The Central Bank has hit Axa Insurance with a fine of €675,000 for breaches of the Consumer Protection Code and for failing to meet the requirements of the Minimum Competency Requirements 2006 and the Minimum Competency Code 2011.

The bank said that Axa failed to:

• Ensure that individuals operating a prescribed script function between January 2008 and April 2012 referred requests for information and advice to an appropriately accredited individual, in contravention of the MCR and the MCC;
• Ensure that individuals operating a prescribed script function between January 2008 and April 2012 were supervised by an appropriately accredited individual, in contravention of the MCR and the MCC;
• Maintain a register of accredited persons in the format prescribed by the MCC; and
• Comply with the Complaints Resolution provisions of the 2012 Code over a six month period from January to June 2014.

As part of its settlement with the bank, Axa has accepted that it committed the breaches.

In Association with

CBI director of enforcement Derville Rowland said: “The MCR and its successor, the MCC, were introduced to establish minimum professional standards for financial service providers, with particular emphasis on areas dealing with consumers. The purpose of these standards is to ensure individuals acting for or on behalf of regulated entities in the provision of advice and associated activities, have a minimum acceptable level of competence to deal with consumers.

“In accordance with the standards, regulated entities must ensure that staff who provide advice to consumers on retail financial products hold a recognised qualification or have gained an appropriate level of experience through working in the industry.

“Non-adherence to the standards can affect the quality of service provided to consumers and creates an unacceptable level of risk to consumers in their dealings with regulated entities by, amongst other things, exposing them to unqualified and/or inexperienced staff.

“This is the first enforcement action to be taken against a firm for breaches of the MCC since it replaced the MCR. The protection of consumers of financial services remains a high level goal for the Central Bank and compliance with consumer focused legal and regulatory requirements is a key priority.”

Axa’s principal activity is the provision of motor and other non-life insurance. It is the second largest insurance provider in Ireland.

Code Breaches

In November 2014, the Central Bank conducted an on-site inspection Axa’s branch office in Derry and head office in Dublin. The inspection focused on the claims department, in particular on the team whose main function is to process motor and property claims. Members of that team operate a ‘prescribed script function’, which means that they operate within a narrow and rigid set of criteria and according to a prescribed script and routine.

During the course of the inspection, a number of suspected breaches of the MCR, the MCC and the 2012 Code were identified.

The bank’s evaluation of the breaches concluded: “The Minimum Competency standards were introduced to ensure individuals acting for or on behalf of regulated entities in the provision of advice and associated activities, have a minimum acceptable level of competence to deal with consumers.

Lack Of Supervision

“In this instance, significant levels of claims (58,118 in total) were being dealt with, over a period of more than four years, by individuals who were not supervised by, and did not have their requests for additional information and advice addressed by, appropriately accredited individuals in accordance with the provisions of the MCR and the MCC .

“The firm was therefore not in a position to ensure that its customers received the level of expertise and competence required to adequately deal with their claims as envisaged by the standards.

“While no individual instances of consumer detriment have been identified, the significant level of claims being dealt with in the manner described in the paragraph above over an extended period of time, created an unacceptable level of risk to consumers in the management of their claims.

Mitigating Factors

“Further, the complaints resolution provisions of the 2012 Code are designed to ensure the speedy, efficient and fair handling of complaints from consumers. The failure by the firm to process complaints by consumers in accordance with the manner and timeframes specified in the 2012 Code jeopardised the level of protection owed to those consumers enshrined in that code.”

The number of claims involved and the lengthy period over which the breaches occurred were the major factors influencing the size of the penalty, while Axa’s quick response in rectifying the breaches, and its cooperative attitude in regard to the investigation, were taken into account as mitigating factors by the bank.