Central Bank fines financial advisers for lack of professional insurance

The Central Bank has fined four financial advisors for failing to hold adequate professional insurance. It marks the first time that the regulator has entered into a settlement agreement with retail intermediaries for a breach of prudential requirements.

Four retail intermediaries were each fined upwards of €1,000 for for failing to hold Professional Indemnity Insurance (PII) over a period of time. PII policies typically provide insurance cover on what is known as a “claims made” basis. So failure to hold PII on a continuous basis means that had a consumer sought to make a claim during the period when the firm had no PII in place, the protections afforded by reglations would not have been available to them.

The advisers and the relevant fines are: Robert Moynihan ( €1,225); Lorna Heffernan Finance Ltd (€1,050); Lupton Financial Services Ltd (€1,225) and Albert Reilly (€1,470).

Brenda O’Neill, head of enforcement at the Central Bank, said that its approach is to act as a deterrent to others and to ensure that standards are met.

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“The Central Bank views PII as a key prudential and consumer protection safeguard. It is important that the consumers know that, in the event of a valid professional negligence claim being established, there will be a source of funds available to them in connection with that claim. Ensuring compliance with PII obligations is therefore fundamental to the Central Bank’s mandate of protecting consumers in the context of the regulation of the Retail Intermediaries sector,” she said.

While there have been previous settlements under the European Communities (Insurance Mediation) Regulations 2005, the Central Bank said that these settlements are the first to be entered into by the Central Bank with retail intermediaries who have breached the requirements imposed on them under the Handbook of Prudential Requirements for Investment Intermediaries, which came into effect on October 1st 2014.