Spain L.C. RODRIGO ABOGADOS Jorge Angell and Rossana de la Cruz jangell@rodrigoabogados.com; rdelacruz@rodrigoabogados.com 1. Insurance intermediation activities 1.1 Is the distribution of insurance products (hereinafter referred to as insurance intermediation activities or insurance intermediation ) limited to insurance intermediaries in your country? Distribution of insurance products in Spain is carried out by insurance intermediaries (agents and brokers), bancassurance operators and by the insurer s network offices. Other distribution channels are through direct marketing, internet and underwriting agencies. The activities of insurance and reinsurance intermediaries are subject to the Private Insurance and Reinsurance Mediation Act 2006 (the PIRMA ), as amended. 1 The PIRMA transposed into Spanish legislation the provisions of Directive 2002/92/EC on Insurance Mediation (the IMD ). The PIRMA applies to intermediation activities between insurance policyholders or the insured on the one hand, and insurance companies on the other (section 2.1, PIRMA). It also applies to distribution activities carried out by insurance companies through channels other than insurance intermediaries (eg, direct marketing, internet, etc). The PIRMA does not include direct sales of insurance products, when these activities are carried out by an insurance company or its employees (section 3.1(c), PIRMA). 1.2 What does the term insurance intermediation include? Is there any definition set forth by statutory or case law? In any case, please indicate which activities/services are included in the above definition, for example, presentation or proposal of insurance products, assistance or consultancy aimed at drafting the agreement. Are collaboration activities that relate to the administration or execution of the contracts drafted, even in the case of accidents, included in the definition? Does the drafting of contracts or insurance agreements in a collective form on behalf of insured individuals also form part of insurance intermediation activities? Insurance mediation includes the activities of introducing, proposing or carrying out other work preparatory to the conclusion of insurance contracts, or activities leading to conclude such contracts, or assisting in the handling of such contracts, in 1 It should be noted that the draft bill on regulation, supervision and solvency of insurance and reinsurance entities envisages the reform of the PIRMA regarding, among other issues: (i) the insurance broker s fair analysis; (ii) the external auxiliaries; and (iii) in relation to the duty of intermediaries to offer truthful and sufficient information, the proposal provides that the Ministry of Economy and Competitiveness will set out the criteria of this duty. The draft bill has been approved by the Chamber of Deputies and is now in the Senate.
particular in the event of a claim (section 2.1, PIRMA). This definition is literally transposed from section 2.3 of the IMD. 2 1.3 Are insurance intermediation activities allowed as ancillary activities to other professional activities (eg, travel or rent-a-car services, etc) and to what extent? Furthermore, are there exceptions that allow actors, other than insurance intermediaries, to carry out insurance intermediation activities? Is it a matter related, for example, to the risk covered, the duration or the cost of the policy premium, etc? Pursuant to section 3.1(c) of the PIRMA, the information given on an accessory basis in the context of another professional activity (eg, travel agencies) would not constitute insurance mediation, provided such activity does not involve: either the assistance to the client to enter into an insurance contract, or the handling of claims for the insurance company on a professional basis; or loss adjusting and expert appraisal of claims. Under section 1.2 of the IMD, the rules contained in the PIRMA do not apply to intermediaries when all the following conditions are met: the main professional activity is different from insurance mediation; the insurance contract only requires acknowledgement of the insurance cover that is provided; the insurance contract is not a life-insurance contract and does not cover liability risks; the insurance is complementary to the provision of goods or services, like the risk of breakdown, loss of or damage to goods and damage to or loss of baggage and other risks linked to the trip booked with that provider, even where the insurance covers the risks of accidents or disease, or civil liability, provided that the cover is ancillary to the main cover for the risks linked to that travel; and the amount of the annual premium does not exceed 500, and the total duration of the insurance contract, including any renewals, does not exceed five years. 2. Insurance intermediaries requirements 2.1 In order to act as an insurance intermediary, is there need for an authorisation and/or to be enrolled in a register? If yes, what are the requirements to be authorised/enrolled in the register as an insurance intermediary (individual or legal entities, integrity and/or professional requirements, etc)? Briefly explain how it works. The PIRMA requires all intermediaries to be registered in the special administrative register of insurance intermediaries, reinsurance brokers and senior management carried by the General Directorate of Insurance and Pension Funds (Dirección General de Seguros y Fondos de Pensiones the DGS ). It is not a proper 2 On July 2012 the European Commission adopted a proposal for the revision from the IMD. The initial proposal has been renamed as the proposal for a Directive on Insurance Distribution (the IDD ). This proposal introduces a number of changes to the regulation of sales of insurance products. The main goal of the IDD is, among others, to expand the scope of insurance mediation to include insurance companies that sell directly to clients. It is expected that the revised rules for the distribution of insurance products may come into force in early 2017.
