Brokers Association criticises ‘lax’ European regulatory system

PAMELA NEWENHAM

The Irish Brokers Association has urged the Central Bank of Ireland to put pressure on Malta's Financial Services Authority, to ensure the Irish taxpayer does not have to pick up the bill relating to the collapse of Setanta Insurance.

The Dublin-based insurer, which was licensed in Malta but traded only in Ireland, went into liquidation earlier this month. As a consequence, the insurer has suspended all payments that were already in the process of being issued.

"The European regulatory system needs a radical overhaul. The system in its current state allows insurance companies, which are primarily owned by Irish people and principally based in Ireland, to sell exclusively to Irish customers - but to be regulated in a different jurisdiction," Irish Brokers Association president John Bissett said.

He said insurance entities operating in Ireland, selling to Irish consumers should be regulated by the Central Bank of Ireland.

“In an era of heightened regulation, Irish consumers need to know that they are protected regardless of where that entity is regulated,” he added.

Setanta was founded by Mike Matthews in Ireland in 2007 with the backing of individual investors. Mr Matthews left the company in 2011, claiming that investors had failed to back his vision to grow the business.

The company, which has offices in Blanchardstown in west Dublin, had been selling mainly commercial motor insurance through brokers and was known as a low-cost operator. It is understood the company has about 75,000 Irish-based customers on its books.