BROKERS who take funds from customers for investment in insurance products will not be regulated by the Central Bank when regulatory changes for investment intermediaries are put in place. The Central Bank will only take over regulation of intermediaries selling non insurance savings and investment products.
This means that brokers who sell a mix of insurance and non insurance products will have two or more regulators. A financial services industry working party set up to advise on the Investment Intermediaries Act has warned that the new regulatory arrangement may be "unworkable in practice".
Unless one regulator has an overview of all of an intermediaries activities, consumer interests and the financial services industry will not be properly protected, according to the working party. The legislative amendment to facilitate the change in regulation is expected to be announced this week. It follows the collapse of a broker, Tony Taylor, and other financial scandals where customers of intermediaries lost funds.
The working party, representing all the main interest groups in the industry, wants the Central Bank to be the lead regulator for all investment and savings intermediaries. It has warned that it will be impossible to ring fence one part of an intermediary's savings and investment business from another.
A regulator needs to be able to have an overview of the entire operations of the intermediary including business done through separate legal entities and under different trading names, it advised.