authorisation, but a formal requirement for the insurance intermediaries to be able to carry out their activity. In Spain, the DGS is responsible for the supervision of insurance intermediaries. The DGS is a division of the Ministry of Economy and Competitiveness. An insurance intermediary may be an individual or a legal entity, acting in the capacity of agent or broker. Employees of insurers involved in direct sales activities are not considered intermediaries and, therefore, are not required to be registered. The PIRMA classifies insurance intermediaries in two categories: insurance agents and insurance brokers. Additionally, the PIRMA rules the activity of mediation through the distribution networks of financial institutions. This activity is widely used in the Spanish market, especially in the life insurance sector, which was one of the pioneer markets back in the early eighties to introduce in Europe this type of distribution channel. Under the PIRMA, bancassurance operators are financial institutions (banks and credit financial institutions) or corporate entities controlled by financial institutions, or in which the financial institution owns a relevant stake (as defined in the PIRMA), which are allowed to act as agents for one (exclusive bancassurance operators) or more (tied bancassurance operators) insurance companies and use their network for the distribution of insurance products. Registration of insurance intermediaries with the DGS is subject to the fulfilment of professional requirements related to their knowledge and ability, good repute, professional indemnity insurance and financial capacity to protect clients: Knowledge and ability With regard to knowledge and ability, tied agents and brokers are required either to complete a training course, or to pass an examination on financial and insurance matters, which must meet the requirements established by the DGS. The training course and examinations are conducted by independent institutions approved by the DGS. For example brokers and tied agents must complete 500 hours of training and exclusive agents and exclusive bancassurance operators must complete 200 hours. For tied and exclusive agents and brokers that are legal entities, at least 50 per cent of the management body must complete the training course or pass the examination mentioned above. Moreover, at least 50 per cent of the members of the board of directors must have the adequate management experience for the performance of their duties. In addition, tied agents are required to hold a continuous training programme for their employees and external auxiliaries (who help insurance intermediaries to attract clients, among other duties). Exclusive agents must also have an appropriate knowledge and ability. Prior to entering into an agency contract with an exclusive agent, the insurance company shall ascertain and certify the professional ability of the agent, without the need for any training course or examination. Insurance companies must establish training programmes for their exclusive agents which will be at the disposal of the DGS. Insurance companies have to register the agents in their own agent register, which is
controlled by the DGS. The insurance companies must send the data contained in their register to the DGS electronically. Good repute Insurance intermediaries must be commercially and professionally honourable. The PIRMA states that forbidden to carry out insurance mediation activities are those persons who have criminal records for certain crimes (eg, fraud, discovery and disclosure of secrets, crimes against the public treasury and the social security and crimes against property, etc) and those who have been declared unfit to hold public office or to manage financial institutions, insurance companies or insurance mediation companies. Professional indemnity insurance Brokers must carry their own professional liability insurance, or any other financial guarantee covering their potential liability arising out of professional negligence, in any European Economic Area (EEA) country. The minimum cover is set out at 1,250,618 per claim, and at 1,875,927 in aggregate for all claims per year. Alternatively, tied agents must provide evidence that each insurance company they work with assumes such liability. Tied agents must carry their own professional liability insurance, or any other financial guarantee in the terms mentioned above, unless the insurer which they work with assumes liability for the agent s acts. Financial capacity to protect clients Regarding exclusive agents, there is no financial capacity requirement, since the PIRMA requires that premiums paid by the client to the exclusive agent will be deemed to have been paid to the insurance company, whereas any indemnities paid by the insurance company through the agent will not release the company until the client actually receives them (section 13.3, PIRMA). Tied agents, brokers and tied bancassurance operators must have financial provision for at least four per cent of annual premiums handled in the previous year, subject to a minimum of 18,760, unless an agreement has been reached with the insurance company for the payment to be made by the client, by direct debit to an account in the name of the insurer. 