We were asked to take part in Pat Kenny’s ‘Friday Panel’ which was hosted by Shane Coleman. The discussion was on many property matters and went on to cover politics and crime. The panel members were Michael O’Regan the political correspondent of the Irish Times, Martina Devlin who is a well known journalist and author, and lastly was our own Karl Deeter.
Return of Payments (Insurance Undertakings) Regulations 2011 (S.I. No 641 of 2011)
These regulations were introduced in 2011. They require Life companies to make returns to Revenue on an annual basis, where payments have been made to policyholders in respect of savings and investment policies.
The first returns were made to Revenue by Irish Life in September 2012. In future years, the returns must be made by 31st March each year.
Revenue may follow up in respect of some of the cases reported in the returns. This may involve follow up queries to Irish Life to seek clarification of the information returned. It may also result in queries being directed by Revenue to customers who receive the payment. Depending on the nature of the queries raised by Revenue, the customer may need to contact Irish Life to clarify details relating to the payment.
With effect from 1st January 2013, an additional requirement comes into effect arising from the new regulations. This requires Irish Life to ask customers for their PPSN/tax number at the point of sale and to record this on our systems.
When payments are made out to customers in respect …
Know your customer ‘KYC’ and fact finding
Knowing your Customer – Fact Finding
A regulated entity must know and understand the clients situation and needs, prior to offering financial advise and/or recommending financial products. The level of information gathered must be appropriate to the complexity of the product or service being sought.
The fact find must include the clients needs & objectives, personal circumstances, their financial situation plus their attitude to risk.
If during a “Fact Find” a potential client refuses to provide the information sought, then the regulated entity must inform the client that it can not proceed as the required information is not sufficient to offer them the product or services they are asking about.
However should a potential client specify both product and producer so that NO advice or information was provided then the regulated entity can proceed on an “Execution only” basis, no fact find is required and this should be noted / recorded.
Estate agents who may be unqualified?
Edel Morgan has an interesting article in the Irish Times today about estate agents having problems getting their licenses set up – the financial services industry went through the same set of issues nearly ten years ago. New forms, paperwork and bureaucracy always suffer teething problems but on the point below there is an obvious answer:
However one south Dublin estate agent, who declined to be named, said he is worried that he may not meet the requirements for licensing despite nearly 20 year’s experience. He was trading under his own name for less than three years prior to his application and the legislation says that sole traders or independent contractors need to show “evidence that the applicant was the holder of a licence or permit issued under the Auctioneers and House Agents Acts 1947 to 1973 for three of the five years immediately preceding the making of the application.”
In financial services there was a similar problem of people having a long established work record but lacking the specific qualifications that were developed for the …
Are banks breaking rules by charging account fees?
“AIB will charge me for not having enough money in my account, apparently I can’t even afford to be broke.”
Regulation is a tricky area, it is a branch of law more than of finance and like law it is open to interpretation, precedent and individual cases.
So when I see Anne Fitzgerald of the NCA say that AIB is ‘breaking the rule that required it to act in the best interests of its customers’. I am concerned because it doesn’t present the context of the rule, rather it just makes a statement.
The actual rule being mentioned is Section 2.1 & 2.2 of the 2012 Consumer Protection Code. Chapter 2 in general covers consumer credit, payment services, and electronic money. The actual text of this section (2.1/2.2) is as follows:
“A regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it that it (2.1)acts honestly, fairly and professionally in the best …
The ‘Cost’ of Regulation
David McWilliams hit an interesting point in today’s piece in the Independent about having ‘too much regulation’, and how it may repel new banks from coming here.
in late 2009 I was picked as part of a team that approached PostBank with a view to turning it into an SME business bank – our proposal never even made it as far as board meetings because they were determined to close down rather than continue, we found the whole process perverse at best.
Instead the same investor group will be setting up in the UK, meaning SME’s in Ireland lose out on funding.
It isn’t that new banks don’t want to come here, it is that they are routinely put off from doing so via the Central Bank and the way in which we grant banking licences in this country.
The other regulatory issue is Basel III.
Asking a bank during a time like this to …
New ‘Consumer Protection Code’, the proposed CPC47 going forward.
The original Consumer Protection Code was brought out in 2006 and it was a welcome augmentation to the Regulatory environment, since the financial crisis began we are increasingly hearing calls for ‘more regulation’.
Naturally, good regulation is of benefit to both industry and consumers alike, perhaps industry is actually the greater beneficiary because faith in the financial system allows funds to flow freely and in turn financial firms can make profits with greater ease albeit at lower margins (increased competition tends to go hand in hand with that environment).
However, Regulation that is there to hog-tie or ‘get back’ at either beneficiary of regulation is flawed, so something that hammers banks or consumers is ultimately not an achievement but a regression, and for that reason I can’t help but feel sceptical about the new Consumer Protection Code which will come about from the briefings laid out in consultation paper 47 (recently closed).
Where are the key areas that the failure arose?
Financial Regulator, official change name to Central Bank of Ireland
In recent correspondence the Financial Regulator wrote explaining that they have merged with the Central Bank, so in future, instead of ‘XYZ Ltd. t/a FirmName is regulated by the Financial Regulator’ companies will instead have to replace ‘Financial Regulator’ with ‘Central Bank of Ireland’. So the re-brand is now complete and the error of split regulation has now been undone.
With current advertisements and promotions you can continue as is but with future print runs or information the new information must apply.
Brokers will also have to provide an email address to the Central Bank for all regulation correspondence, as well as keeping a proper file of CPD (Continuous Professional Development) hours.
A register by firms of who is acting on their behalf must be available at all times and kept up to date, and MCR (Minimum Competency Requirements) must also be kept proving that experience is relevant to a present role.
Oversight of prudential supervision and compliance has now been moved to the Consumer Protection Codes Department within the Central Bank of Ireland.
No use having teeth if you don’t bite: FSA shows it has grit.
Below is a press release from the Financial Services Authority in the UK. This is how they deal with executives who cross the line, while we can praise reform in Ireland it is clear to see that we do not come anywhere near the standards set in the UK when it comes to discipline in the market, while over 90% of complaints are against banks, they have the fewest sanctions and yet this is the same banking system which nearly pushed the nation over the edge. The people in charge now are the same people that lead us here and it is shocking that we laud ‘new regulation’ when in fact we are still behind the times.
It is becoming evident that our own banks may have not been totally forthcoming in how they presented their own statements of affairs in the past, will similar sanctions therefore follow?
27 July 2010
FSA bans and fines former Northern Rock finance director £320,000 for misreporting mortgage arrears figures
The Financial Services Authority has fined David Jones, former finance director (FD) of …
Regulation failure: Independent brokers unable to be ‘independent’
We were thinking of changing the way that brokers operate, by saying to our clients ‘our service comes at a price, we’ll advise you on any lender in the market and be totally independent, if we place your loan with one that pays commission you can set that against your fee, and if not then pay the fee’, doing so in the belief that totally transparent and independent advice is a good thing, and something that everybody wants, the broker, the consumer and the Regulator.
Sadly this is not the case, instead the Regulator (soon due another name change to ‘Central Bank Financial Services Authority of Ireland’) is relying on the letter of the law in the Consumer Credit Act of 1995 to ensure that brokers can’t give best advice. This is an example of total regulatory failure.
The actual portion of the code is S. 116.1.b which states ‘A person shall not engage in the business of being a mortgage intermediary unless— ( a ) he is the holder of an authorisation (“a …