The Insurance Distribution (Amendment) (EU Exit) Regulations 2019
2019 No. 663
Exiting The European Union
Financial Services
The Insurance Distribution (Amendment) (EU Exit) Regulations 2019
Made 25th March 2019
Coming into force in accordance with regulation 1
The Treasury, in exercise of the powers conferred by section 8(1) of the European Union (Withdrawal) Act 20181, make the following Regulations.
In accordance with paragraph 1(1) of Schedule 7 to that Act a draft of this instrument has been laid before Parliament and approved by a resolution of each House of Parliament.
PART 1
General provisions
Citation and commencement
1. These Regulations may be cited as the Insurance Distribution (Amendment) (EU Exit) Regulations 2019 and come into force on exit day.
PART 2
Amendment of retained direct EU Legislation
CHAPTER 1
Commission Delegated Regulation (EU) 2017/2358
Commission Delegated Regulation (EU) 2017/2358
2. The Commission Delegated Regulation (EU) 2017/2358 of 21 September 2017 supplementing Directive (EU) 2016/97 of the European Parliament and of the Council with regard to product oversight and governance requirements for insurance undertakings and insurance distributors is amended in accordance with regulations 3 to 7.
General provisions
3.—(1) Chapter 1 (general provisions) is amended as follows.
(2) After Article 2 (scope), insert—
“Reference to a sourcebook in the Handbook of Rules and Guidance
Article 2A. A reference in this Regulation to a sourcebook is to a sourcebook in the Handbook of Rules and Guidance published by the Financial Conduct Authority, containing rules made by the Financial Conduct Authority under the Financial Services and Markets Act 2000, as the sourcebook has effect on exit day.”.
(3) In Article 3—
(a)
(a) in paragraph 1, for “Article 25(1) of Directive (EU) 2016/97” substitute “rules 4.2.1, 4.2.2, 4.2.29, 4.2.34, 4.3.1 and 4.3.2 of the Product Intervention and Product Governance sourcebook”;
(b)
(b) in paragraph 4, for “Article 25(1) of Directive (EU) 2016/97” substitute “rules 4.2.1, 4.2.2, 4.2.29, 4.2.33 and 4.2.34 of the Product Intervention and Product Governance sourcebook”.
Product governance requirements for manufacturers
4.—(1) Chapter 2 (product governance requirements for manufacturers) is amended as follows.
(2) In Article 5 (target market), after paragraph 4, insert—
“5. For the purposes of paragraph 2, reference to an ‘insurance-based investment product’ is to an insurance product which offers a maturity or surrender value where that maturity or surrender value is wholly or partially exposed, directly or indirectly, to market fluctuations, except those products listed in paragraph 6.
6. For the purposes of paragraph 5, an ‘insurance-based investment product’ does not include:
(a) non-life insurance products as listed in Annex I of Directive 2009/138/EC3(Classes of non-life insurance);
(b) life insurance products where the benefits under the contract are payable only on death or in respect of incapacity due to injury, sickness or disability;
(c) pension products which, under national law, are recognised as having the primary purpose of providing the investor with an income in retirement, and which entitle the investor to certain benefits;
(d) officially recognised occupational pension schemes as defined in section 1(1) of the Pension Schemes Act 19934;
(e) individual pension products for which a financial contribution from the employer is required by national law and where the employer or the employee has no choice as to the pension product or provider.”.
(3) In Article 8 (distribution channels), in paragraph 3, in point (d), for “Article 17(1) of Directive (EU) 2016/97” substitute “rule 2.5-1 of the Insurance: Conduct of Business sourcebook and rule 2.1.1 of the Conduct of Business sourcebook”.
(4) In Article 9 (documentation), for “competent authorities” substitute “Financial Conduct Authority”.
Product governance requirements for insurance distributors
5. In Chapter 3 (product governance requirements for insurance distributors), in Article 12 (documentation), for “competent authorities” substitute “Financial Conduct Authority”.