2.2 In what form can anyone access and verify the registration/authorisation or verify the fact that the insurance intermediary is a professional (eg via the web)? Anyone can access and verify information in regard to whether an intermediary is registered at the DGS by verifying the intermediary s details in the single information point of insurance intermediaries on the DGS website. 3 2.3 Are insurance intermediaries with a registered office in another country allowed to operate in your country and how (eg, under the right of establishment or freedom to provide services in your country, as in the EU)? If yes, under what conditions? In such a case, are they bound by the same 3 www.dgsfp.mineco.es/mediadores/punto_unico_mediadores.asp.
obligations as the insurance intermediaries with a registered office in your country? Please describe. Insurance intermediaries who are duly registered in another EEA member state will be entitled to start business in Spain, under either the freedom of establishment or the freedom to provide services regime, provided that they satisfy certain notification requirements. In both cases, they must respect the regulation dictated for reasons of the general good, as well as those relating to the protection of the insured (section 65, PIRMA). 3. Different types of Insurance intermediaries 3.1 Please list the different types of insurance intermediaries acting in your country such as agents, brokers, banks, financial intermediaries or financial advisers. As stated above, the PIRMA classifies insurance intermediaries in two categories: insurance agents and brokers. Insurance agents may be either exclusive agents (who sell products from one insurance company only, or from two insurance companies in different business lines) or tied agents (who sell products from two or more insurance companies). Bancassurance operators also act as either exclusive or tied agents. 3.2 Do insurance intermediaries need to enter into a written contract with the insurers (or receive a mandate from the insurers)? An insurance agent must sign a written agency contract with the insurance company (section 9, PIRMA). This contract shall be agreed freely by the parties and shall be governed by the Agency Contract Act 1992 on a supplementary basis. Bancassurance operators must sign an agency contract with one or more insurance companies to carry out mediation activity as agents and use their network for the distribution of these companies insurance products (section 25.1, PIRMA). 3.3 Can an insurance intermediary enter into a contract with the insurers (or receive a mandate from the insurer) and in turn enter into one or more agreements with other insurance intermediaries (the so-called horizontal distribution)? As regards the insurance agent, given the personal nature of the agency contract, the agent must personally perform his mediating role between policyholders/the insured and the insurer or insurers he works for, thus he cannot subcontract his obligation to mediate, unless there is a specific authorisation in the agency contract. 3.4 The insurance intermediaries more in detail: 3.4.1 The agent 3.4.1.1 Does the role of insurance agent exist in your country? If yes, describe the agent s functions. According to the PIRMA, the insurance agent can intervene in the mediation of all types of insurance contracts, extending his activity from the presentation and information prior to the conclusion of the insurance contract and the completion
of the contractual documentation, as well as the assistance to the insured in the management of a contract, especially in the event of a claim (sections 2.1 and 9, PIRMA). 3.4.1.2 In particular, does an agent act on behalf of the insurer or the insured? Who pays the agent s remuneration? To what kind of remuneration is the agent entitled? An insurance agent acts on behalf of the insurer (one or several insurers), promoting and concluding insurance contracts in exchange for a remuneration characteristically on a continuing and stable basis. Commission is the usual remuneration of the agent (section 11.1, PIRMA) which is set at a percentage of the premium and varies depending on the line of business and type of the insurance. Also, there is usually a differentiation between the commission for the acquisition of new clients and portfolio-based commission, which is a lower amount. Other forms of remuneration include the setting of a lump sum, fixed or variable as an alternative or complement to the commission. 