Transcript Consumer Protection Directorate

Retail Intermediaries
Patricia Moloney: Head of Consumer Protection – Retail
Intermediaries & Payment Institutions
November 2013
Introduction
Retail Intermediaries
Authorisations, Post-Authorisation Changes
Prudential & Conduct of Business
Supervision/Inspections
Referrals to Enforcement
Revocations
Joe Donnelly
Nuala Gribben
Authorisations
On-going
Supervision
PostAuthorisation
Revocations
(inspections,
ONR)
RTD
Fitness & Probity Individual
Questionnaires
In-situ Due Diligence
ONR Submission
Donal Morgan
Ann Moylan
ONR Submission Fitness and Probity
Agenda
• Presentations
– Advertising Monitoring
– Inspections
– Enforcement Process
– Submission of On-Line Return
– Minimum Competency Code
– Fitness and Probity
• Q&A
• Meet the teams
Advertising Monitoring
November 2013
Background
•
Financial Services advertisements monitored for compliance with
• Consumer Protection Code
• Other legislative requirements
•
Ensure that consumers
– appropriately protected
– have information to make an informed decision
•
No pre-approval of advertisements –
• Guidance on the Advertising Requirements
• assist on general queries where we can
5
Supervisory approach
Initial contact
with firms
• Info request
• Instruction to
withdraw (‘if
consumer detriment
risk’)
Case escalation
Other
• Case review
• Follow up action
• Advertising
Monitoring
Committee
• Engagement with
General Conduct of
Business & Prudential
Supervisors
• Use of information
for market
intelligence
- Formal letter to
withdraw
- Letter of Direction
6
Responsibilities & best practice engagement
Compliance
Officer
(regulated firm)
Client
(regulated firm –
PR/Marketing)
Advertising
agency
Central
Bank
7
Most common reoccurring issues
• Use of ‘regulatory disclosure’ (Regulated by…)
- use of incorrect regulatory disclosure statement
- incorrect application to regulated and unregulated activity
• Reference to ‘independent’ & ‘independent advice’
- Need to qualify and to be specific about sources of evidence
•
Misleading advertising
- use of phrases “up to”, “from”, ‘free’ and ‘leading’
- ‘visual representations’
• ‘Key information’ & ‘qualifying criteria’
- being put in the ‘small print’
- absence of (using T&C’s as a ‘catch-all’)
8
Examples of key information
Savings/investments
Insurance
•
Actual product (lump-sum or
savings)
•
Actual product (building or
contents) /add-on’s
•
Rate/type
•
Excess
•
Term
•
Product benefits
•
Penalties/withdrawals allowed
•
•
Min/max deposits
Restrictions/exclusions i.e. new
customers
•
Guarantees
•
Maximum payouts
•
Restrictions i.e. new business
•
Discounts applied
9
Other issues
• Reminder!
Application of Code requirements to
all formats of advertising
10
Thank you
11
Consumer Protection: Inspections
Retail Intermediaries - Regional Event Kilkenny & Wexford
November 2013
Supervision of the Retail Intermediary Sector
Online Annual
Returns
Monitoring of
Prudential
Requirements
Themed
Inspections
Reactive
Inspections
Types of Inspection for Intermediaries
Reactive Supervision
• Firm Specific
• Triage / Trigger Based
• Issues must be significant with potential for
serious impact
Thematic
• Issue Specific
• Focused
• High number of firms inspected
Reactive Supervision
The Central Bank receives information from our market
intelligence unit, internal sources, the media and other external
sources, which may be any of the following:
• Members of the public;
• Competitors;
• Other Regulators;
• Employees or ex-employees of regulated firms;
• Consumers; and
• An Garda Síochána.
