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Europe steps up its fight against fraud
European watchdogs have long been focusing on enforcement against corporate crime with a great focus on anti-corruption, economic sanctions and money laundering.
Global | Publication | January 2013
The European Parliament's Committee on Economic and Monetary Affairs (ECON) has published its draft report on the recast Insurance Mediation Directive, known as IMD2.
ECON has made some significant amendments to the European Commission’s proposal including removing mandatory disclosure requirements and granting member states far more discretion in implementing the regime. Provisions relating to professional and training requirements, and the amount and suitability of information provided to consumers, are less onerous in ECON’s draft.
Overall, the industry is likely to welcome the latest draft, particularly the rethink on remuneration disclosure which had been widely criticised.
The report sets out the European Parliament’s legislative resolution on IMD2, together with an explanatory statement of the proposed amendments which include the following main changes:
In addition, ECON imposes less onerous requirements under Chapter VI in relation to information requirements and conduct of business rules. Undertakings are no longer required to act “honestly and fairly” and "in the best interests of its customers". Instead, undertakings must act “professionally in accordance with the interests of its customers”. Similarly, information provided to the customer must be clear and not misleading but is not required to be fair. Insurers and intermediaries are likely to welcome these changes which effectively reduce their liability exposure.
A further change provides that, where direct insurers or intermediaries are using only distance communication channels (i.e. online) to conclude insurance contracts, the requirement to specify the underlying reasons for any advice given will not apply.
Finally, in relation to breaches, ECON has removed the provision allowing member states to impose an administrative sanction of up to 10 per cent of a firm’s total annual turnover. This had been particularly controversial because, in the event that a subsidiary was in breach, the sanction would be applied to the annual turnover of the parent undertaking. Instead, ECON states that pecuniary sanctions will be decided by member states in line with the range of penalties applied by the national supervisory authority.
For further information: ECON draft report on IMD2
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