IVASS published on 5 June Regulation no. 38 concerning provisions on the corporate governance system (the “Regulation“) implementing EIOPA Guidelines pursuant to Solvency II Directive.
The Regulation will be applicable to: (i) insurance and reinsurance undertakings having a registered office in Italy (ii) the Italian branches of insurance and reinsurance undertakings having a registered office in a third State and (iii) the Italian ultimate parent company, only with respect to the provisions concerning the group corporate governance system.
FCA Consultation Paper 18/18
On 4 July 2018, the FCA released a Consultation Paper providing guidance and seeking responses on PPI mis-selling complaints, and the issue of recurring non-disclosure of commissions. The consultation follows the publication in August 2017 of amendments to provisions the FCA Handbook relating to the handling of PPI mis-selling complaints (DISP App 3).
The amendments to DISP App 3 were the culmination of a series of regulatory changes following the Supreme Court decision in Plevin v Paragon Personal Finance Limited, in which the Court held that a lender’s failure to disclose the level of commission taken from a PPI sale gave rise to an unfair relationship between creditor and borrower under the Consumer Credit Act. Previous blog posts from Hogan Lovells have considered these changes in detail.
The Plevin case and subsequent cases which have come before the courts (including the Doran case discussed below) all concerned sales of “single premium” PPI products, purchased through payment of a lump sum at the time the customer took out their loan. Although the rules set out in DISP App 3 relate to complaints regarding both single premium and “regular premium” (where customers paid for PPI on a rolling basis), the FCA has determined that there is uncertainty about some complaints regarding sales of regular premium PPI.
In particular, the FCA considers that there is uncertainty about whether firms should consider recurring non-disclosure(s) (i.e. non-disclosures after the point of sale) of the existence of, or level of, commission and/or profit share (‘RND’) when assessing mis-selling complaints.
On 4 July 2018, the FCA and the PRA released near final rules on the extension of the Senior Managers and Certification Regime (SMCR). While the majority of the rules remain the same, the regulators have made a few changes and have also provided a significant amount of extra guidance to firms who will be subject to regime. Please see a summary below of some of the key points to note for different firm types.
Key Points for Insurers
The FCA and PRA have each released near final rules on the extension of the SMCR to Insurers. In general, there do not seem to be any significant changes made since the draft proposals. The only exception to this is the narrowing of the scope of the certification regime for small non-directive firms, where the certification regime will now encompass only members of the governing body (other than PRA/FCA approved persons or non-executive directors) rather than include all members of the governing body and all employees who report directly to the governing body.
The Hogan Lovells’ Corporate Insurance Newsletter for June has been published. This provides a round-up of UK, EU and international regulatory developments relevant to UK based insurance market participants. In this issue, amongst other items, we cover:
- Papers published by HM Treasury, the Bank of England, FCA and EIOPA about preparing for Brexit
- Publication by the PRA of its letter to the House of Commons Treasury Select Committee on its review of the Solvency II risk margin
- Publication by the Law Commissions of a new draft Bill on insurable interest.
On 28 June Consob (the Italian supervisory authority on financial markets) launched a public consultation regarding amendments to its Regulation adopted with Resolution No. 11971 of 14 May 1999 (“Consob Regulation on Issuers”) in order to review the pre-contractual information requirements to be met by insurance undertakings when issuing insurance products with financial content (i.e. life insurance products belonging to insurance class III and V).
This consultation follows the recent publication of Legislative Decree No. 68 of 21 May 2018 implementing in Italy Directive (EU) 2016/97 on insurance distribution (the “IDD”) which amended respectively the Italian Insurance Code and the Consolidated Financial Act, by providing specific provisions regarding insurance based investment products (“IBIPs”) both in terms of pre-contractual disclosure requirements and conduct rules.
Our Asia insurance regulatory tracker for the first quarter of 2018 is attached.
It includes updates on the introduction of an insurance levy in Hong Kong, a consultation on agency recruitment incentives in Singapore, and new measures in relation to the use of insurance funds in China.
On 16 June Legislative Decree No. 68/2018 aimed at implementing the IDD (the “Legislative Decree“) was published on the Italian Official Journal.
The Legislative Decree will significantly impact the rules currently in force in Italy on insurance mediation set out by the Italian Insurance Code and the Italian Consolidated Financial Act.
On 8 June IVASS launched three public consultations on its draft regulations providing for secondary level legislation regarding insurance and reinsurance distribution, pre-contractual transparency requirements to be met in connection with the distribution of insurance products and on administrative sanctions.
Although the Legislative Decree approved by the Italian Government on 16 May aimed at implementing in Italy the IDD has not been published yet in the Italian Official Journal, IVASS decided to accelerate the approval process of the necessary secondary level measures. They will significantly impact the current regulations regarding the activity of insurance undertakings and intermediaries and are to enter into force by 1st October 2018.
The Hogan Lovells’ Corporate Insurance Newsletter for May has been published. This provides a round-up of UK, EU and international regulatory developments relevant to UK based insurance market participants. In this issue, amongst other items, we cover:
- Publication of the FCA’s finalised guidance on its approach to Part VII transfers of insurance business
- Publication by the PRA of its policy statement on financial management and planning by insurers
- The Financial Guidance and Claims Act 2018
Following a consultation from May to August 2017, the Financial Conduct Authority has issued its long awaited final guidance on its approach to the review of insurance business transfers under Part VII of the Financial Services and Markets Act 2000. Although the Prudential Regulation Authority takes the lead on managing the process of a Part VII transfer, the FCA plays an active role in that process and must be consulted with by the PRA at all stages. Last year, the FCA said that it had produced the draft guidance partly in response to requests from industry practitioners to help them understand the FCA’s particular approach and requirements which may be different to that of the PRA, as it has different regulatory objectives. Also, to help applicants reduce costs by ensuring a smooth review process and avoiding additional work which would arise if the FCA rejected draft documents prepared by the applicant or independent expert. This finalised guidance sets out the FCA’s key considerations and general expectations when reviewing a Part VII Transfer. Click here for our summary of the guidance.