Transfer of Directive Functions
6. After Article 12, insert—
“CHAPTER IIIA
Transfer of functions
Directive functions transferred to the Treasury
Article 12A.—(1) The Treasury may make regulations by statutory instrument to further specify the principles laid down in rules made by the Financial Conduct Authority under the Financial Services and Markets Act 2000, equivalent to those in Article 25(1) of Directive 2016/97/EU5.
(2) Regulations made for the purpose set out in paragraph 1 must take into account:
(a)
(a) the activities performed;
(b)
(b) the nature of the insurance products sold; and
(c)
(c) the nature of the insurance distributor6.
(3) Regulations made for the purposes set out in paragraph 1 shall not apply to insurance products referred to in rule 1.4.3(1) of the Product Intervention and Product Governance sourcebook.
(4) A statutory instrument which contains regulations under paragraph 1 is subject to annulment in pursuance of a resolution of either House of Parliament.
Directive functions transferred to the Financial Conduct Authority
Article 12B. The Financial Conduct Authority may make technical standards regarding a standardised presentation format of the insurance product information document to further specify the information referred to in rule 2.1 in Annex 3 to chapter 6 of the Insurance: Conduct of Business sourcebook.”.
Final provisions
7. After Article 13 (entry into force and application), omit the words “This Regulation shall be binding in its entirety and directly applicable in all Member States.”.
CHAPTER 2
Commission Delegated Regulation (EU) 2017/2359
Commission Delegated Regulation (EU) 2017/2359
8. The Commission Delegated Regulation (EU) 2017/2359 of 21 September 2017 supplementing Directive (EU) 2016/97 of the European Parliament and of the Council with regard to information requirements and conduct of business rules applicable to the distribution of insurance-based investment products is amended in accordance with regulations 9 to 13.
Scope and definitions
9.—(1) Chapter 1 (scope and definitions) is amended as follows.
(2) In Article 2 (definitions), after subparagraph (3), insert—
“4 ‘insurance-based investment product’ refers to an insurance product which offers a maturity or surrender value where that maturity or surrender value is wholly or partially exposed, directly or indirectly, to market fluctuations. An insurance-based investment product does not include:
(a) non-life insurance products as listed in Annex I to Directive 2009/138/EC8(classes of non-life insurance);
(b) life insurance contracts where the benefits under the contract are payable only on death or in respect of incapacity due to injury, sickness or disability;
(c) pension products which, under national law, are recognised as having the primary purpose of providing the investor with an income in retirement, and which entitle the investor to certain benefits;
(d) officially recognised occupational pension schemes as defined in section 1(1) of the Pension Schemes Act 19939;
(e) individual pension products for which a financial contribution from the employer is required by national law and where the employer or the employee has no choice as to the pension product or provider;
5 ‘insurance distribution’ has the meaning given in Article 4(5) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 200110;”.
(3) After Article 2 (definitions), insert—
“Reference to a sourcebook in the Handbook of Rules and Guidance
Article 2A. A reference in this Regulation to a sourcebook is to a sourcebook in the Handbook of Rules and Guidance published by the Financial Conduct Authority, containing rules made by the Financial Conduct Authority under the Financial Services and Markets Act 2000, as the sourcebook has effect on exit day.”.
Conflicts of interest and inducements
10.—(1) Chapter 2 (conflicts of interest and inducements) is amended as follows.
(2) In Article 3 (identification of conflicts of interest), in paragraph 1, for “Article 28 of Directive (EU) 2016/97” substitute “rules 3.3.5, 3.3.13, 10.1.3 and 10.1.8 of the Senior Management Arrangements, Systems and Controls sourcebook, in so far as those rules apply to the insurance-based investment products”.
(3) In Article 4 (conflicts of interest policy), in paragraph 1, for “Article 27 of Directive (EU) 2016/97” substitute “rules 3.3.8, 3.3.9, 10.1.3, 10.1.7 and 10.1.7A of the Senior Management Arrangements, Systems and Controls sourcebook, in so far as those rules apply to insurance-based investment products”.
(4) In Article 6 (disclosure), in paragraph 1—
(a)
(a) for “Article 28(2) of Directive (EU) 2016/97” substitute “rules 3.3.13 and 10.1.8 of the Senior Management Arrangements, Systems and Controls...
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