Ireland: Central Bank Update

Last Updated: 5 February 2013
Article by Sharon Daly and Darren Maher

Central Bank issues Strategic Plan 2013- 2015

On 20 November 2012, the Central Bank published its 2013-2015 Strategic Plan (“Strategic Plan”) in which it announced various changes for the future and the consolidation of existing strategies.

Some of the more noteworthy provisions of the Strategic Plan for insurance and reinsurance undertakings are:

  • The Central Bank (Supervision and Enforcement) Bill, 2011 (the “Bill”) will be a key tool in enhancing supervision and the Central Bank stated that it is soon to be revitalised. The Central Bank intends to establish an Implementation Advisory Committee to facilitate consultation of the Bill’s implementation;

  • The PRISM methodology may be extended to all regulated firms;

  • The Central Bank admitted that the proposed timeline of Solvency II transposition by 30 June 2013 and implementation by 1 January 2014 is unrealistic (as affirmed by the UK FSA);

  • The Central Bank welcomed the government's proposals to bring it within the Freedom of Information Act and to introduce specific arrangements for whistle blowers;

  • The Central Bank referred to the proposals for an impact-based approach to the regulatory levy set out in Consultation Paper 61 and stated that it expects the adoption of this new levy calculation process to run from 2014;

To view the full text of the Strategic Plan, please click here.

Updated Consumer Protection Code Guidance 

In December 2012, the Central Bank published a revised Consumer Protection Code Guidance document.

To view the full text of the updated Guidance, please click here.

Resignation of a pre-approval controlled function holder 

The Central Bank recently published a notification on its website drawing financial service providers’ attention to the requirement under the fitness and probity regime for certain information to be provided to the Central Bank when a person occupying a pre-approval controlled function (“PCF”) resigns.

These requirements are not set out in the Fitness and Probity Regulations, Standards or Guidance published by the Central Bank.

Section 12 (Proposer Declaration) of the applicant’s individual questionnaire (the “IQ”) requires the “proposer” of an applicant to a PCF to:

“Please confirm the proposing entity will notify the Central Bank of Ireland without delay of the resignation of the proposed applicant, including confirmation of the reason(s) for the resignation”.

Under the new rules, the following information which must be submitted to the Central Bank when a PCF holder resigns:

  • full name of person resigning;

  • financial service provider name and number;

  • PCF held;

  • date of resignation;

  • reason given for resignation (including copy of resignation letter);

  • contact details of the person resigning, including email address and postal address (the Central Bank may contact the resigned PCF in the course of the regulation of the financial service provider); and

  • contact details of the financial service provider.

This information should be submitted to the relevant supervisory department in the Central Bank rather than the Regulator Transactions Unit which otherwise deals with fitness and probity matters.

Update on Central Bank’s on-going investigation into payment protection insurance sales 

The Central Bank has issued an update on its on-going investigation into the sale of payment protection insurance (“PPI”) to Irish consumers. The Central Bank has confirmed that as requested the six firms, namely, The Bank of Ireland, Allied Irish Banks, EBS, GE Money, Ulster Bank and Permanent TSB, have commenced reviews of their PPI sales since August 2007. These firms have been instructed to engage independent third parties to oversee the review and the Central Bank has confirmed that it is closely monitoring the review process. The Central Bank stated that consumers of these firms do not need to do anything at this point and that the firms will be communicating with their consumers shortly to outline the approach taken and the expected timelines for completion of their reviews.

With regard to other PPI complaints, including those relating to sales prior to August 2007, the Central Bank stated that these should be dealt with in compliance with the Consumer Protection Code 2012.

The Central Bank highlighted to consumers that where a PPI related complaint or enquiry is being dealt with by claims management companies on behalf of consumers, the claims management company will charge significant fees for doing so.

Finally, the Central Bank announced that it has extended its investigation to look at PPI sales by other banks and credit institutions and that enforcement actions are being considered. The Central Bank stated that it will update consumers as developments arise. 

Intermediaries fined by the Central Bank for failure to hold professional indemnity insurance 

In a press release published on 25 October 2012, the Central Bank announced that it has entered into settlement agreements with two retail intermediaries for their failure to hold professional indemnity insurance (“PII”) for a period of time in contravention of the European Communities (Insurance Mediation) Regulations 2005 (as amended). The Central Bank noted that the failures had been discovered through themed inspections carried out by its Consumer Protection Directorate.  The Central Bank stated that each of the retail intermediaries has been reprimanded and a monetary penalty has been imposed.

The Central Bank also emphasised the importance of holding PII, stating that it is a key prudential and consumer protection tool which provides an additional resource from which a firm can pay justified claims by consumers relating to professional negligence. The Central Bank highlighted that it expects retail intermediaries to comply with the requirement to hold PII and where retail intermediaries fail to do so, they can expect vigorous investigation to follow.  Indeed, the Central Bank stated that a number of other cases relating to PII arising from themed inspections are currently under investigation.

Details of the settlement agreements can be found here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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