3.4.1.3 If an agent acts on behalf of the insurer, describe the type of work relationship with the insurer (eg, subordinate, para-subordinate or freelance, self-employed etc). Does the principal-agent model exist, that is, is one appointed by the insurer to manage a particular branch or subsidiary? Pursuant to section 10.2 of the PIRMA, the contract between an insurance agent and an insurance company is a commercial agreement, not an employment contract. Insurance agents are self-employed intermediaries. 3.4.1.4 What type of organisation does the agent have? Can he have staff working for him (eg, sub-agents)? Insurance agents carry out their activities as owners of an autonomous business organisation, having its own facilities and staff. Insurance agents, both exclusive and tied, including bancassurance operators, can use the services of external auxiliaries that can be individuals or legal entities, in the terms agreed in the agency contract. External auxiliaries are not insurance intermediaries. For this reason, their activity is limited to attract new clients and to other administrative tasks, but without assuming any obligations. They shall not advise on performance or enforcement of the insurance contract, even in the event of a claim. 3.4.1.5 Is the relationship between the insurer and the agent regulated by a collective bargaining agreement? If yes, what does it mainly cover? Can the relationship be exclusive to a particular area? Is the remuneration established by the collective bargaining agreement? Can the provisions be waived by the parties mutual agreement? The relationship between the insurer and the agent is governed by the agency contract freely agreed by the parties. It is not regulated by a collective bargaining agreement.
3.4.1.6 Does the termination of the work relationship between the agent and insurer provide for the agent s obligation to return the portfolio of contracts? In such a case would the agent be entitled to an indemnity? The PIRMA establishes that the insurer is the owner of the portfolio. On the other hand, it recognises a credit right in favour of the agent during the term of the contract, and even after its termination, by means of payment of commissions of the contracts in force (section 11.1, PIRMA). If the insurance agency contract is terminated by the insurer due to the failure by the agent to fulfil his obligations, the agent shall lose every right to the commissions accrued from the termination of the contractual relationship; (see the decision of the Supreme Court of 29 September 1999, RJ 1999\7088). According to the Agency Contract Act 1992, applicable on a supplementary basis to insurance agency contracts, insurance agents are entitled to compensation for the termination of insurance agency contracts for reasons of goodwill and clientele. 3.4.2 The broker 3.4.2.1 Please describe the broker s services. In general terms, do the services consist of intermediation or are they similar to consultancy/advisory activities? Is the broker an independent actor? An insurance broker acts for the insured and must provide independent, professional and impartial advice to the insured demanding risk coverage of their persons, goods, interests or liabilities. The main duty, according to PIRMA, is to recommend the appropriate insurer, which provides the insurance to fulfil the insured s needs. Insurance brokers can use the services of external auxiliaries (see 3.4.1.4). External auxiliaries act under the responsibility of the insurance broker on behalf of whom they work. Generally speaking, they are the dealmakers and coordinate the parties involved (eg, the insured, the insurer, the reinsurer, etc). They are independent actors. 3.4.2.2 Who pays for the broker s remuneration (please specify case by case for the different services, if any)? Is the broker allowed to retrocede a portion of his remuneration to the insurer or to the insured? The broker s remuneration may be paid by both the client and the insurance company (section 29, PIRMA). On the one hand, the PIRMA allows remuneration agreements on a freedom of contract basis, between insurers and insurance brokers, in the form of a commercial commission for their mediation services, as long as this remuneration does not affect the independence of the broker. Any remuneration linked to rappels (or overriding commission), subsidies or total volume of operations is totally prohibited for brokers. On the other hand, the broker can enter into a written commission contract with the client in relation to a particular insurance operation, and issue a professional fee invoice to the client for the services rendered.
