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

Agreements between regulators to exercise enhanced supervision

14.  After Part 13 (incoming firms: intervention by FCA or PRA)(1) insert—

“PART 13A Enhanced supervision of firms exercising rights under the Insurance Distribution Directive

Insurance distribution directive: enhanced supervision of EEA firms by UK regulators

203A.— (1) The appropriate regulator may agree with a relevant EEA firm’s home state regulator that the appropriate regulator may exercise relevant functions in relation to the firm.

(2) The appropriate regulator must notify the firm and EIOPA of the agreement without delay.

(3) Subsection (2) does not require the PRA to notify the firm and EIOPA where the PRA is satisfied that the FCA is required to do so, or has done so, or will do so.

(4) An agreement under subsection (1) must specify which relevant functions the appropriate regulator may exercise in relation to the firm.

(5) The appropriate regulator may exercise relevant functions in relation to the firm in accordance with the agreement, as if the firm were a UK firm.

(6) In this section—

“appropriate regulator” means—

(a)

where the relevant EEA firm is a PRA-authorised person, the FCA or, subject to subsection (3), the PRA;

(b)

in any other case, the FCA;

“relevant functions” means any functions that may be exercised by the appropriate regulator in relation to a UK firm, that exist to implement, or enable to be implemented, obligations in Chapters IV to VII of the insurance distribution directive (or any functions that exist to deal with matters arising out of, or related to, any such obligations);

“primary place of business”, in relation to a firm, means the location from where the main business of the firm is managed;

“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 and whose primary place of business is the United Kingdom; and

“UK firm” has the meaning given in paragraph 10 of Schedule 3.

Insurance distribution directive: enhanced supervision of UK firms by an EEA regulator

203B.— (1) This section applies where—

(a) a UK firm is exercising a right derived from the insurance distribution directive in an EEA State other than the United Kingdom, and

(b) that EEA State is the firm’s primary place of business.

(2) The appropriate regulator may agree with the host state regulator for that EEA State that the host state regulator may exercise relevant functions in relation to the UK firm.

(3) In this section—

“appropriate regulator” means—

(a)

where the relevant UK firm is a PRA-authorised person, the FCA or the PRA;

(b)

in any other case, the FCA;

“relevant functions” means any functions that may be exercised by the host state regulator in relation to a firm for whom that regulator is its home state regulator, that exist to implement, or enable to be implemented, obligations in Chapters IV to VII of the insurance distribution directive (or any functions that exist to deal with matters arising out of, or related to, any such obligations);

“host state regulator” has the meaning given in paragraph 11 of Schedule 3;

“primary place of business”, in relation to a firm, means the location from where the main business of the firm is managed;

“UK firm” has the meaning given in paragraph 10 of Schedule 3.

Modification or waiver of rules where firm subject to enhanced supervision

203C.— (1) Where a firm is subject to an agreement under section 203A or 203B, the appropriate regulator may direct that all or any of its rules—

(a) do not apply to that firm, or

(b) apply to that firm with such modifications as may be specified in the direction.

(2) The appropriate regulator may not give or vary a direction unless it is satisfied that—

(a) compliance by the firm with the rules, or with the rules as unmodified, would not give effect to the agreement under section 203A or 203B (as the case may be), and

(b) the direction would not adversely affect the advancement of any of the appropriate regulator’s objectives.

(3) In subsection (2)(b) “objectives”, in relation to the FCA, means operational objectives.

(4) The appropriate regulator may—

(a) revoke a direction, or

(b) vary it on its own initiative or on the application of the firm to which it relates.

(5) In this section, “appropriate regulator” means—

(a) where the firm is a PRA-authorised person, the FCA or the PRA;

(b) in any other case, the FCA.

Publication of directions under section 203C

203D.— (1) Subject to subsection (2), a direction under section 203C must be published by the appropriate regulator in the way appearing to the appropriate regulator to be the best calculated for bringing it to the attention of—

(a) persons likely to be affected, and

(b) persons who are, in the opinion of the appropriate regulator, likely to be subject to a similar direction.

(2) Subsection (1) does not apply if the appropriate regulator is satisfied that it is inappropriate or unnecessary to publish the direction.

(3) In deciding whether to publish the direction, the appropriate regulator must consider whether publication—

(a) would be detrimental to the stability of the financial system of the United Kingdom,

(b) would prejudice, to an unreasonable degree, the commercial interests of the person concerned, or

(c) would be contrary to an international obligation of the United Kingdom.

(4) In this section “appropriate regulator” means—

(a) where the firm is a PRA-authorised person, the FCA or the PRA;

(b) in any other case, the FCA.”.

(1)

The heading to Part 13 was amended by paragraph 30 of Schedule 4 to the Financial Services Act 2012.