Some 20 retail investment intermediaries are facing enforcement proceedings, possibly including their licences being revoked, as a result of an investigation of the sector last year by the Central Bank of Ireland.
The regulator found that 325 brokers were not compliant with its minimum mandatory reporting obligations.
Of this group, 171 are now compliant with the regulator’s rules while 134 firms have sought voluntary revocation of their authorisation.
“Further supervisory powers will be utilised in relation to the remaining 20 firms,” the Central Bank said yesterday.
A spokeswoman declined to comment on the timeframe for this “further engagement” with these firms, whose names have not been released by the regulator.
However,it is understood that they could face enforcement action, up to and including having their authorisations revoked.
The Central Bank carried out a targeted inspection last year, which included unannounced visits to 127 retail intermediary firms in 23 counties over a 14-week period. These inspections found that many intermediaries were not compliant with minimum reporting requirements.
The bank discovered that 325 brokers had failed to submit annual returns, while many of those that did, showed potential issues of non-compliance with key regulatory requirements.
"While this targeted approach may be resource intensive, it has resulted in increased overall compliance in the retail intermediary sector with 92 per cent now meeting reporting obligations which will enable us to effectively supervise them," said Bernard Sheridan, director of consumer protection at the Central Bank.
“The Central Bank has a strong consumer protection framework in place to ensure that customers of retail intermediaries are protected. Although many of these firms are small and are categorised as low impact under the Central Bank’s risk assessment framework, we have a clear and tailored strategy in place for these firms which includes the analysis of annual online returns and regular thematic inspections of the sector.”
The Central Bank is responsible for supervising more than 2,600 retail intermediaries in Ireland, which include insurance, re-insurance, investment and mortgage brokers. Some of these groups are one-person operations.
The regulator said the sector plays an important role ensuring that consumers can access financial products and the information they need to make well-informed decisions on insurance, investment and mortgage products, ranging from home and car insurance to more complex longer-term products like pensions and mortgages.
Retail intermediaries are supervised by a combination of on-site and off-site monitoring. While supervisory teams do not conduct regular face-to-face meetings with every retail intermediary, the Central Bank consistently monitors the sector through desk-based analysis of financial returns, thematic reviews, risk-based supervision and inspections.
Previous reports carried out by the Central Bank have also highlighed failures by firms to meet obligations.
Since 2011 retail intermediaries are required to submit an annual online return to the Central Bank. This is considered a key supervisory tool to identify key risk indicators, such as when a firm fails key financial health checks or does not have the correct level of Professional Indemnity Insurance in place.
According to the regulator, not submitting an annual return can “pose a serious threat” to the Central Bank’s objectives, as non-compliance in one area can often be a sign of “wider issues which can negatively impact on consumers”.
