Retail Intermediaries Regional Events
2014
Pensions Themed Inspection
• Central Bank disappointed with the level of compliance shown
• Issues arose with over half of the files reviewed, with a pattern of
issues emerging
• Central Bank’s view is that an intermediary should be able to
evidence/demonstrate compliance with the Code
• In a number of cases intermediaries did not hold relevant
information on file at the time of the inspection
• Firms provided redress to consumers where relevant
2
Pensions Themed Inspection – Next Steps
• Follow up with individual firms to rectify issues to ensure that the
best outcome is achieved for the consumer
• Results of the review will be published in a Special edition
Intermediary Times
• Further work to be considered:
• Possible further inspections
• Further work with relevant firms
• Discussions with Product Providers in relation to commission options
available to intermediaries
3
Handbook of Prudential Requirements for
Investment Intermediaries
• Change to definition of firm types
• Requirement to hold Professional Indemnity Insurance
• Requirement to notify the Central Bank when
outsourcing any important operational function
• Changes to regulatory reporting requirements
• Firms required to be in a position to meet their debts as they fall due
• Treatment of Goodwill and other Intangible Assets
• Requirement to submit Annual Return via Online reporting system
4
Advertising monitoring common case issues
•
4.10 regulatory
disclosure statement
•
9.2 (ad) clear, fair,
accurate and not
misleading
•
4.1 (info) should be
clear, accurate and up
to date
•
9.6 key information
•
9.7 qualifying criteria
•
4.7 regulatory
disclosure use
Fees and Charges
• Make full disclosure of all relevant information, to include
charges
• NB: A regulated entity must display in its public offices, in a
manner that is easily accessible to consumers, a schedule of
fees and charges imposed by that regulated entity. If the
regulated entity has a website, its schedule of fees and charges
must also be made publicly available through placing this
schedule on its website.
6
The Central Bank’s enforcement role
‘Enforcement’ Powers of the Central Bank of Ireland
• The Central Bank’s ‘enforcement’ powers:
– administrative sanctions;
– fitness and probity regime;
– revocation and refusal of licences;
– summary criminal prosecution.
• Also, reports to other agencies (e.g. Gardaí, Revenue
Commissioners, Competition Authority)
8
Who might face enforcement action?
• Regulated Financial Service Providers, including:
– Intermediaries;
– Credit Institutions;
– Insurers;
– Investment Firms;
– Stockbrokers;
– Licenced Moneylenders;
– Credit Unions
• Those concerned in the management of a regulated financial service
provider.
9
What is an Administrative Sanctions Procedure (ASP)?
• Most visible aspect of the Central Bank’s enforcement actions.
• Investigation into whether a regulated entity has failed to comply with
relevant:
– Legal obligations imposed by 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.
10
Public Enforcement Actions and Penalties (2006 –
2014)
Number of Settlements
Total Monetary Sanctions
18
9000000
16
8000000
14
7000000
12
6000000
10
5000000
8
4000000
6
3000000
4
2000000
2
1000000
0
2006 2007 2008 2009 2010 2011 2012 2013 2014
86 Settlement Agreements
11
0
2006
2007
2008
2009
2010
2011
2012
2013
€31,324,765 in fines
2014
Flow Diagram of Investigations
Information relating to a
suspected prescribed
contravention
Commencement of an
Investigation
Supervisory
Warning
Investigation Letter(s)
Replies / Submissions
Criminal
Prosecution
Supervisory
Warning
No Further
Action
Settlement
Procedure
Notice of Inquiry
Inquiry
12
The ASP 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.
13
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.
14
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.
15
Enforcement Priorities for 2014
Banking & Insurance
Credit Unions
•
Prudential requirements
•
Prudential requirements (with a focus on reserves, liquidity, lending &
investments)
•
Systems & controls
•
Timeliness and accuracy of information submitted to the Central Bank
•
Systems & controls
•
Governance
Markets
•
Prudential requirements (with a focus on large exposures)
•
MiFID conduct of business rules
•
Client Asset Requirements
•
Timeliness and accuracy of information submitted to the Central Bank
•
Systems & controls
Consumer Protection
•
Code of Conduct for Mortgage Arrears
•
Prudential requirements for retail intermediaries and debt
management firms
•
Professional indemnity insurance
•
Firms which fail to engage appropriately with the Central Bank
All Sectors
16
•
Fitness and probity obligations of the Central Bank Reform Act 2010
•
Anti-Money Laundering (AML)/Counter Terrorism Financing (CTF)
compliance
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 of failing to comply
17
Industry Funding Levy
Karen O’Leary, Industry Funding Manager
November 2014
Introduction
• Purpose
• Levy in place since 2004
• Enabling legislation: Central Bank Reform Act, 2010
• Industry Funding Regulations: made on an annual basis by means
of a Statutory Instrument
• Funding arrangements: under review by Dept of Finance
Basis for Calculation of Levy
• Revised calculation methodology introduced in 2013
• Retail intermediaries fall into low impact category
• Levies payable by Retail Intermediaries are determined with
regard to the firm’s impact score under PRISM
• In 2014, there were 7 bands and Industry Funding levies varied
between €515 and €26,500
How is Impact Score Calculated
• Determined by application of a model to certain
key information provided as part of the firm’s
OnLine Regulatory Return (ONR), namely
- Turnover
- Number of Retail Clients
- Number of Customer Facing Advisors
Default levies
• Issued to those RIs who do not have an impact
score because they failed to complete their ONR
• Default levies are cancelled and replaced with an
actual invoice following submission of the ONR
Payment Methodologies
• Electronic Funds Transfer
• Direct Debit – single/recurring
• Impact of E-Day
Further Questions
• Guide to Industry Funding Levy/FAQ which are
published on our website
• Helpline : 01-2244022
• Email : funding@centralbank.ie
Thank you