OREANDA-NEWS. The Central Bank today (29 May) publishes the results of its extensive review programme of retail intermediary firms, and issues its industry newsletter, the Intermediary Times, to the sector.

The supervisory review programme was carried out over 2014 and 2015 and covered 379 firms in total, representing 13% of Irish authorised firms. Some key findings include:

Examination of the sale of pensions to retail consumers:

  • The Central Bank conducted a review of the sale of personal pensions to consumers, who already held a pension policy. This review targeted nine firms, following on from a wider review of pension sales in 2013. The key finding from this review is that the standard of information gathering and record keeping needs to be significantly improved in a number of firms.  The review identified concerns about some firms’ ability to demonstrate that they sought sufficient information from consumers (e.g. personal circumstances or attitude to risk) to enable the firms to provide the best pension product to those consumers.
  • As a result of this review, the Central Bank has required four firms to undertake independent reviews of their pension sales and expects all firms to review their processes and procedures in light of the published findings from this review.

Assessment of firms’ financial positions:

  • The assessment of compliance with capital/solvency requirements found that a number of retail intermediaries were experiencing temporary financial difficulties, which can impact on a firm’s ability to meet liabilities as they fall due.
  • Following targeted intervention by the Central Bank, 94% of the 64 firms included in the review have since resolved the issue. Five firms voluntarily revoked their authorisations arising from this review.

Assessment of firms’ compliance with Professional Indemnity Insurance:

  • The Central Bank also undertook a themed review to ensure that firms held the correct level of professional indemnity insurance, which covers firms in the event that consumers make justified claims relating to professional negligence (e.g. the provision of negligent or incorrect advice).
  • Following this supervisory intervention, the Central Bank reports that 99% of the 315 firms identified (as not having the required level of PII cover) have now met requirements. The majority of firms had not increased their PII cover in line with new requirements, which took full effect in mid-2014. Twenty six firms applied to revoke their authorisations.

Speaking today, Director of Consumer Protection, Bernard Sheridan, said:"Retail intermediaries play an important part in the provision of financial services and products to consumers.  It is important that consumers can have full confidence that the firms they are dealing with are financially sound and that their interests are being looked after, particularly where firms are selling long-term products such as pensions.

In February, we published our Consumer Protection Outlook Report, which identifies key risks to consumers, including the need for firms to meet the minimum regulatory standards.  All firms should review their compliance arrangements in light of the Outlook Report and the findings from this programme of themed reviews.  We expect firms to be able to demonstrate how they are delivering positive outcomes for consumers, going beyond tick-box compliance.”