Reactive Supervision
We assess the information available in respect of the firm:
• Number of customers
• Size of firm/ number of employees
• Annual return submitted on time
• ICCL fee paid
• Industry funding levy paid
• Previous regulatory history
Reactive Supervision
The supervisor will also assess aspects of the referral in their own
opinion, particularly the:
• Seriousness of potential breach
• Potential consumer detriment
• How widespread is the issue
• Inputs for each case result in a ranking of high/medium/low
risk
• Enforcement/ Legal
Themed Inspections
• A themed inspection
– Inspection team visit/review a number of firms
– Focus on only one area/issue in all firms to gauge industry
standards in that area
Professional Indemnity Insurance Theme
− Risk to consumers
− Serious prudential concern
− PRISM - PII is a key risk indicator
− Failure to comply is a criminal offence
− Enforcement action against firms that have failed to comply
Outcome of 2012 PII Themed Review
PII of 129 Intermediaries Reviewed
Overall Outcome
Enforcement Referrals
In Compliance
Administrative Sanction
Voluntary Cancellation
Supervisory Warning
Referred to Enforcement
Involuntary Cancellation
Other
16%
6%
43%
62%
14%
24%
35%
Themed Inspection – Financial Position
• 164 Firms were selected that reported a Negative Financial
Position in their Annual Online Return
• Financial Position is a Key Risk Indicator for all entities
regulated by the Central Bank of Ireland
• 3 Types of Letters issued to 164 Firms on 20 February 2013:
1. Letter of Direction issued to Investment Intermediaries;
2. Letter of Direction issued to Insurance Intermediaries; and
3. Request for Records letter issued to Mortgage Intermediaries
Themed Inspection – Financial Position Results
• 164 Firms Reviewed
.
Method of Resolution
Result from Financial Position
Theme
18,
11%
5,
3%
159,
97%
Compliant
Directions and/or
Request for
Records Complied
with
Not
Compliant
Voluntary
Revocation
141,
89%
Themed Inspection – Pension Sales Process
• Complex long term product
• Replacement (or additional) pension policies
• Initial Questionnaire
• Pre-Inspection Questionnaire (for firms selected for on-site
inspection)
• On-Site Inspection
• Off-Site Post-Inspection work & follow up
Themed Inspection – Pension Sales Process
• Sales files reviewed to ensure compliance with the Consumer
Protection Code
• Important to gather and record ALL relevant information prior
to recommendation (CPC 5.1)
• Where advising to switch a policy, advisors must research
existing policy to ensure switch is in the best interest of
consumer
• Statement of Suitability
• Important information to be provided on PRSAs- (CPC 4.53)
Compliance Checklist
‘To get it right for consumers’













Submit online annual return - timely and accurately
Ensure you have PII (IMR firm)
Ensure firm is solvent
Follow the Code when dealing with a consumer
Ensure accredited staff of firm meet Minimum Competency/ CPD
Keep up to date – Intermediary Times/ Website
Inform us immediately of proposed Acquiring Transactions (IIA firms)
Inform us about post-authorisation changes e.g. new trading name/
contact details
Ensure you have the correct authorisation for the activities you
engage in
Ensure your website/advertising is not misleading for the consumer –
differentiate between regulated and un-regulated activities
Inform RTD about proposed new Directors
Industry Funding levy – on time
ICCL Levy– on time
Thank You
Enforcement in the Central Bank
‘Enforcement’ Powers of the Central Bank of Ireland
• The Central Bank has the following ‘enforcement’ powers:
– administrative sanctions;
– fitness and probity regime;
– revocation and refusal of licences;
– summary criminal prosecution; and
– reports to other agencies (e.g. Gardaí, Revenue Commissioners,
Competition Authority)
28
Who might face enforcement action?
• Regulated Financial Service Providers, including:
– Intermediaries;
– Credit Institutions;
– Insurers;
– Investment Firms;
– Stockbrokers;
– Licenced Moneylenders; and
– Credit Unions (from 1 August 2013)
• Those concerned in the management of a regulated financial
service providers.
29
What is an ASP?
• Most visible aspect of the Central Bank’s enforcement actions.
• Investigation into whether a regulated entity has failed to
comply with:
– legal regulatory obligations (statute or statutory instrument e.g.
