Central Bank Thematic Review
Thu Aug 27 2020
Today you should have received communication from the Central Bank entitled “Thematic Review: Verification of data submitted in Retail Intermediaries’ Annual Returns”. Please find attached a copy of the letter, the Central Bank’s accompanying Press Release and Brokers Ireland’s Press Release in response.
The letter focuses on the verification of data submitted by Retail Intermediaries to the Central Bank in their Annual Returns. The Central Bank has stated that it will have regard to the contents of the letter when conducting future supervisory engagement.
The letter has highlighted the improvement in submission rates, from 81% in 2013 to 98% in 2020. Brokers Ireland believes that our members are to be congratulated for the significant improvement reflected in the statistics.
The CBI found that “the thematic review did not find evidence of firms submitting material information that was known to be false or misleading”. This reflects well on the intermediary sector.
Areas to Note
A number of areas were addressed in the letter of which Brokers should be cognisant:
Accuracy of Data
When submitting the Annual Return, Directors and Principals of firms should verify the accuracy of data before submitting the return. You will find guidance on the Annual Return on the Central Bank Website. This should be read carefully prior to making a submission. It should also be noted that the return allows a Broker to export all of the sections and questions into an excel sheet and this function can assist firms in preparing for the return well in advance of the submission date.
Professional Indemnity Insurance
In June this year, the Professional Indemnity insurance requirements for Brokers were updated (please find more details here). It is important that each firm checks its PI levels with its provider and enters the correct details for its professional indemnity cover when making its return.
If a firm is regulated under the IIA, it must prepare Audited Accounts. These accounts should be referred to when inputting data to the Financial Information section of the Annual Return.
Authorised Retail Intermediaries Not Actively Trading
The Central Bank takes the view that non-trading intermediaries distort the true size of the sector and affect the integrity of the Central Bank registers. Firms that are no longer trading run the risk of being in breach of legislative/regulatory requirements. If a Brokers Ireland member is considering retirement, then this point is one that will have to be borne in mind.
Central Bank Expectations of Brokers
Consider the contents of the letter and take all remedial actions necessary, including strengthening procedures and controls to ensure compliance with obligations to submit complete and accurate annual returns in a timely manner.
Discuss this letter at the next Board meeting (or equivalent meeting in the absence of a Board) and record the discussion in the meeting minutes.
Voluntarily revoke authorisations where a firm is not actively using them. Further information on the revocation process can be obtained by contacting firstname.lastname@example.org.
Investment intermediaries are to be fully aware of obligations and have robust procedures and controls in place to ensure compliance with the obligations attendant to authorisation, in particular, the requirements to maintain a net positive asset position and prepare audited accounts annually.
If you have any queries on your regulatory requirements, please contact our compliance unit at email@example.com