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The Central Bank of Ireland (CBI) published its feedback report on 23 July 2026 in respect of its review of delegation in the Irish funds sector.
This review was conducted with a representative sample of fund management companies (FMCs) and involved detailed quantitative and qualitative surveys and onsite inspections to assess delegation arrangements across the sector.
FMCs retain ultimate responsibility for all delegated activities and must maintain sufficient substance, resources and oversight to ensure that delegated functions are performed in accordance with regulatory requirements and in the best interests of investors. Firms are required to demonstrate that they exercise sound management and decision making and exercise sound and effective control over any function they delegate. This has been an area of continuing focus by the CBI in its supervisory work where it has set out its expectations through thematic reviews and communications to industry.
In general, the CBI found that FMCs operating a delegation model have good governance frameworks, controls, oversight processes and data capabilities in place. Areas for improvement were identified by the CBI, including board independence, over-reliance on group level committees, resourcing concerns, lack of contingency planning and limitations with data access. The Central Bank’s findings underscore that while delegation delivers important benefits for investors and supports the optimal functioning of European capital markets, it must be accompanied by robust governance and oversight within the authorised FMC.
The CBI will engage in a review of the governance arrangements for FMCs in 2026, including enhancements to the current framework regarding delegation. This may include simplifying the FMC Guidance (also known as “CP86”), reinforcing the PCF framework for FMCs, enhancing governance requirements and considering how the CBI might proportionately apply the IAF/SEAR framework to the funds sector.
Delegation models
While models vary by particular FMC, the CBI observed that the main operating models observed were:
- FMCs delegating portfolio management activities to Group entities, while retaining risk management activities;
- a hybrid model, where the FMC utilises both group and third-party delegates to perform portfolio management, while retaining risk management activities;
- a third-party model, where the FMC delegates portfolio management activities and certain risk management tasks to multiple third-party delegates.
FMC action required: Gap analysis and plan
FMCs must conduct a gap-analysis of the CBI delegation feedback report and, by end of 2026, put in place a time-bound plan to address any issues identified.
CBI expectations and findings
The report sets out under 5 core themes of Governance, Portfolio Management, Risk Management, Delegate Oversight, and Data Capabilities what the CBI expects to see in a delegation model from a supervisory perspective. It then states observations during its review of FMCs. This is summarized below:
| Theme | Supervisory Expectations | Observations |
|---|---|---|
| Governance | • FMCs must maintain governance frameworks appropriate to their operating model and ensure funds are managed in line with their strategy and risk profile.
• Boards must retain sufficient authority and substance to avoid becoming overly dependent on delegates. • Strong control frameworks are expected so that oversight, challenge and decision-making remain firmly within the FMC. |
Governance standards were generally strong. Boards were typically diverse, experienced and supported by clear reporting structures. FMCs demonstrated active challenge through local committee structures and evidenced oversight of delegate performance and associated risks. However, the CBI identified several weaknesses: some boards lacked sufficient independence due to excessive group influence and long director tenure; some Designated Persons were not senior enough or were carrying too many responsibilities; some firms relied too heavily on group committees; and certain FMCs operated with informal governance arrangements lacking documented policies, procedures and entity-specific risk statements. These weaknesses increased the risk of inconsistent oversight and weaker local decision-making. |
| Portfolio Management | • FMCs are expected to maintain effective oversight and control of delegated portfolio management activities. Delegates must be subject to appropriate due diligence and ongoing assessment.
• Critically, FMCs must demonstrate active ownership of portfolio management decisions through documented governance processes, regardless of whether activities are retained or delegated. |
Portfolio management oversight was generally one of the strongest areas reviewed. Firms demonstrated regular engagement with delegates, detailed performance monitoring, comprehensive management reporting and clearly defined escalation channels. FMCs retaining portfolio management functions generally had appropriate substance and resources to do so effectively. The CBI also observed positive contingency planning arrangements in several firms. Areas requiring enhancement included limited autonomy in oversight and decision-making in some FMCs, an absence of documented procedures and performance standards in others, and insufficient planning for the orderly transition or wind-down of third-party portfolio management arrangements should a delegate be unable to continue performing its mandate |
| Risk Management | • FMCs must implement risk-management frameworks aligned to their operating model, investment strategy and asset profile. The framework should clearly distinguish between retained and delegated activities.
• FMCs must independently verify delegated risk outputs, maintain access to timely and accurate information and evidence active decision-making through documented governance processes. • The overall level of delegation must remain proportionate and compliant with regulatory requirements. |
Risk management was largely retained within FMCs and generally exhibited strong levels of substance. Firms typically maintained comprehensive policies and procedures, independent risk oversight functions and effective risk assessment processes. Many firms performed independent verification of delegate outputs through shadow monitoring, real-time data access and pre-trade compliance controls. However, the CBI identified shortcomings where delegate support had expanded into core risk management activities. In these cases, governance arrangements required strengthening to align with outsourcing requirements. The report explicitly notes that additional risk management resourcing was required in some FMCs to support effective oversight and decision-making. Furthermore, some firms lacked sufficient independent challenge and relied heavily on delegate-generated reports because they did not have direct access to real-time risk information |
| Delegate Oversight | • FMCs must retain ultimate decision-making authority over delegated activities and operate robust, documented oversight frameworks.
• Due diligence should be systematic, evidence-based and applied consistently to delegates and sub-delegates. • Oversight should be formal, accountable and not rely solely on self-certification or questionnaires completed by delegates. |
The review found widespread use of structured delegate oversight frameworks. FMCs generally adopted risk-based due diligence methodologies using questionnaires, risk scoring and performance metrics. Many firms supplemented monitoring with annual on-site visits assessing delegate systems, controls, personnel and governance arrangements. However, the CBI observed examples where FMCs relied excessively on group-level due diligence processes instead of conducting their own assessments. Local representation on group oversight committees was sometimes limited. Importantly, the report specifically highlighted insufficient involvement of Designated Persons and Operational Risk functions in delegate oversight activities, with some firms relying instead on group personnel or secondees. This was viewed as a weakness in local accountability and oversight ownership |
| Data Capabilities | • FMCs should have robust data-management frameworks that provide timely, accurate and accessible information to support oversight, governance and decision-making.
• Firms are expected to address weaknesses in data strategy, integration, governance and reporting so that data can effectively support both delegated and retained activities. |
Data governance has become a growing area of focus across the industry. Larger FMCs demonstrated sophisticated approaches, including formal data policies and procedures, business intelligence tools, compliance dashboards and dedicated data teams. The CBI noted increasing recognition of data as a strategic oversight tool. Nevertheless, several firms continued to operate fragmented technology environments where risk, investment and compliance data remained dispersed across multiple systems, creating manual reconciliation challenges. The review also identified cases involving delegations of pre- and post-trade controls and monitoring activities, including instances where internal risk limits were overridden. In addition, some FMCs lacked documented contingency arrangements to deal with data interruption or loss, creating operational resilience concerns. |
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