The Central Bank of Ireland (the "Central Bank") has now published the first issue of its Intermediary Times for 2019 (the "Newsletter"). The Newsletter contains an update for the insurance intermediary sector on Brexit developments, errors and complaints resolution under the Consumer Protection Code ("CPC") and certain reporting obligations to the Central Bank.
The Newsletter confirms that upon the proposed withdrawal of the United Kingdom (UK) from the European Union on 29 March 2019, the UK will become a third country for the purposes of the application of the Insurance Distribution Directive (IDD). In the event of a "no-deal" Brexit, the Central Bank states that UK-registered insurance intermediaries must put in place the necessary registration in order to continue operating in Ireland on a freedom of services and/or freedom of establishment basis. In particular, the Central Bank highlights that the ability of UK insurance intermediaries to continue performing certain obligations and activities, such as the provision of sub-broking services to EU-registered intermediaries, may also be impacted. In addition, the ability of UK intermediaries to ensure service continuity of insurance contracts concluded before Brexit date may be affected. The Central Bank also expects all relevant firms to ensure that all risks to their businesses and customers have been considered, including issues relating to data protection and data transfer.
The Newsletter does not make reference to the recent publication by the European Insurance and Occupational Pensions Authority (EIOPA) of its Recommendations for the insurance sector in light of the United Kingdom withdrawing from the European Union (the “Recommendations”). The Recommendations are addressed to National Competent Authorities (NCAs), including the Central Bank, and apply on a 'comply or explain' basis, with two months given to explain any non-compliance.
Recommendation 9 deals with the topic of insurance distribution activity and encourages NCAs to ensure that UK intermediaries which intend to continue or commence distribution activities to EU27 policyholders and for EU27 risks post-Brexit date are established and registered in the EU27 in accordance with the IDD. In light of the foregoing, it appears difficult to see how an intermediary can continue to place EU risk business without setting up an EU subsidiary. Recommendation 9 also makes clear that any intermediary seeking registration in the EU must demonstrate an appropriate level of substance proportionate to the nature, scale and complexity of its business and must not be an 'empty shell'. This is a view which has been consistently expressed by the Central Bank and is one which, in our experience, has been applied to applicant firms seeking registration in Ireland.
Returning to the Newsletter, the Central Bank also draws attention to the Irish Government's publication of the General Scheme of the Miscellaneous Provisions (Withdrawal of the United Kingdom from the European Union on 29 March 2019) Omnibus Bill (the "General Scheme"). The Irish Government has since published the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2019 which is drafted along similar lines to the General Scheme. In short, Part 8 of the draft legislation provides for a temporary run-off regime which, subject to satisfying a number of conditions, will permit UK-registered intermediaries to continue administering existing insurance contracts entered into with Irish policyholders. For further details on the temporary run-off regime, please see our article here.
Dealing with errors and complaints
The Central Bank issues a reminder to all firms subject to the CPC regarding the minimum requirements which apply to the resolution of errors and the handling of complaints involving consumers. Where an error affecting a consumer has not been fully resolved within 40 business days of the date that the error was first discovered, the firm must inform the Central Bank within 5 business days of that deadline. The Central Bank states that an Error Notification Template is available on its website and all related correspondence should be sent to firstname.lastname@example.org.
In relation to the resolution of complaints, the Central Bank notes that where a complaint has been received and has been resolved to the satisfaction of the complainant within 5 business days, the written complaints procedure need not apply. However, the CPC provides that a record of this complaint must be kept by the firm. In addition, the Central Bank stresses that the CPC requires firms to provide complainants with a regular update on the progress of the investigation at intervals not exceeding 20 business days. If the complaint is not resolved within 40 business days, an estimated timeframe for resolution of the complaint must be provided.
The Newsletter contains a reminder for all retail intermediaries to submit their annual returns to the Central Bank via the Online Reporting System no later than six months after their financial year-end. A failure to do so may result in enforcement action being taken by the Central Bank.
Finally, in relation to the Central Bank's fitness and probity regime, the Newsletter notes that the deadline for intermediaries to file the annual PCF confirmation return was 28 February 2019.