Brussels, 22/05/2012 (Agence Europe) - At the end of this month or beginning of next, the European Commission will publish draft changes to insurance agent rules to ensure better consumer protection and introduce a single market in this domain as part of a retail investor legislative package (see EUROPE 10611). The new rules will replace the existing directive (2002/92/EC), adjusting the consumer protection measures to fit in with the current revision of the MiFID Directive (financial instruments).
A draft directive seen by this newsletter and dating from April this year will make the following improvements: - expanding the scope of the directive to all distribution channels, such as insurance cover for car hire or purchase, managing and assessing repair requests), without covering exempt industries but raising the exclusion threshold; - restricting conflicts of interest; - introducing greater harmonisation of penalties; - improving the quality of services; - ensuring that professional qualifications correspond to the complexity of the financial products; and - simplifiying the cross-border provision of services (mutual recognition of qualifications).
Service providers will have to register online with the European Insurance and Occupational Pensions Authority (EIOPA), apart from agents selling insurance products as a sideline or who only manage damages. All companies selling insurance will have to have qualified staff and professional insurance. A compulsory publication system is being considered for life insurance, which would come into operation upon request from a client for non-life insurance. Small business will be given three years to adjust to the new rules.
Consumers will be provided with clearer information. For consultancy and advice services, salesman will be required to get to know their clients' financial system and investor profile and warn them if they are interested in unsuitable products. The draft directive increases the penalties for flouting the rules, which can be in the form of removing an agent's authorisation, banning individuals and fines of up to twice the value of the commission or profits on the missold product. (MB/transl.fl)