Central Bank fines Axa €3.6m over ‘serious’ risk failures

Originally set at €5.2 million, the fine was reduced by 30% under settlement scheme

The Central Bank of Ireland has reprimanded and fined the European life and pensions division of Axa €3.6 million for a number of regulatory breaches related to risk management and the group’s handling of conflicts of interest.

Dublin-anchored Axa Life Europe (ALE) has admitted to the three breaches, which occurred over a 13-year period from 2006 to 2019, relating to its control processes for “identifying, monitoring, managing and reporting risk”, the regulator said.

Originally set at €5.2 million, the fine was reduced by 30 per cent after the firm made an early admission to the infringements under the terms of the Central Bank’s settlement discount scheme.

The fine arose out of an investigation by the German financial regulator, BaFin into an insurance product called TwinStar, which Axa began selling in 2006 before discontinuing it in 2012, shortly before ALE closed its German branch.


In 2006, BaFin wrote to ALE’s German branch, stating that references to a “parental claims guarantee” in some TwinStar policy documents suggested greater security to customers than that which was actually being provided. This was because some policy documentation failed to make clear that the guarantee was conditional and could terminate automatically if certain conditions were met.

The Irish regulator became involved in 2018 when during its consideration of a proposed sale of ALE, which sold insurance from Ireland to German customers, the Central Bank realised that the firm had not updated some policy documents from 2006 and 2007 to reflect the conditional nature of the guarantee.

A subsequent investigation uncovered significant failures in ALE’s risk-management systems over the 13-year period. Over that time, the Central Bank said, “ALE did not put in place an effective process to identify, manage, monitor and report the risks arising from approximately 30,000 TwinStar policies with terms and documentation which referenced the [claims guarantee], 80 per cent of which had not made it clear that the [guarantee] was subject to certain conditions.

The Central Bank inquiry also found that ALE “failed to establish effective conflict-of-interest policies and procedures and that it failed to conduct an adequate assessment of potential conflicts of interest” when its board considered the issues at a meeting in 2018.

“It is important that firms identify, assess and manage the risks to which they are or might be exposed, to ensure that they can meet their commitments to consumers,” said Seána Cunningham, director of enforcement at the Central Bank.

“ALE’s weak internal control framework meant that it failed to identify and monitor a cohort of policies in relation to which policy-related documentation was unclear, despite having been made aware of concerns in this regard.

“This failure meant that ALE was unable to inform its policyholders of information which was relevant to them.”

Ian Curran

Ian Curran

Ian Curran is a Business reporter with The Irish Times