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Dáil Éireann debate -
Wednesday, 30 Jan 2002

Vol. 547 No. 1

Written Answers. - Insurance Intermediaries.

Jim O'Keeffe

Question:

436 Mr. J. O'Keeffe asked the Minister for Finance if, in the context of the regulation and supervision of investment intermediaries by the Central Bank, independent brokers have been put at a competitive disadvantage to the banks selling life insurance, pensions and related products through their life assurance subsidiaries; and his proposals to ensure that such unfair advantages are eliminated. [2410/02]

Provision for the regulation of insurance intermediaries was first introduced into law by Part IV of the Insurance Act 1989. This provided for a relatively simple system of self-regulation by the insurance industry, under the overall responsibility of the Department of Enterprise, Trade and Employment. The Investment Intermediaries Act, 1995, introduced detailed procedures for the regulation of investment intermediaries under the regulatory responsibility of the Central Bank.

As there was considerable blurring at the margins between investment and insurance products, with a significant number of intermediaries engaging in both investment and insurance business, the Insurance Act 2000, allocated regulatory responsibility for insurance intermediaries to the Central Bank, largely in accordance with the parameters set down in the 1995 Act.

Under the Investment Intermediaries Act, the Central Bank is obliged to set down various codes of conduct and conduct of business rules handbooks for all firms falling within the scope of the Act in order to ensure appropriate consumer protection. Following a lengthy consultation process, the Central Bank produced handbooks, with equivalent measures, both for independent insurance intermediaries and for banks acting as insurance intermediaries. I understand that the Department of Enterprise, Trade and Employment, which has responsibility for regulating life assurance companies, is due to publish similar codes for that sector. In the meantime, the Irish Insurance Federation has expressed an interest in developing voluntary codes for its members, pending official regulation.

I understand that the most contentious aspect of the handbooks relates to contact with potential new clients, so called "cold-calling". Although the same rules apply to both types of intermediary, banks probably have an advantage over the independent intermediaries, simply because their size and customer base. This is a reflection of general market forces rather than as a result of regulatory practices employed by the Central Bank. The bank continually reviews its codes of conduct in order to identify and address any anomalies that may arise.

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