Malta Financial Services Authority (‘MFSA’) Updates
Update to Rulebooks for Investment Service Providers
The MFSA has updated certain sections of the Investment Service Rules for Investment Service Providers.
The Rules have been amended in several sections, namely in relation to:
These amendments have been implemented to transpose Commission Implementing Regulation (EU) 2018/1212, as well as to align the Rules to provisions from Directive (EU) 2017/828 (‘SRD II’).
For more information: https://www.mfsa.mt/publication/update-to-investment-services-rulebooks/
Circular to Investment Services Licence Holders and Collective Investment Schemes
The MFSA has updated its Circular on the Fitness and Properness Assessment of Committee Members involved with Investment Services Licence Holders and Collective Investment Schemes to incorporate information on online personal questionnaires (PQ) and the notification on the process for non-approved roles. Thus, as of 5th October 2020, Committee Members and/or Valuation Officers shall no longer be required to submit a PQ form.
The License Holder (‘LH’) portal now features amendments pertaining to the online PQ form.
Prospective officials of ISLHs and/or CISs, whose role is subject to regulatory approval, are now to be aware that the dropdown list under the field ‘Proposed Positions(s)’ shall only include roles which require the submission of a PQ and therefore, any other involvement type which does not fall under this category is excluded.
MFSA Implements Changes in line with Insurance Distribution Directive
On 30th July 2019 the EIOPA issued a report on the requirement of Article 11(5) of Directive (EU) 2016/97 (‘IDD’), entitled Insurance Distribution Directive – Report Analysing National General Good Rules. General good rules are provisions which form part of the host Member State’s legal system and establish further requirements to address specificities of the respective EU markets. Such provisions must be adhered to by those undertakings authorised in a Member State and which carry out cross-border activities in another Member State.
The MFSA, to better accommodate IDD requirements relating to the imposition of general good requirements and which reserve the matters pertaining to professional and organisational requirements to the home member state, shall be withdrawing the general good requirement of Chapter 8 of the Insurance Distribution Rules from Chapter 16 of the Insurance Distribution Rules.
Chapter 8, therefore, shall no longer pertain to European insurance intermediaries which establish a branch in Malta in terms of Chapter 16 on the Freedom of Establishment and Freedom to Provide Services by a European Intermediary issued under the Insurance Distribution Rules.
For more information: https://www.mfsa.mt/wp-content/uploads/2020/10/Circular-on-the-amendments-to-the-Annexes-to-Chapter-16-of-the-Insurance-Distribution-Rules-and-in-the-Annexes-to-Chapter-9-of-the-Insurance-Rules.pdf
European Securities and Markets Authority (‘ESMA’) Updates
Call for Evidence on the review of transparency requirements for equity and non-equity instruments
Through its recent Call for Evidence (‘CfE’) vis-à-vis the review of transparency requirements for equity and non-equity instruments, ESMA is striving to collect input and views on practical issues related to the application of RTS 1 and RTS 2 that market participants may have encountered since the application of MiFID II/MiFIR.
ESMA moreover is seeking to receive feedback regarding any technical issues, policy gaps and unclear provisions that market participants may have experienced at implementation level. Furthermore, the CfE aims to collect input from stakeholders on the application of pre- and post-trade transparency requirements.
Participants are to send in their responses through the ESMA website by 31 October 2020.
European Insurance and Occupational Pensions Authority (EIOPA) Updates
EIOPA finalises guidelines on information and communication technology security and governance
In its finalised Guidelines on Information and Communication Technology (ICT) Security and Governance, EIOPA seeks to provide guidance to national supervisory authorities and market participants on how regulation regarding operational risks under Directive 2009/138/EC and the Commission’s Delegated Regulation 2015/35, is applied in case of ICT security and governance.
The guidelines establish that operational resilience is a crucial tool to protect insurance and reinsurance undertakings’ digital assets. Particularly, the guidelines:
These guidelines are to start applying to national supervisory authorities as from 1 July 2021.
EIOPA’s approach to the effective supervision of product oversight and governance
As of 8th October 2020, the EIOPA has adopted a new approach to the supervision of product oversight and governance (POG) requirements. EIOPA indeed seeks to support insurance manufacturers and distributors when implementing their own POG policies and, moreover, make their communication with national supervisors easier.
Insurance manufacturers and distributors are advised to consider their business model, product complexity, as well as the characteristics of the target market in their policies and processes. Supervisors are now to focus on how insurers and distributors go about ensuring customer-tailored business product design, approval and distribution process with adequate systems and measures in place, by:
EIOPA further aims to provide better transparency for insurance manufacturers and distributors on what to expect from the supervisory approach to POG requirements.
EIOPA Calls on Insurance Sector to Complete Preparations for the End of the UK Transition Period
EIOPA is presently recommending that the insurance sector finalises preparations and implements suitable and sustainable contingency plans prior to the elapsing of the UK transition period. As per the Withdrawal Agreement, the UK transition period is set to end on 31 December 2020 and thereafter, all Union primary and secondary law, such as the Solvency II Directive and the Directive on Insurance Distribution, will no longer apply to the UK.
EIOPA expects (re)insurance undertakings to implement measures to prevent insurance activity without authorisation and ensure service continuity of cross-country business. Moreover, insurance undertakings and intermediaries must inform customers about the potential impact of the UK’s withdrawal from the EU vis-à-vis insurance contracts.
This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.