EIOPA-BoS-16/323 15 December 2016 Committee on Consumer Protection and Financial Innovation (CCPFI) Mandate I. Background The Committee on Consumer Protection and Financial Innovation (CCPFI) contributes to enhancing European convergence in legislation and supervision in the field of insurance and occupational pension schemes. The unusual aspect of the CCPFI is that there are a number of Members that are not Members of EIOPA but are nevertheless responsible for supervision of insurance intermediaries at the national level, and have adhered to the principles of the Luxembourg Protocol on Insurance Mediation. Article 9(4) of Regulation 1094/2010 establishing EIOPA ( the EIOPA Regulation ) 1 requires EIOPA to establish as an integral part of the Authority, a Committee on financial innovation, which brings together all relevant competent national supervisory authorities with a view to achieving a co-ordinated approach to the regulatory and supervisory treatment of new or innovative financial activities and providing advice for the Authority to present to the European Parliament, the Council and the Commission. II. Tasks of the CCPFI The EIOPA Regulation sets out ground-breaking new powers and tasks in the field of consumer protection for EIOPA. EIOPA s primary task in this area is to contribute to enhancing customer protection 2 and foster the protection of policyholders, pension scheme members and beneficiaries for which it will have the power to develop common methodologies for assessing the effect of product characteristics and distribution processes on the financial position of institutions and on consumer protection 3. More specifically, under Article 9 of the EIOPA Regulation, EIOPA is required to take a leading role in promoting transparency, simplicity and fairness in the market for consumer financial products or services across the internal market by: Collecting, analysing and reporting on consumer trends; 1 Regulation (EU) No 1094/2010, O.J. L 331, 15.12.2010, p.48 2 Article 1(f) of the EIOPA Regulation 3 See Articles 8(1)(h) and (2)(i) of the EIOPA Regulation. EIOPA Westhafen Tower, Westhafenplatz 1-60327 Frankfurt Germany Tel. + 49 69-951119-20 Fax. + 49 69-951119-19, Website: https://eiopa.europa.eu
Reviewing and coordinating financial literacy and education initiatives by competent authorities; Developing industry training standards for the industry; and Contributing to development of common disclosure rules. In addition to this, EIOPA is required to: Monitor new and existing financial activities; Establish a Committee on financial innovation (under the terms described above). The CCPFI will play a leading role in EIOPA s work in these areas listed above. In addition, under Article 9 of the Regulation, EIOPA may: Adopt guidelines and recommendations to promote safety and soundness of markets and convergence of regulatory practice; Issue warnings in case a financial activity poses a serious threat to its core objectives; Within specific parameters, temporarily prohibit or restrict certain types of financial activities that threaten the orderly functioning of financial markets or the stability of the whole or part of the EU s financial system. The CCPFI will contribute to EIOPA s work in these areas from the perspective of consumer protection and financial innovation. Furthermore, the CCPFI will continue (or stand ready to contribute to) existing or future work instigated either on its own initiative or at the request of the European Commission in areas such as retail financial services and insurance, PRIIPs and Insurance Distribution Directive (IDD). In addition, the CCPFI s tasks include: Drafting technical standards, guidelines and recommendations, to analyse the potential related costs and benefits in accordance with Articles 10, 15 and 16 of the EIOPA Regulation respectively; Preparing and contributing to or executing impact studies necessary to assess the impact of standards or guidelines. EIOPA s strategy towards a comprehensive risk-based and preventive framework for conduct of business supervision EIOPA s strategy towards its comprehensive framework stems from its founding Regulation. The envisaged framework is an integral part of EIOPA s legal remit and strategic goals: Take a proactive role in intervening early to tackle risks of consumer detriment; Build a coordinated understanding of issues that go beyond one national market; and Foster convergence across the EU by promoting a high, effective and consistent level of regulation and supervision. The framework is based on two key principles: 2/7
Risk based identify depth and scale of risks and focusing on priorities and resources; and Preventive anticipate issues early to solve problems of the future. It is envisaged to use of the following tools to implement the framework: Consumer Trends Reports Deep and effective market monitoring Thematic Reviews Retail Risk Indicators The further implementation of the framework is to be gradual and proportionate, taking into account the fragmentation of conduct of business regulation and supervision and the different stages of development of consumer protection across the EU. The implementation of the framework, especially with regard to fostering convergence across the EU, also takes into account the national efforts to transpose the Insurance Distribution Directive (IDD). Relationship with the work of the other ESAs and in particular, the Joint Committee of the ESAs The consumer protection-related tasks in the EIOPA Regulation are mirrored in the Regulations establishing ESMA (European Securities and Markets Authority) and EBA (European Banking Authority). In this respect, Article 54 of the EIOPA Regulation provides for the establishment of a Joint Committee of ESAs, which will serve as a forum in which EIOPA will co-operate regularly and closely and ensure cross-sectoral consistency with ESMA and EBA in particular regarding [ ] retail investment products. Article 56 provides that within the scope of its tasks in Chapter II [i.e. including Consumer Protection], EIOPA will reach joint positions with