Consumer Credit Act, 1995, The European Communities
(Insurance Mediation) Regulations, 2005);
– Code of Conduct e.g. Consumer Protection Code; and
– A direction by the Central Bank.
30
Public Enforcement Actions and Penalties (2006 –
2012)
No. of Settlements
Total Monetary Sanctions (€)
18
9000000
16
8000000
14
7000000
12
6000000
10
5000000
8
4000000
6
3000000
4
2
0
2000000
1000000
0
2006
2007
2008
2009
2010
2011
64 Settlement Agreements
31
2012
2006
2007
2008
2009
2010
2011
2012
€23,320,200 million fines and 9
disqualifications
The Administrative Sanctions Procedure (‘ASP’)
- How we deal with issues
Flow diagram of Investigations
Information relating to a
suspected prescribed
contravention1
Commencement of an
Investigation
Supervisory
Warning
Investigation Letter(s)
Replies / Submissions
Criminal
Prosecution
Supervisory
Warning
No Further
Action
Settlement
Procedure
Notice of Inquiry
Inquiry
32
The Settlement Process and Settlement Meetings
• Full details of the Administrative Sanctions Process and
Procedures are available on the Central Bank’s Website within
the following documents:
- “Outline of the Administrative Sanctions Procedure”; and
- “Inquiry Guidelines”
- Recently revised and published (6 November 2013) Firms will now have much
greater clarity on the ASP and Inquiry Process and the various steps involved.
• These documents are provided to firms who are subject to the
ASP process at the outset of an Investigation.
33
The Settlement Process and Settlement Meetings
• Voluntary process.
• Is run in parallel to the Investigation/Inquiry.
• Full information to be provided by regulated entity in response
to any questions raised in Investigation Letters.
• Settlement is conducted in private.
• Settlement conducted on a “without prejudice” basis.
• Only one settlement meeting.
34
Settlement Meeting – On the Day
• Introduction by Central Bank.
• Central Bank sets out facts of case, legal issues and any
preliminary issues.
• Central Bank sets out seriousness and proposed terms of
settlement.
• Reply from regulated entity.
• Agreement in principle.
• Publicity statement.
• Aim is to agree:
– settlement agreement; and
– publicity statement.
35
Publicity Statements
• Contains:
– name of the regulated entity;
– the prescribed contraventions;
– the facts of the case (including relevant background);
– the sanctions imposed, including any discount;
– any mitigating factors;
– any aggravating factors; and
– an industry message.
36
Enforcement Priorities for 2013
•
Timeliness and Accuracy of
Information submitted to the
Central Bank
Client Asset Requirements
•
Errors and overcharging
•
Prudential Requirements
•
Payment Services Regulations
•
Anti-Money Laundering &
Counter Terrorist Financing
•
•
Systems and Controls
Suitability Requirements
(Consumer Protection Code –
2012)
•
Retail Intermediaries
•
Payment Protection Insurance
•
37
Developments – Legislation
• Central Bank (Supervision and Enforcement) Act, 2013
– amendments to authorised officer powers and information
gathering powers.
– 3rd party reviews.
– protected disclosure / whistle-blower regime.
– restitution orders.
– amendments to Part IIIC of the Central Bank Act 1942
• penalties of suspension and revocation of authorisations
• increased monetary sanctions
• offences for failing to comply
38
Thank you
39
Regulatory Transactions Division
Intermediaries Roadshow
November 2013
Regulatory Transactions Division
What does the Regulatory Transactions Division do?
 The Division has been established to centralise, streamline
and automate Central Bank regulatory transactions.
 RTD currently process Individual Questionnaires for
prospective Pre-Approval Control Function (PCF) holders and
is responsible for the management of the online returns
submission process.
 RTD oversees the filing of returns through the Online
Reporting System (ONR) for all divisions across the Central
Bank.
41
Regulatory Transactions Division
Queries by percentage
• Queries related to the Intermediaries
Sector for Q3 YTD has amounted to 35 %
of our overall queries coming into RTD.
• Top 3 Queries are:
1. Password Reset
2. Access Rights
3. Return Completion Guidance
42
Regulatory Transactions Division
How to Reset your Password
• The System Administrator for a firm can reset the
password of any other User in that firm.
