Central Bank refers Administrative Sanctions Procedure case to Inquiry in respect of an Insurance Intermediary

Following an investigation conducted by the Central Bank of Ireland (the “Central Bank”) under its Administrative Sanctions Procedure (pursuant to Part IIIC of the Central Bank Act 1942 (as amended) (the “Act”)), the Central Bank has determined that it has reasonable grounds to suspect that an insurance intermediary has committed a prescribed contravention pursuant to Regulation 17 of the European Communities (Insurance Mediation) Regulations 2005 by failing to hold satisfactory professional indemnity insurance for a period of time. In accordance with Part IIIC of the Act, an Inquiry will be held by the Central Bank to establish whether this suspected prescribed contravention has been committed by the insurance intermediary.

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Notes:

Administrative Sanctions Procedure (“ASP”) Inquiry

Part IIIC of the Act provides the Central Bank with the power to administer sanctions in respect of the commission of prescribed contravention(s) by regulated financial service providers.

Where a concern arises that a prescribed contravention has been or is being committed, the Enforcement Directorate (“Enforcement”) of the Central Bank may investigate. Following an investigation, an Inquiry may be held where there are reasonable grounds to suspect that a prescribed contravention has been or is being committed. The purpose of the Inquiry is to (i) determine if the regulated financial service provider has committed the prescribed contravention(s) and (ii) determine the appropriate sanction(s).

The ASP provides that, any time before the conclusion of an Inquiry, the matter may be resolved by entering into a settlement agreement. This is a written agreement which binds the Central Bank and the regulated entity.

Prescribed contravention

 A prescribed contravention could be a breach of:

• a provision in legislation;
• a code, or a direction, given pursuant to legislation;
• a condition or requirement imposed on a regulated entity under legislation, a code or direction; or
• any obligation imposed on any person by the legislation governing the ASP Inquiry process (i.e. Part IIIC of the Act) or imposed by the Central Bank under that legislation.

ASP Inquiry

Part IIIC of the Act sets out the overall framework for how ASP Inquiries are to be carried out. The Central Bank has prescribed Inquiry Guidelines (PDF 1.13MB) in order to set out the general procedure which the Central Bank ordinarily proposes to follow at an ASP Inquiry.

There are certain preliminary procedures which are set out in the Inquiry Guidelines ^[1] . The Regulatory Decisions Unit shall issue a Notice of Inquiry to the regulated entity. The Notice of Inquiry will:

(a) set out the suspected prescribed contravention(s) and the grounds upon which the suspicions are based, as outlined by Enforcement at referral; and
(b) append an Inquiry Management Questionnaire (“the Questionnaire”).

The Notice of Inquiry will be accompanied by a copy of all documentation provided to the Regulatory Decisions Unit by Enforcement at the time of referral together with confirmations from the Inquiry Member that he/she is not prevented from participating in the Inquiry by virtue of any conflict of interest.

The Questionnaire must be completed and returned to the Regulatory Decisions Unit within such time as specified in the Questionnaire.

The Inquiry Member will decide how the Inquiry will proceed and the procedures to be followed. The Inquiry is not a court of law and the Inquiry procedure will be kept as informal as possible. However, an Inquiry into suspected prescribed contraventions is a serious matter and the procedure at Inquiry must reflect this.

It is a matter for the Inquiry Member to decide in each Inquiry whether he/she wishes to hold an oral hearing and he/she will consider if this is necessary for a fair determination of whether the prescribed contravention(s) were committed.

Further information

Further information in relation to the ASP can be found in the Central Bank’s 2014 Outline of the Administrative Sanctions Procedure.

Further information in relation to the Inquiry process can be found in the Central Bank’s 2014 Inquiry Guidelines (PDF 1.13MB) here.
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¹ For a flowchart of this stage of the Inquiry see Appendix 1 to the Inquiry Guidelines (PDF 1.13MB).