CPD Seminars July 2018 Compliance Update Linda Doyle Items - PowerPoint PPT Presentation

Brokers Ireland CPD Seminars July 2018

Compliance Update Linda Doyle

Items Covered • Update on transposition of Insurance Distribution Directive (IDD) • Minimum Competency Code 2017 and Statutory Instrument 391 of 2017 • General Data Protection Regulations /Data Protection Act 2018

Update on transposition of Insurance Distribution Directive (IDD)

Update on transposition of Insurance Distribution Directive (IDD) • Transposition date of the Insurance Distribution Directive is 1 July 2018. • Application date is 1 October 2018. • The Department of Finance has confirmed its transposition is faithful to the Directive with only a few enhanced provisions. • Good news for us. Many of the requirements are already in place in Ireland such as the minimum competency requirements. 5

Insurance Based investment Products (IBIPs) Restriction on the use of the term “Independent” • Must assess a sufficiently large number of insurance products available on the market. • Sufficiently diversified with regard to their type and product providers • Not to be limited to insurance products issued or provided by entities having close links with the intermediary. Brokers Ireland will be issuing a revised Terms of Business Template to reflect changes later in the Summer. 6

IBIPs (Chapter 6) – Additional Requirements Information to Customers prior to conclusion of contract: • Periodic assessment of the suitability of the recommended IBIP • Warnings of the risks associated with the IBIP • Information relating to the distribution of the IBIP including the cost of advice , the cost of the IBIP, and how the customer may pay for it, (also include third party payments) • The information provided must allow the customer to understand the overall cost , as well as the cumulative effect on the return of the investment, and where the customer requests, the breakdown of the costs. 7

Assessment of Suitability - IBIP • When providing advice, the intermediary must obtain the necessary information regarding ➢ the customers knowledge and experience, ➢ their financial situation, ➢ their ability to bear losses, ➢ investment objectives and risk tolerance • so as to enable the intermediary to recommend the IBIP that is suitable for that person. 8

Appropriateness and Reporting to Customers • Where the intermediary considers that the product is not appropriate the intermediary must warn the customer to that effect. This warning must be provided in a standardised format. • Where the customer does not provide the information required, or it is insufficient, regarding their customers knowledge and experience, their financial situation, the ability to bear losses, investment objectives and risk tolerance, the intermediary must warn them it is not in a position to determine whether the product is appropriate for them. This must be provided in a standardised format.

Additional Requirements as per Chapter VI – but already in place as per the CPC • The intermediary must maintain a record of his dealings with the customer. • Must include the documents agreed between the intermediary and the customer that set out the rights and obligations of the parties. • The intermediary must provide the customer, prior to the conclusion of the contract, with a Suitability Statement.

Insurance Product Information Document • To be drawn up by the manufacturer of the insurance product .i.e. the insurer or wholesale broker. • To follow a standardised format – to include information about the product, summer of cover, means of payment of premium and duration, exclusions, obligations, term of the contract, and means of terminating the contract. • Allows customer to make an informed decision, while taking into account the complexity of the insurance and type of customer. • EIOPA drafted standardised template.

Self-Employed Agents • Under the Insurance Mediation Regulation 2005, self-employed agents have to be registered in their own right. • However, under IDD, an insurance intermediary may be registered by another insurance intermediary, undertaking or association under the supervision of the Central Bank. • However, this is at the discretion of the Department of Finance. • Brokers Ireland have asked the Department of Finance to avail of this discretion. Indications so far is that they will. • The registering intermediary would be fully responsible for the intermediary its registering. • If you are appointing a self-employed agent, beware the revenue implications. (Also bear in mind - IIA tied agent requirements)

Approved Professional Bodies • Indications are that the Central Bank will be the competent authority for the Approved Professional Bodies as distributors of insurance products. • Accountants will no longer be regulated by their professional body for investment services. • Level playing field

Minimum Competency Code 2017 and Statutory Instrument 391 of 2017 • New requirements since January 2018 • All staff (that are offering advice or arranging a financial service) must fall into one of the following categories:- ➢ Be a qualified person. ➢ Be a Grandfathered person. ➢ Be a new entrant and is working towards a recognised qualification.

Minimum Competency Code 2017 and Statutory Instrument 391 of 2017

Obligations of the Employer • Employers must maintain a Register of all accredited persons (i.e. qualified and grandfathered persons and new entrants). Each branch must maintain their own Register. • A person who has had their professional designation removed due to failure to comply with the relevant CPD requirements must be removed from the Register.

Obligations of the Employer - continued • A person who is grandfathered or qualified who has failed to complete the 15 hours of CPD more than once in any five year period must be removed from the Register. • A person who has not met their CPD requirements and has been removed from the Register, but meets the Fitness & Probity Standards, must be restored promptly once he or she is again in compliance with the CPD requirements.

General Requirements to ensure appropriate competence and skills • You must ensure that each person subject to the Minimum Competency Code performing a relevant function on your behalf has obtained the competence and skills appropriate to the relevant function through experience, or training.

Firms must carry out an internal annual review of the following: • Qualifications of all staff which are subject to the Minimum Competency Code to ensure that the qualification held by the staff member is appropriate to the staff member’s function being carried out. • The development and experience needs of staff who are subject to the Minimum Competency Code taking into account regulatory developments and any new retail financial products you may be offering.

Firms must carry out an internal annual review of the following (continued): • Where you issue a Certificate of Competency, you must maintain a record of the certificate issued and carry out an annual review to ensure the certificates are accurate and up to date. • Your internal policies and procedures to ensure that staff, understand and apply these policies and procedures (in respect of MCC). • Check staff are completing their required number of CPD hours . The first check to be completed before 1 October and follow up thereafter if number of hours is deficient.

Approval of online processes • If you are providing services on an online platform you must ensure ➢ that the process for the selection of products and ➢ any advice or information provided on foot of that selection process is approved in writing by a person who has one or more recognised qualification , or is a grandfathered person, in respect of the function being exercised.

Retention of Records You must maintain • Records to evidence compliance with ‘ Prescribed Script Function ’ requirements. • Records in respect of CPD requirements • Records of all monitoring which you carried out on your staff’s compliance with the Minimum Competency Code. • Records which demonstrate your staff’s compliance with the CPD requirements. • Records of all breaches of the CPD requirements. • Records in relation to any pro-rata adjustments including ➢ The extent of the adjustment, ➢ The reason for the adjustment, and ➢ Where appropriate, medical certification of illness. • Any other relevant information.

Retention of Records You must establish and maintain a register which shall record information in respect of an accredited person for whom you are responsible. • Name of the accredited person • Qualification, grandfathered status, transitional status, new entrant, or prescribed script function • The relevant function and related retail financial product in respect of which the person is accredited • The date the person obtained a recognised qualification and completed the relevant experience, or was grandfathered • If the person is a new entrant; ➢ The date of commencement of the function, and ➢ The qualification being pursued.

Retention of Records • You must provide a Statement of Grandfathering Status to a grandfathered person when that person ceases employment with you, or at any other time at the request of the grandfathered person, and keep a record of it . • You must retain all records and documentation necessary to create and confirm the content of each Statement of Grandfathered Status provided.