It was reported in August 2021 that the Irish Competition and Consumer Protection Commission (CCPC) had accepted legally binding commitments from six insurers following allegations of concerted price-signaling in the private motor sector in Ireland. The CCPC’s investigation into the matter was interesting from several perspectives. Its intensity and length were striking, the misrepresentation of its outcome by the mainstream Irish media was breath-taking, and it reminded the financial sector of the degree to which regulatory bodies in the financial sector are increasingly co-ordinating their efforts to address common themes.

The CCPC investigation

The CCPC’s investigation opened in 2016 and ran for five years. At the time, the CCPC was concerned that industry participants had been openly signalling upcoming increases in motor insurance premiums and that this could have amounted to “unspoken coordination” in violation of competition law. The CCPC’s investigation was robust. It issued witness summonses and information requests to motor insurance providers and industry groups in Ireland. Through this, it gathered substantial documentary evidence and, with digital forensic tools, conducted a detailed review and assessment of the evidence gathered. It also conducted witness summons hearings, where representatives from each of the parties gave evidence under oath.

The law does not currently allow the CCPC to make legally enforceable findings of breaches of the competition rules. Instead, the CCPC issued ‘preliminary’ findings to the parties, alleging that certain organisations had engaged in anti-competitive co-operation over a 21-month period during 2015 and 2016. The parties continued to strenuously deny this. The alleged anti-competitive co-operation consisted of public announcements of future private motor insurance premium rises as well as other contacts between competitors, all of which could have reduced levels of competition between the parties. To settle the matter, six out of seven of the industry parties gave legally binding commitments to the CCPC, commonly referred to as Agreement and Undertakings. They continued to deny that they were in breach of competition law.

Outcome of the CCPC investigation

The commitments given to the CCPC require each company to implement and maintain an appropriate internal competition law compliance program or enhance existing programmes. These must include internal monitoring mechanisms, appointment of compliance officers, regular competition law training, independent oversight, and annual reporting to the CCPC. One party, Brokers Ireland, declined to give commitments to the CCPC. Part of its rationale appears to be that it was the Irish Brokers Association, its predecessor organisation, that was initially party to the CCPC investigation. Brokers Ireland also continued to deny any breach of competition law.

The CCPC’s press release announcing the settlement casts Brokers Ireland in a somewhat unfavourable light. However, it also appears to have formed a dim view of the entire insurance industry. The CCPC wrote to the Central Bank of Ireland (CBI) “to outline broader cultural concerns in the industry which have come to light during the course of the investigation”. The full content of that communication has not been disclosed by the CCPC.

Public and media reaction

In summary therefore, the facts are that the CCPC conducted a robust investigation and made preliminary findings against the parties, whereupon the parties maintained their denial of breaches of competition law but gave commitments to alter their practices to settle the matter. This perfectly reasonable outcome of a regulatory investigation was met by howls of derision from the public and press alike. The media viewed the outcome as a mere “slap on the wrist” for the insurance industry. Certain political leaders criticised the CCPC for not taking the insurers to court to be prosecuted. This narrative follows years of negative media focus on the industry, particularly in relation to spiralling premiums and perceived lack of competition. The CCPC and CBI have come under fire for not adequately protecting consumers. One media outlet even stated that the investigation “illustrates yet again that Ireland’s financial regulatory system does not have the teeth required to make a real impact”. Any financial institution currently regulated by the CBI would beg to differ from this statement, as day-to-day business priorities and allocation of resources become increasingly dominated by regulatory concerns.

The treatment of the CCPC at the hands of press and public is a worrying example of how regulatory policy and practices in Ireland are increasingly directed by media hobbyhorses and ill-informed public backlashes. The CCPC currently does not have the power to impose fines or prison sentences for a breach of competition law. However, this is likely soon to change. Although the outcome of the investigation may seem underwhelming when presented in a distorted manner to the public, it was the appropriate course of action by the CCPC acting within its current statutory powers. It is important for the regulatory community not to allow the setting of public priorities and allocation of resources to be dominated by the currents of ill-informed and fast-moving news cycles.

Co-operation between regulators

The CCPC writing to the CBI to alert it to the ‘cultural concerns in the industry’, which came to light during the investigation was a red flag to the CBI. This will have been especially impactful because of the CBI’s focus on issues of culture and conduct in the financial industry and is bound to trigger closer review of conduct frameworks within insurers in the medium term.

The CCPC letter shows the increasing tendency of regulatory bodies in the financial sector to cross-report their concerns and to co-ordinate their activities. This trend was also demonstrated by the co-operation between the Financial Services and Pensions Ombudsman and the CBI on tracker mortgage and COVID-19 business interruption complaints and the fact that the CBI is known to liaise with the ODCE in relation to governance failings by financial institutions. Increasingly, a financial institution that falls foul of one regulator may find that this triggers action by others through cross-reporting. Financial institutions need to consider their compliance frameworks holistically, rather than in silos, and ensure that training, monitoring, and oversight are joined up throughout the organisation.