The Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Order 2018

Division of competence between home and host state regulators

13.  After section 195B (contravention by relevant EEA firm of requirement in mortgages directive: home state regulator primarily responsible for securing compliance)(1), insert—

“Contravention by relevant EEA firm of requirement in insurance distribution directive: home state regulator primarily responsible for securing compliance

195C.— (1) This section applies if the appropriate regulator has reason to believe that a relevant EEA firm has contravened, or is contravening, a requirement to which Article 5.1 or 8.2 of the insurance distribution directive applies, unless that firm is the subject of an agreement under section 203A (in which case, the provisions in that agreement apply).

(2) The appropriate regulator must notify the relevant EEA firm’s home state regulator of the situation mentioned in subsection (1).

(3) The notice under subsection (2) must—

(a) request that the home state regulator take all appropriate measures for the purpose of ensuring that the relevant EEA firm puts an end to the contravention;

(b) state that the appropriate regulator’s power of intervention is likely to become exercisable in relation to the relevant EEA firm if it continues the contravention; and

(c) indicate any requirements that the appropriate regulator proposes to impose on the relevant EEA firm in exercise of its power of intervention in the event of the power becoming exercisable.

(4) The appropriate regulator may exercise its power of intervention in respect of the relevant EEA firm if—

(a) a reasonable period of time has elapsed since the giving of the notice under subsection (2), and

(b) conditions A to C are satisfied.

(5) Condition A is that—

(i) the home state regulator of the relevant EEA firm has failed or refused to take measures for the purpose mentioned in subsection (3)(a), or

(ii) any measures taken by the home state regulator have proved inadequate for that purpose.

(6) Condition B is that the relevant EEA firm is acting in a manner which is clearly prejudicial to the interests of consumers in the United Kingdom or to the orderly functioning of the markets.

(7) Condition C is that the appropriate regulator has informed the home state regulator of the relevant EEA firm of its intention to exercise its powers of intervention in respect of the firm.

(8) The appropriate regulator may exercise its powers of intervention in respect of a relevant EEA firm without complying with subsections (2) and (4)—

(a) in a case where the relevant EEA firm has a branch in the United Kingdom, where it decides that immediate action is necessary to protect the interests of consumers, and where measures of the home state regulator are inadequate or lacking; and

(b) in any other case, where it decides that immediate action is necessary to protect the interests of consumers.

(9) Subsections (4) and (8) apply whether or not the appropriate regulator’s power of intervention is also exercisable as a result of section 194, 194D or 195.

(10) If circumstances exist which enable the appropriate regulator to exercise its power of intervention under subsection (4), the appropriate regulator may refer the matter to EIOPA and request its assistance in accordance with Article 19 of Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority)(2).

(11) If the appropriate regulator exercises its power of intervention in respect of the relevant EEA firm by virtue of subsection (4) or (8), it must notify the home state regulator, the Commission and EIOPA, without undue delay of—

(a) the fact that the appropriate regulator has exercised that power in respect of that firm;

(b) any requirements it has imposed on the firm in exercise of the power; and

(c) the reasons for the exercise of that power.

(12) Subsection (2) is not to be regarded as requiring the PRA to notify the home state regulator in relation to the situation mentioned in subsection (1) in a case where the PRA is satisfied that the FCA is required to act, and is acting, or has acted, under subsection (2) in relation to that situation.

(13) In this section—

“appropriate regulator” means—

(a)

where the relevant EEA firm is a PRA-authorised person, the FCA or, subject to subsection (12), the PRA;

(b)

in any other case, the FCA;

“relevant EEA firm” means an EEA firm falling within paragraph 5(e) of Schedule 3 which is exercising in the United Kingdom an EEA right deriving from the insurance distribution directive.”.

(1)

Section 195B was inserted by S.I. 2015/910.

(2)

O.J. 15.12.2010 L 331/48.