The disclosure of remuneration is limited. Only in cases where the insurance broker is paid both a fee by his client, and a commission by the insurer, the amount of the commission and the name of the relevant broker must be stated in the premium receipt. 3.4.3 Banks, financial intermediaries, financial advisers and others allowed to act as insurance intermediaries 3.4.3.1 Can banks, financial intermediaries and/or financial advisers act as insurance intermediaries? As regards banks and credit financial institutions, see 2.1. 3.4.3.2 Please define a financial intermediary. Are there particular requisites for the profession of financial intermediary? Does the financial intermediary have to be enrolled in another register (eg, a register of financial intermediaries)? Financial agents (or credit financial agents) are individuals or legal entities to which a bank has granted powers to act typically before clients, for and on behalf of the credit financial institution, in the negotiation or execution of typical bank operations (section 21 of Royal Decree 84/2015, implementing Law 10/2014 on the organisation, supervision and solvency of credit institutions). Financial agents and the bank must conclude an agency contract. Banks must provide the Bank of Spain once a year with a list of its agents, indicating the scope of the granted representation. The Bank of Spain shall register the agents in the bank agents register. 3.4.3.3 Please define a financial adviser. Are there particular requisites for the profession of financial adviser? Does the financial adviser have to be enrolled in another register (eg, a register of financial advisers)? Financial advisory entities ( Empresas de Asesoramiento Financiero ) are a type of investment service company that are only authorised to provide investment advice on financial instruments subject to securities market legislation. The authorisation of these entities corresponds to the National Securities Market Commission (CNMV). They can be both individuals and legal entities. Individuals shall have proper commercial and professional honourableness, as well as knowledge and experience on the investment of financial instruments. Legal entities shall have the exclusive business purpose of performing this type of investment advice. Financial advisers cannot hire agents to carry out their functions. They must be registered in the Official Register of the CNMV (sections 66 and 67 of the Securities Market Act, approved by Law 24/1988 and sections 20 to 23 of Royal Decree 217/2008 on the legal regime of investment companies and other entities providing investment services). 3.4.3.4 Can financial intermediaries and/or financial advisers distribute any insurance and/or financial products? If yes, under what conditions or with what limitations?
Financial intermediaries and financial advisers, as defined by law, cannot distribute insurance products. As regards financial products, please see 3.4.3.2 and 3.4.3.3 above. 3.4.3.5 With reference to insurance intermediaries other than agents, brokers, banks, financial intermediaries and financial advisers, as indicated under question 2.1 above (if any), please describe what kind of products they can distribute and under what conditions. Mention should be made to underwriting agencies although these entities are not insurance intermediaries and their activities are not considered as insurance mediation. Therefore, underwriting agencies (UAs) are not regulated by the PIRMA. Underwriting agencies are regulated by section 86(2) and 86(3) of the Regulation and Supervision of Private Insurance Act 2004. An underwriting agency is considered as a direct distribution channel of the insurer. Underwriting agencies can underwrite risks on behalf of insurers domiciled in Spain or in the EEA. They must be authorised by the DGS prior to conducting business in Spain. The acceptance by the insured binds the insurer, in accordance with the power of attorney granted to the underwriting agency. Amongst other requirements, they must be legal entities and present and fulfil a programme of activities and purchase professional indemnity insurance or other financial guarantee covering the whole territory of the EEA. The coverage must be at least 1.5m per loss and 2m in the aggregate for all claims for a year. Underwriting agencies must submit to the DGS their powers of attorney. Underwriting agencies are under the supervision and control of the Dirección General de Seguros y Fondos de Pensiones DGSFP and shall be subject to the breaches and sanctions regime provided for insurance companies. 4. Rules of conduct and responsibilities 4.1 Are there rules of conduct that insurance intermediaries should comply with (eg, duties in relation to the obligation of utmost care, correctness, utmost good faith, information, adequacy, transparency, conflict of interests, filing of documentation, separate accounting or other accounting obligations)? Please describe the above duties, specifying if they apply to all the different insurance intermediaries (eg, agents, brokers, banks, financial intermediaries, financial advisers, etc) and whether the content differs with particular reference to responsibility according to the type of actor/activity and person (insurer or insured) receiving the activity. The PIRMA provides specific conduct rules for insurance intermediaries and specific duties regarding pre-contractual disclosure requirements. Insurance intermediaries are under the duty to offer truthful and sufficient information when promoting, offering and underwriting insurance contracts (section 6.1, PIRMA). According to section 42 of the PIRMA, intermediaries must provide the following information prior to the conclusion of the insurance contract:
