Irish banks are pushing for major changes to simplify regulations, aiming to make the sector more competitive and attract more investment. In a new report released on September 2, 2025, the Banking and Payments Federation Ireland (BPFI) warned that overly complex rules are hurting Ireland’s economy and driving businesses away.
Why Banks Want Change Now
The push comes at a time when Ireland’s financial sector faces growing pressure from global competition. BPFI’s report, titled Regulating for Growth – A Roadmap for Simplification, highlights how layers of rules added since the 2008 financial crisis have become confusing and costly. Banks argue these rules often go beyond what the European Union requires, a practice known as gold-plating.
This extra burden, they say, makes it harder for new banks to enter the market and for existing ones to invest in growth. For instance, Ireland hosts 35 banks, including big names like AIB, Bank of Ireland, and PTSB, but the federation claims the current setup puts them at a disadvantage compared to rivals in other EU countries.
The report lists 52 specific recommendations to fix this. These focus on creating clearer guidelines without weakening key protections like capital requirements. BPFI chief executive Brian Hayes stressed that the goal is not deregulation but a reset after years of intense reforms.
Key Issues with Current Regulations
Banks point to several problems in the regulatory framework. One major complaint is the lack of a single, clear rulebook that applies consistently across the EU. Instead, national differences create confusion and extra costs for firms operating in multiple countries.
Another issue is the one-size-fits-all approach, where small banks face the same strict rules as large ones. This, according to the report, discourages innovation and investment in areas like green energy and technology.
Here are some of the main concerns raised by the industry:
- Overlapping rules that increase compliance costs without adding real safety.
- Gold-plating of EU standards, making Irish banks less competitive.
- Slow approval processes that delay new products and services.
- Inconsistent enforcement, leading to uncertainty for investors.
Experts note that this aligns with broader EU efforts in 2025 to simplify rules and boost competitiveness. For example, the European Commission has prioritized reducing burdens in its work program this year.
The timing is critical as Ireland’s economy relies heavily on its financial services hub. Recent data shows the sector contributes billions to GDP, but growth has slowed due to regulatory hurdles.
Central Bank’s Response and Warnings
The Central Bank of Ireland has responded cautiously to the demands. Deputy Governor Mary-Elizabeth McMunn acknowledged the need for some simplification but emphasized that changes cannot risk financial stability or consumer protection.
In a speech earlier this year, she said the bank is already working on ways to reduce unnecessary burdens. However, she warned that lessons from the 2008 crash must guide any reforms. The bank plans to engage with the industry but insists on keeping strong safeguards.
This stance reflects ongoing debates in Europe. Similar calls for lighter rules have come from banking groups across the EU, but regulators worry about repeating past mistakes that led to economic turmoil.
Impact on Investment and the Economy
Simplifying regulations could unlock significant benefits for Ireland. Banks claim it would encourage more foreign investment and help fund key projects in infrastructure and sustainable development.
For example, easier rules might speed up lending for renewable energy initiatives, aligning with Ireland’s 2030 climate goals. Recent figures show investment in Irish financial services dropped by 5 percent last year, partly due to regulatory complexity.
To illustrate potential gains, consider this table of economic impacts based on industry estimates:
| Area | Current Challenge | Potential Benefit from Simplification |
|---|---|---|
| Investment Inflow | High compliance costs deter investors | Up to 10% increase in foreign capital |
| Job Creation | Slow approvals limit expansion | Thousands of new jobs in finance |
| Competitiveness | Gold-plating disadvantages local banks | Level playing field with EU peers |
| Innovation | Complex rules stifle new tech | Faster rollout of digital banking tools |
These projections highlight how reforms could strengthen Ireland’s position as a global financial center.
However, critics argue that easing rules too much could expose consumers to risks. Consumer groups have voiced concerns that simplification might weaken protections against issues like mis-sold products or bank failures.
Broader EU Context and Future Outlook
This Irish push fits into a larger EU trend toward competitiveness in 2025. The European Banking Federation has urged policymakers to cut complexity across the bloc, warning that fragmented rules slow growth.
In Ireland, the government has shown interest. The Department of Finance received the BPFI report and promised to review it alongside the Central Bank’s input. With elections on the horizon, this could become a key policy issue.
Looking ahead, experts predict some changes by 2026, but full implementation might take longer. The balance between growth and safety remains the core challenge.
As this story develops, readers should share their thoughts in the comments below. What do you think about simplifying bank rules? Your input could help shape the debate.
