Prudential sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries

Transcription

1 Prudential sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries Chapter Insurance mediation activity: responsibility, knowledge, ability and good repute

2 MIPU : Insurance mediation Section.1 : Application and purpose.1 Application and purpose.1.1 Application... This chapter applies to a firm with Part 4A permission to carry on insurance mediation activity..1. Purpose... The main purpose of this chapter is to implement in part the provisions of the Insurance Mediation Directive as these apply to firms regulated by the appropriate regulator. MIPU / elease Jan 016

3 MIPU : Insurance mediation Section. : Allocation of the responsibility for insurance mediation activity. Allocation of the responsibility for insurance mediation activity..1 esponsibility for insurance mediation activity... A firm, other than a sole trader, must allocate the responsibility for the firm's insurance mediation activity to a director or senior manager. [Note: Article 3(1), fourth paragraph, of the Insurance Mediation Directive].. The firm may allocate the responsibility for its insurance mediation activity to an approved person (or persons) performing: (1) a governing function (other than the non-executive director function); or () the apportionment and oversight function; or (3) the significant management function in so far as it relates to dealing in investments as principal, disregarding article 15 of the egulated Activities Order (Absence of holding out etc) (or agreeing to do so) or an activity which is not designated investment business...3 (1) Typically a firm will appoint a person performing a governing function (other than the non-executive director function) to direct its insurance mediation activity. Where this responsibility is allocated to a person performing another function, the person performing the apportionment and oversight function with responsibility for the apportionment of responsibilities must ensure that the firm's insurance mediation activity is appropriately allocated. () The descriptions of significant influence functions, other than the required functions, do not extend to activities carried on by an insurance intermediary with permission only to carry on insurance mediation activity and whose principal purpose is to carry on activities other than regulated activities (see SUP 10A.1.18 ). In this case, the firm may allocate the responsibility for the firm's insurance mediation activity to one or more of the persons performing the apportionment and oversight function who will be required to be an approved person. (3) In the case of a sole trader, the sole trader will be responsible for the firm's insurance mediation activity. elease Jan MIPU /3

4 MIPU : Insurance mediation Section. : Allocation of the responsibility for insurance mediation activity..4 Where a firm has appointed an appointed representative to carry on insurance mediation activity on its behalf, the person responsible for the firm's insurance mediation activity will also be responsible for the insurance mediation activity carried on by an appointed representative...5 The FCA will specify in the Financial Services egister the name of the persons to whom the responsibility for the firm's insurance mediation activity has been allocated by inserting after the relevant controlled function the words "(insurance mediation)". In the case of a sole trader, the FCA will specify in the Financial Services egister the name of the sole trader as the 'contact person' in the firm. MIPU /4 elease Jan 016

5 MIPU : Insurance mediation Section.3 : Knowledge, ability and good repute.3 Knowledge, ability and good repute.3.1 A firm (other than a connected travel insurance intermediary) must establish on reasonable grounds that: (1) a reasonable proportion of the persons within its management structure who are responsible for insurance mediation activity; and () all other persons directly involved in its insurance mediation activity; demonstrate the knowledge and ability necessary for the performance of their duties; and (3) all the persons in its management structure and any staff directly involved in insurance mediation activity are of good repute. [Note: Article 4(1) and () of the Insurance Mediation Directive].3. In determining a person's knowledge and ability, the firm should have regard to matters including, but not limited to, whether the : (1) has demonstrated by experience and training that he is able or will be able to perform his duties related to the firm's insurance mediation activity; and () satisfies the relevant requirements in the FCA's Training and Competence sourcebook and the Senior Management Arrangements, Systems and Controls sourcebook..3.a.3.3 In considering a person's repute the firm must ensure that the person: (1) has not been convicted of any serious criminal offences linked to crimes against property or other crimes related to financial activities (other than spent convictions under the ehabilitation of Offenders Act 1974 or any other national equivalent); and () has not been adjudged bankrupt (unless the bankruptcy has been discharged); elease Jan MIPU /5

6 MIPU : Insurance mediation Section.3 : Knowledge, ability and good repute.3.4 under the law of any part of the United Kingdom or under the law of a country or territory outside the United Kingdom. [Note: Article 4() of the Insurance Mediation Directive] The firm should give particular consideration to offences of dishonesty, fraud, financial crime or other offences under legislation relating to banking and financial services, companies, insurance and consumer protection..3.5 Firms are reminded that Principle 3 requires firms to take reasonable care to organise and control their affairs responsibly and effectively. Principle 3 is amplified by the rule which requires firms to take reasonable care to establish and maintain such systems and controls as are appropriate to its business ( SYSC and SYSC ). A firm's systems and controls should enable it to satisfy itself of the suitability of anyone who acts for it ( SYSC and SYSC 5.1. ). This includes the assessment of an individual's honesty and competence. In addition, the competent employees rule ( SYSC and SYSC ) sets out a high-level competence requirement which every firm should follow. MIPU /6 elease Jan 016