their identity and their address; details of the register which contains their registration; whether the intermediary holds more than ten per cent of the shares or voting rights in a particular insurance company; whether an insurance company holds more than ten per cent of the voting rights or capital of the intermediary; the procedures by which a customer may lodge a complaint and, where appropriate, the out-of-court dispute resolution procedures; and the processing of their personal data in accordance with the Personal Data Protection Act. Depending on their status, insurance intermediaries may also be required, prior to the conclusion of an insurance contract, to provide the following information: exclusive agents must specifically disclose that they are tied to one insurance company; tied agents must specifically disclose they are tied to several insurance companies; and brokers must specifically disclose whether they give advice based on fair analysis. The intermediary must also specify the demands and the needs of the client and describe the basis for recommending a certain product. The information must be provided to the client on paper or in some other durable medium available and accessible to the client, in a clear and accurate manner, comprehensible to him and, in any of Spain s official languages or any other languages agreed between the parties. The information, however, may be provided orally if the customer requests it, or where immediate cover is necessary (section 43, PIRMA). 4.2 Does the insurance intermediary represent the insurer? By way of example, is the agent also the insurer s representative vis-à-vis the client, and if so, does this also apply during trial before a court? Is there a matter of imputation of knowledge? What happens when a broker has information on matters relevant to the insurer s decision to insure which the broker fails to disclose to the insurer? Is the insured deemed to have breached its duty of disclosure in such circumstances? In which cases? Can the insurance intermediary be accountable for the contracts he executed on behalf of the insurer? Section 12.1 of the PIRMA establishes that communications carried out by the policyholder to the insurance agent who mediates or has mediated in the contract shall have the same effect as if they had been made directly to the insurer. That is, the agent represents the insurer. Furthermore, in order to strengthen clients protection, section 13.3 of the PIRMA establishes that premiums paid by the client to the exclusive agent will be deemed to have been paid to the insurance company, whereas any indemnities paid by the insurance company through the agent will not release the company, until the client actually receives them. This provision refers only to the payment of the premium,
accepting the full legal representation of any exclusive insurance agent to collect the amount of the premium. As explained above, the insurance agent represents the insurer for the receipt of the premium payment and the receipt of communications by the policyholder, the insured or beneficiary (eg, change of address of the insured, communication on risk aggravation, notice of loss, etc). The insurance agent does not represent the insurer before the court. The duty of disclosure or declaration of the risk lies on the policyholder or insured (section 10 of the Insurance Contract Act 1980). 4.3 Is the insurer jointly liable for damages caused by the insurance intermediary, appointed by the same, when executing intermediary activities? Who is liable vis-à-vis the insured person? Is it always the intermediary or the insurer? Section 18 of the PIRMA establishes that the insurer is liable for the acts or omissions of their exclusive agents. As regards the tied agent, whether the insurer or the agent is liable or not will depend on who bears responsibility in the agency agreement signed between the insurer and the agent. If the agent has agreed to bear responsibility, he will have to obtain professional indemnity cover or any other appropriate financial guarantee for his activities in the EEA (section 21.3(h), PIRMA), see 2.1(c). 4.4 Are there particular regulations or specific forms of compensation for damages caused to the insured person? No, there are no particular regulations nor specific forms of compensation for damages caused to the insured. Generally the Spanish civil liability rules would apply. 5. Supervision and sanctions 5.1 Regardless of the requirement of an authorisation and/or enrolment, are insurance intermediaries subject to the control of supervisory bodies? Does the supervisory body have powers/duties of prudential supervision on the insurance intermediary s activities, and if so, in what way does it act? Insurance intermediaries are subject to the control of the DGS. The DGS s mission is to supervise the Spanish insurance sector, mainly so that insurance companies and insurance intermediaries comply with the rules in place and that they are able to meet their obligations towards clients. The DGS has broad supervisory powers. The DGS can request information on all aspects of the insurance intermediaries and their activities. The supervision may relate to their legal, technical and economic-financial situation. Any documents related to the insurance intermediaries operations can be examined. Formal inspections are carried out periodically. The DGS can impose special control measures in certain circumstances, and can impose sanctions on insurance intermediaries in breach of Spanish regulations.
