FSMA Circular on legal requirements for persons responsible for distribution appointed at insurance and reinsurance undertakings

𝗖𝗶𝗿𝗰𝘂𝗹𝗮𝗿 𝗙𝗦𝗠𝗔_𝟮𝟬𝟮𝟰_𝟮𝟬 𝗼𝗻 𝗹𝗲𝗴𝗮𝗹 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁𝘀 𝗳𝗼𝗿 𝘁𝗵𝗲 𝗽𝗲𝗿𝘀𝗼𝗻𝘀 𝗿𝗲𝘀𝗽𝗼𝗻𝘀𝗶𝗯𝗹𝗲 𝗳𝗼𝗿 𝗱𝗶𝘀𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗼𝗻 𝗮𝗽𝗽𝗼𝗶𝗻𝘁𝗲𝗱 𝗮𝘁 𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗮𝗻𝗱 𝗿𝗲𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝘂𝗻𝗱𝗲𝗿𝘁𝗮𝗸𝗶𝗻𝗴𝘀.

This Circular, issued by the FSMA last 18 December, is addressed to insurance and reinsurance undertakings under Belgian law, as well as their branches. Its main purpose is to remind the undertakings in scope of the applicable legal requirements for the designated persons responsible for distribution (RDs), and of the obligation to maintain a file in which the company keeps the information demonstrating the RDs’ compliance with these requirements.

Articles 272 to 275 of the Insurance Act (law of 4 April 2014 on insurance), listed under Chapter 4 of Part 6 on ‘Insurance Intermediation and Distribution’ of said law, notably set out the organisational requirements for the relevant insurance undertakings. The six main organisational requirements can be summarized as follows:

• to designate at least one person responsible for distribution (RD), at a ratio of one RD per 10 persons in contact with the public (PCPs);
• the RDs and PCPs directly involved with distribution need to meet a set of legal requirements;
• internal organisation: to establish internal policies and procedures ensuring that the first two obligations are met at all times;
• to keep a file at the FSMA’s disposal on each RD and PCP, demonstrating that they comply with legal requirements;
• to communicate to the FSMA a list of the names of RDs and other team members engaged in distribution activities;
• to appoint a responsible supervisor to monitor the internal organisation and the keeping of the files on the RDs and PCPs, and to inform the FSMA about this person’s identification details.

The main purpose of this Circular is to recall the applicable legal requirements to be met by the RDs, as laid down in Article 266, 1° to 3° of the Insurance Act, i.e.:

• to possess the required professional knowledge and competence;
• the above are to be kept up to date through continuing education;
• to possess the appropriate expertise and professional reliability required for the performance of their duties;
• not being subject to a conviction for any of the cases referenced in Article 20 of the law of 25 April 2014 on the legal status and supervision of credit institutions;
• not to have been declared bankrupt within the last 10 years (unless rehabilitation was obtained).

The Circular provides some additional information on each requirement, constituting a handy reference tool. It is available in Dutch (https://lnkd.in/eUP5uDGM) or French (https://lnkd.in/euvqcbXz).

Questions? Contact our Insurance expert Sandra Lodewijckx.