Settlement agreements reached with Retail Intermediary firms over failure to hold Professional Indemnity Insurance.

The Central Bank of Ireland (the “Central Bank”) has entered into settlement agreements with four retail intermediaries for failing to hold Professional Indemnity Insurance (“PII”) over a period of time. These enforcement cases have resulted from supervisory engagement conducted by the Central Bank’s Consumer Protection Directorate. The enforcement action taken against these firms demonstrates the seriousness with which the Central Bank views non-compliance with this requirement₁. While there have been previous settlements under the European Communities (Insurance Mediation) Regulations 2005, these settlements are the first to be entered into by the Central Bank with retail intermediaries who have breached the requirements imposed on them under the Handbook of Prudential Requirements for Investment Intermediaries (the “Handbook”). The Handbook came into effect on 1 October 2014.

The Central Bank’s Head of Enforcement, Brenda O’Neill, has commented as follows:

“The Central Bank views PII as a key prudential and consumer protection safeguard. It is important that the consumers know that, in the event of a valid professional negligence claim being established, there will be a source of funds available to them in connection with that claim. Ensuring compliance with PII obligations is therefore fundamental to the Central Bank’s mandate of protecting consumers in the context of the regulation of the Retail Intermediaries sector.

Firms should be aware that where consumers are put at risk through failures by firms to respect their obligations the Central Bank will apply its supervisory and enforcement powers. The Central Bank’s approach aims to act as a deterrent to others and to ensure that standards are met.“

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¹ Insurance intermediaries are required to hold PII under Regulation 17 of the European Communities (Insurance Mediation) Regulations, 2005 and Investment Intermediaries are required to hold PII under Part 4 of the Handbook of Prudential Requirements for Investment Intermediaries.