5.2 Are there fines for violations of the insurance intermediaries obligations? If yes, please describe. The PIRMA specifies three categories of regulatory breaches: very serious, serious and slight (section 55.1, PIRMA). The DGS is empowered to impose administrative sanctions on insurance intermediaries in the case of serious and slight breaches. The Ministry of Economy and Competitiveness imposes sanctions for very serious breaches at the recommendation of the DGS (section 59, PIRMA). The range of sanctions that the DGS and the Ministry of Economy and Competitiveness may impose is prescribed in the PIRMA: a) very serious breaches can entail one of the following sanctions: (i) cancellation of the registration in the special administrative register of insurance intermediaries, reinsurance brokers and senior management; (ii) suspension of the right to operate as tied insurance agent, tied bancassurance operator and insurance broker for a period of time not exceeding ten years; (iii) publication of the breach; (iv) monetary fine from 15,001 to 30,000. b) serious breaches can entail any of the following sanctions: (i) suspension of the right to operate as tied insurance agent, tied bancassurance operator and insurance broker for a period not exceeding one year; (ii) publication of the breach; (iii) public reprimand; (iv) monetary fine from 6,001 to 15,000. In both types of breaches (very serious and serious) the publication of the breaches is compatible with any of the other sanctions imposed. c) slight breaches: (i) private reprimand or monetary fine for up to 6,000. 5.3 Do sanctions also apply to foreign intermediaries who operate in your country? Yes. Insurance intermediaries domiciled in another EEA member state are subject to the disciplinary power of the DGS. 5.4 Is there a consultation procedure with the insurance intermediary before the fine is applied? As a general rule, there is a period to submit defence allegations before the sanction (penalty/fine) is applied. The procedure to penalise the breach of applicable Spanish regulations is governed by Act 30/1992 on the legal system applicable to Public Administration and the
Common Administrative Procedure, and the Regulation of the procedure for the exercise of the power to impose sanction, approved by Royal Decree 1398/1993. The main steps of an administrative sanctioning procedure are as follows: notification of the initiation of proceedings; submission of defense allegations: The DGS will grant a period of 15 days to submit defence allegations; presentation of evidence; notification of the proposal of resolution the DGS will issue a proposed resolution and will grant an additional 15 days period to submit further defence allegations; notification of the resolution the DGS in the case of serious infractions, or the Ministry of Economy in the case of very serious infractions, will issue the final resolution. As a general rule, administrative resolutions can be appealed before the same administrative body that has issued them, and then appealed to administrative courts. 5.5 Could the application of more fines, or the breach of particular regulations, result in the revocation of the authorisation, or in the intermediary being struck off the register (if any), or in the prohibition to act as an insurance intermediary? If so, what are the most relevant circumstances? Yes, the breach of particular regulations could result in the intermediary being struck off the register. For example, the exercise of intermediation insurance activities without being registered as such in a register legally admitted under the regulations of the home EEA Member State, or exceeding the functions authorised by the registration, will be considered very serious infractions (section 55.3(a), PIRMA). As regards sanctions, please see 5.2.