• All Users can also avail of the self-service password
reset function which will issue a new password after
answering the security questions.
• RTD should only be contacted to reset a password if the
System Administrator has forgotten both their password
and answers to security questions.
43
Regulatory Transactions Division
User Access Issues
• The Access granted to Users within an entity is controlled by the
System Administrator.
• If you cannot see a return you should have access to – please
contact your System Administrator.
• System Administrators can control this by going to “Edit Access” in a
User’s profile.
44
Regulatory Transactions Division
Return Completion Guidance
Retail Intermediaries Annual Return
• Due 6 months after Year end.
• 4 sections are to be completed:
– General Information
– Financial Information
– Ownership Information (not applicable to sole traders)
– Conduct of Business Information
45
Regulatory Transactions Division
Return Completion Guidance
Guidance
• Guidance material for the Retail Intermediaries Annual Return is
available to you on the Central Bank website.
• From the homepage, go to Financial Regulation -> Brokers/Retail
Intermediaries -> Annual Online Return
• Guidance includes the Retail Intermediaries Annual Return Mockup and the Guidance Notes for Retail Intermediaries Annual
Return
46
Regulatory Transactions Division
Return Completion Guidance
Signing off a Return
• Limited Companies require a dual sign off
• Sole Traders only require one person to sign off
• For Tied Agents, usually the Compliance Officer of
the entity that they are tied to (e.g. Acorn Life)
completes the return; please contact them directly.
• Warnings & Errors
– Warnings should be
reviewed but require no action.
– Errors require an explanation
to be input alongside the error.
47
Regulatory Transactions Division
Contact Details
• Submit a Request via the ONR:
• Email: [email protected]
• Phone: 01 224 45 45
48
Thank you
Minimum Competency Code 2011
Background
• Minimum Competency Requirements introduced 1
January 2007
• Review in 2010
• Link with Fitness and Probity Regime
• Minimum Competency Code 2011 effective 1
December 2011
Scope
• Providing advice
• Arranging or offering to arrange
• Specified functions
• Includes:
– Restructuring and rescheduling of loans
– Amendments to insurance cover
– Services provided over the internet
Retail Financial Products
• Retail financial products:
– Life assurance
– Pensions
– Savings and investments
– Personal general insurance
– Commercial general insurance
– Private medical insurance and associated insurances
– Housing loans, home reversion agreements and associated
insurances
– Consumer credit agreements and associated insurances.
Specified Functions
• Specified functions:
– assisting consumers in making a claim
– determining the outcome of claims by consumers
– reinsurance mediation
– direct management or supervision of accredited
persons
– adjudicating on complaints
The Minimum Competency Standards
a) Recognised qualification, or
b) Grandfathering arrangements, or
c) New entrant, or
d) Prescribed script function,
and
in the case of a) and b), CPD requirements.
Prescribed Script Function
• Script devised by accredited person
• Initial and ongoing training
• Outside script – refer to accredited person
• Supervision by accredited person
• Monitoring and records
Recognised Qualifications
• Restructure of CIP and QFA
• Accredited Product Adviser
– for each category of retail financial product
Grandfathering
• Statement of Grandfathered Status
– Standard format
– Statement provided to grandfathered person when
ceasing employment or if requested
– Supporting documentation
New Entrants
• Training programme that includes:
– Initial training
– Supervision by accredited person
– Working towards a recognised qualification
– Timeframe – maximum four years
New Entrants
• A regulated firm must:
– inform new entrant of requirement to obtain
qualification;
– agree a plan;
– monitor; and
– document the reasons why an opportunity to sit an
examination is not availed of.
