensuring alignment with all relevant rules and guidance (UCITS, AIFMD, CP86, CP138). Arrange board-level communication of the plan and secure board sign-off, together with any necessary internal approvals, all by year-end 2026.
- Data and systems review: Assess data delivery, integration, and contingency arrangements to ensure timely, accurate data for decision-making and delegate oversight.
- Prepare for governance enhancements: Monitor the Central Bank’s forthcoming governance review and the potential extension of IAF/SEAR to the funds sector. FMCs should proactively assess board composition, independence, tenure, and Designated Person resourcing.
Based on the Report, there is no indication that FMCs’ time-bound remediation plans need to be separately submitted to the Central Bank. However, FMC's should be prepared to discuss their plans and progress during any ongoing supervisory engagement.
If you have any queries about the Report or its implications for your business, please speak to your usual contact or connect with any of the key contacts listed below.