EBA and ESMA as appropriate. The CCPFI acknowledges the importance of ensuring cross-sectoral consistency and reaching joint positions amongst the ESAs on matters relating to Consumer Protection. It will, in particular, be mindful of work undertaken by the Joint Committee s Subcommittee on Consumer Protection and Financial Innovation, set up in May 2012. III. Organisation of work The Committee will cooperate with other EIOPA Committees to ensure the consistency of the draft technical standards and guidelines and to ensure that adequate expertise is available for the delivering on the tasks identified above. Liaison with stakeholders in the frame of the stakeholder groups will be pursued and cooperation with other ESAs in areas of cross-sectoral relevance will be established where necessary. Through a combination of the membership of the CCPFI and internal staff resources, the aim is to ensure adequate expertise being available for delivering on the tasks identified above. 3/7
The Committee will organise itself along main work streams to be covered by smaller ad hoc drafting teams. These ad hoc drafting teams will report to the plenary meetings of the CCPFI and their work will be discussed and agreed within the CCPFI. Typically, five or six two-day meetings will be necessary to accommodate both the work on financial innovation and other consumer protection issues. Stakeholder input (from industry and consumer groups) will be sought, for example, via representation on EIOPA s stakeholder groups on insurance/reinsurance and occupational pensions, adhering to EIOPA s Consultation Practices. IV. Chairperson Ludwig Pfleger (FMA, AT) since March 2014. The Vice-Chair is Ursula Gerold (BaFin, DE) since May 2014. V. Review of the Mandate (including Chairmanship) To review at least every three years on policy matters and annually for detailed deliverables. Moreover, the mandate of the working group was reviewed during the second half of 2015 as part of a general review of the EIOPA working group structure. VI. Deliverables for 2017 (N.B. This section will be updated annually) The CCPFI s deliverables for 2017 are aligned with EIOPA s priorities for 2017 as laid down in the annual work programme. Especially relevant is the focus on: Whole product life cycle-focused consumer protection with greater emphasis on preventive, risk-based regulation and supervision; Constant quality cycle for regulation: remain clear on the underlying principles. Project Completion of draft Implementing Technical Standards on the standardised presentation format of a Insurance Product Information Document (IPID) for non-life insurance products Q1 January H 4/7
Project Other IDD deliverables: (i) initial preparatory work on market monitoring of ancillary insurance products; (ii) development of a single electronic register for passporting intermediaries (hyperlink to national registers); and (iii) revision of the Luxembourg Protocol Completion of Technical Advice to the Commission on Delegated Acts under IDD on: (i) POG (ii) conflicts of interest; (iii) inducements and (iv) assessment of suitability and appropriateness of insurance-based investment products EIOPA Instruments initiation of work Regulatory Technical Standards on the amounts for professional indemnity insurance (for completion in 2018) Ongoing Q4 Q4 November November Q1 January 2017 H Q4 (roll over to 2018) June 2017 (Approval public consultation paper) of M H Guidelines under Art 30(7) & 30(8) of the IDD on the assessment of IBIPs that incorporate a structure, which makes it difficult for the customer to understand the risks involved Annual Consumer Trends Report (consumer protection and financial innovation, including digitalisation, InsurTech, etc.) Q3 August 2017 H Q4 November H 5/7
Project Products on consumer protection (see separate Joint Committee precise work programme) will cover (i) PRIIPs KID follow up to Level 2 work including work on (a) a comprehension alert and (b) credit risk mitigation; (ii) Technical Advice to COM DA on PRIIPs with environmental and social objectives; (iii) finalisation of Report on Big Data; and (iv) work on crossborder supervision of financial services EC mandate: Net performance of common investment products including long term savings (consumer protection) Q1-Q4 To be decided M Q1-Q4 To be decided M Report Finalisation of thematic review on market conduct addressing monetary incentives in unit-linked policies. Opinions, warnings, temporary restrictions and prohibitions- As required Report on the level of reporting of complaints data under the Complaints handling Guidelines on cross-border basis and whether the EIOPA template is being used (in conjunction with Peer Review on the Complaints Handling Guidelines) Q1 Q4 March and November To be decided As required As required Q2 June M M 6/7
Project EC Action Plan on Retail Financial Services, e.g. certificate for professional indemnity insurance and/or a 29th regime for life insurance policies Retail risk indicators: annual report based on staggered approach to develop market and product monitoring by means of retail risk indicators Fifth Joint Consumer Protection Day, (in association with EBA and ESMA) Market monitoring generally and specifically under the PRIIPs Regulation with a view to potential product intervention on IBIPs Q4 As required M Q3 September H Q2 Continuous As required H Update of the CCPFI Mandate Q3 November H M The following key areas have been identified to date, where cooperation with other EIOPA Working Groups is required: 1. Occupational Pensions Committee (OPC): work on consumer protection related to pensions (where relevant). 2. IT and Data Committee (ITDC): refinement of data requirements for consumer protection and financial activities 3. Risk and Financial Stability Committee (RFSC): input from a financial stability perspective in relation to consumer trends, temporary prohibitions/restrictions of financial activities 4. Internal Monitoring Group (IMG): Development of suggestions for warnings and/or restrictions/prohibitions for financial activities, if needed. 7/7