New Entrants
• Detailed supervision requirements, including:
– All documentation checked and signed off
– New entrant accompanied for a period
– Regular meetings and contact
– No more than seven new entrants per supervisor
– Reduction based on documented assessment
Continuing Professional Development (CPD)
• 15 formal hours per year
• At least one hour for each function undertaken
• At least one hour relating to ethics
• Surplus hours may not be carried forward
• One shortfall in five-year period
• Procedures to ensure compliance
Register and Certificate of Competency
• Register of Accredited Persons
– removal from Register for failure to complete CPD
more than once in five years
• Certificate of Competency
– confirmation for consumers that person meets the
standards
Finally…
• Key component of consumer protection measures
• Builds on the framework introduced in 2007 and
provides more clarity in a number of areas
• A wider range of professional development
opportunities
Thank you
Fitness and Probity Update
November 2013
Fitness and Probity Update
Agenda
– Fitness & Probity Regime: Initial Phases
– Fitness & Probity Regime: Initial Phases (re-opened)
– Relevant Statistics
– New since 1 December 2011
– Information and Guidance
67
Fitness and Probity Update
1. Fitness and Probity Regime: Initial Phases
1 December 2011, the Fitness & Probity Regime came into
effect for all Regulated Financial Service Providers (‘RFSPs’)
(other than Credit Unions):
– All new persons seeking to act as PCF Holder must receive
prior approval from the Central Bank via the IQ application
process.
• Competent and Capable;
• Honest, Ethical and to act with Integrity; and
• Financially Sound
– All PCF Holders as at 01 December 2011 considered InSitu PCF Holder
• In-Situ submission required by 31 March 2012 from each RFSP
detailing list of all PCF Holders and confirming the necessary due
diligence was undertaken and all persons met the Standards and
agreed to abide by them.
68
Fitness and Probity Update
1. Fitness and Probity Regime: Initial Phases (re-opened)
PCF In-Situ Return available for all RFSPs that did not previously
make submission.
 The PCF In Situ Return will be available until 01 December
2013 only;
 Thereafter RFSPs who were subject to the Regime since 01
December 2011 will not be permitted to make an In-Situ
Return.
 The Central Bank has provided guidance with instructions and
“how to” guides for RFSPs which are available on the website.
 Format of return: Excel spreadsheet of PCF holders and
accompanying declaration letter
69
Fitness and Probity Update
1a. PCF In Situ Return - Screenshot
70
2. Relevant Statistics
• The Central Bank has received c.1150 applications for the
Retail Intermediaries Sector since 1 December 2011;
• This represents c.20% of total applications received;
• c.900 applications approved / nearing completion;
• c.250 applications rejected / withdrawn;
• Fitness & Probity Service Standards met.
71
Fitness and Probity Update
3. New since 1 December 2011
PCF Holder Information
• All In-Situ information has been updated to Central Bank
records.
• PCF holder information (PCF Information Return) available to
be viewed via ONR. RFSPs have the ability to:
– Update PCF Holders effective start date or advise when an
approved person does not take up a PCF;
– Update persons residential address and/or contact email
details;
– Notify the Central Bank of PCFs holder resignation(s).
72
Fitness and Probity Update
3a. ONR PCF Information Return - Screenshot
73
Fitness and Probity Update
3. New since 1 December 2011 (cont’d…)
PCF Annual Confirmation Return (ACR):
Introduction of the new PCF ACR whereby all RFSPs will be required
to confirm existing PCF Holders continue to comply with the Fitness
and Probity Standards.
RFSPs must confirm the following on an annual basis:
1. The PCF holders listed continue to comply with the Fitness and Probity
Standards and
2. That they have obtained each PCF holder’s written agreement to
continue to abide by the Fitness & Probity Standards*
*Firms must upload a letter signed by an appropriate PCF Holder confirming
the above.
74
Fitness and Probity Update
3b. Annual PCF Confirmation Return - Screenshot
75
Fitness and Probity Update
2. Information and Guidance
The Central Bank website has webpages dedicated to Fitness and
Probity
 Regulatory Requirements and guidance
 On-going Compliance obligations
 Guidance material including
 videos
 ‘How To’ guides
 Regular updates via Regulatory Transactions Review (Bulletin)
 Performance Reports
Recommend establishing RSS feed to website for automatic updates
direct to your email.
76
Fitness and Probity Update
Thank you
77