The Central Bank of Ireland (CBI) has fined the European life and pensions unit of Axa €3.6m for several regulatory breaches.
According to the Irish Times, the breaches related to risk management and the group’s handling of conflicts of interest.
Axa admitted to the three breaches, which happened over a 13-year period from 2006 to 2019, relating to its control processes for identifying, monitoring, managing and reporting risk.
The Irish Times said that fine arose out of an investigation by German financial regulator BaFin into an insurance product named TwinStar, which Axa began selling in 2006.
In 2006, BaFin wrote to ALE’s German branch, saying that references to a “parental claims guarantee” in some TwinStar policy documents suggested greater security to customers than that which was actually being provided. This was due to the fact that some policy documentation failed to make clear that the guarantee was conditional and could terminate automatically if certain conditions were met.
The CBI got involved four years ago when during its consideration of a proposed sale of ALE, which sold insurance from Ireland to German customers, the CBI realised the firm had not updated some policy documents from 2006 to 2007 to reflect the conditional nature of the guarantee.
A subsequent investigation uncovered significant failures in ALE’s risk-management systems over the 13-year period.
CBI director of enforcement Seána Cunningham said, “It is important that firms identify, assess and manage the risks to which they are or might be exposed, to ensure that they can meet their commitments to consumers.
“ALE’s weak internal control framework meant that it failed to identify and monitor a cohort of policies in relation to which policy-related documentation was unclear, despite having been made aware of concerns in this regard.
“This failure meant that ALE was unable to inform its policyholders of information which was relevant to them.”
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