The Central Bank of Ireland (CBI) has recently published its first Intermediary Times newsletter of 2020 (the Newsletter). The Newsletter provides a number of updates from the CBI for retail intermediaries, including (re)insurance intermediaries. In the foreword to the Newsletter, the CBI highlights the importance of retail intermediaries developing their business in a manner which puts consumers first and many of the topics covered demonstrate the CBI’s focus on consumer risk. We have briefly summarised the key issues highlighted in the Newsletter below.

Brexit

The Newsletter stresses the importance of Brexit contingency planning. In particular, the implications of a no-deal Brexit for consumers and the impact on the obligations of (re)insurance intermediaries to existing and prospective consumers.

The Newsletter also discusses the temporary run-off regime introduced by the Irish Government (further information is available in our article) and the UK Temporary Permissions Regime (UK TPR). The CBI emphasises that firms must ensure that they notify the UK Financial Conduct Authority (FCA) if they wish to avail of the UK TPR. 

COVID-19

The CBI sets out its expectations of (re)insurance intermediaries in light of COVID-19. It highlights the importance of considering the impact of the pandemic on consumers when making decisions and engaging with consumers in an “open, fair and transparent manner”. The CBI also stresses that firms must ensure their employees remain aware of potential cyber threats, which are heightened in a remote working environment.

PCF-49 – Chief Information Officer

In the context of the CBI’s fitness and probity regime, the Chief Information Officer role was designated as PCF-49 with effect from 5 October 2020. While the PCF-49 role is not obligatory for (re)insurance intermediaries, it is a matter for each firm to decide whether it needs to appoint a PCF-49. In considering this, the CBI says that firms should consider their size and complexity, and the nature of activities and types of services provided, including information and communication technology and security risks related to its processes and services.

The Impact of COVID-19 on Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT)

The CBI highlights that as COVID-19 poses challenges to firms in relation to the carrying on of their business, this heightens the risk of money laundering and terrorist financing.

The Newsletter sets out the CBI’s expectations of firms in upholding AML/CFT standards including:

• identifying suspicious transactions;
• reviewing AML/CFT risk assessments and making any necessary adjustments to reflect the changed risk landscape; and
• adjusting AML/CFT systems and controls to reflect new risks arising from the pandemic.

Trends in the Retail Intermediaries Sector – Minimum Competency

The Newsletter notes that the CBI has identified a number of trends as part of its ongoing supervision of the retail intermediary sector including the cold-calling of consumers, breaches of the Minimum Competency Requirements (MCR) and issues regarding self-employed agents.

Of particular interest to (re)insurance intermediaries is the CBI’s comments in the Newsletter in relation to breaches of the MCR. The CBI notes the importance of retaining written records in relation to continuing professional development requirements under the Minimum Competency Code 2017.

Consumer Insurance Contracts Act 2019

The Newsletter contains a summary of the main provisions of the Consumer Insurance Contracts Act 2019 (CICA), which represents a significant overhaul in the area of insurance contracts for consumers. The CICA has important implications for insurance intermediaries as well as insurers in Ireland.  The majority of the legislative provisions introduced by the CICA took effect from 1 September 2020, with the remaining provisions taking effect from 1 September 2021. A summary of the provisions currently in force is set out in our article on the coming into force of the CICA.

Complex Products

Finally, the Newsletter emphasises the importance, for firms involved in the sale of insurance-based investment products (IBIPs), of complying with the EIOPA guidelines under the Insurance Distribution Directive on IBIPs that incorporate a structure which makes it difficult for the customer to understand the risks involved.  

Other Updates

Other updates in the Newsletter include:

• The launch of the CBI portal for all sectors on a phased basis from Q1 2021.
• The new intermediary authorisation framework. Further information on the framework is set out in our recent article.
• The retail intermediary annual return process including main findings from its recent thematic review in relation to annual return reporting requirements.
• The increase in minimum professional indemnity insurance coverage to be held by all (re)insurance intermediaries from:
  • €1,250,000 to €1,300,380 applying to each claim; and
  • €1,850,000 to €1,924,560 per year for all claims.
• A reminder to firms of the changes to the Consumer Protection Code 2012 in relation to commission arrangements and conflicts of interests. Further information on which is available in our article.

We continue to monitor developments on the topics and updates discussed above.  Please contact Eoin Caulfield, John Larkin, Ian Murray or your usual William Fry contact, if you wish to discuss further.

Contributed by Claire O’Connor