The 'twin peaks' model of regulation, invented by Dr Michael Taylor of London Guildhall University in the 1990s and now in force in the UK, has now become the model for the Central Bank of Ireland's internal structure.

The Central Bank of Ireland Commission has approved the restructuring of the bank's financial regulatory functions. The idea is to equip the Central Bank to meet its expanded regulatory mandate. The financial regulatory functions will be organised under two pillars - prudential regulation and financial conduct. The former pillar will include the Bank's directorates for credit institutions; insurance; and asset management supervision. The latter pillar will include the Bank's directorates for consumer protection; securities and markets supervision; and enforcement. The Policy and Risk Directorate will support both pillars but will be part of the financial conduct pillar for administrative purposes. (The central banking pillar and the operations pillar of the Bank will remain unchanged.)

This is not a full 'twin peaks' revolution, as Taylor originally called for two distinct and free-standing regulators along the lines of the UK's current Financial Conduct Authority and Prudential Regulation Authority. Both regulators, of course, do many things together, share similar attitudes and even exchange personnel (notably Andrew Bailey, the FCA head who came directly from the PRA) but they are quite distinct organisationally. The Irish model can be thought of as "twin peaks lite."

The structure of the senior management team will be amended accordingly. Prudential regulation will be led by a "deputy governor (prudential regulation)," which is a statutory position. That functionary will also be an ex officio member of the aforementioned commission and will be responsible for the Bank’s representation in the Single Supervisory Mechanism (SSM), the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA).

The financial conduct pillar will be led by someone with a newly-created title: "director general (financial conduct)." This person will also be responsible for the Bank’s representation in the European Securities and Markets Authority (ESMA). Although not a member of the commission, he or she will provide reports at each commission meeting and will be fully available to the members of the commission.

Both these people will report directly to the Governor and will be members of the Central Bank’s most senior management committee, the Governor’s Committee. In addition, a new Financial Regulation Oversight Committee will be established to co-ordinate the Bank's regulatory work. The membership of the oversight committee will consist of the Governor, both deputy governors and the "director general (financial conduct)."

Announcing the restructure, Governor Philip Lane said: “The changes are driven by two factors. First, due to the expanded mandate of the Bank and the shift to a more intrusive method of supervision, the scale of financial regulation activity has sharply increased in recent years. Second, the level of European engagement has also been transformed, with the SSM in particular requiring extensive input. Allied to that, this restructuring places clear emphasis on the importance of our financial conduct mandate, which includes consumer protection, investor protection, the orderly operation of financial markets and enforcement.

Competition for the posts of deputy governor and director general will commence next week.