Regulations, 2018

Suppliment tal-Gazzetta tal-Gvern ta’ Malta Nru. 20,028, 20 ta’ Lulju, 2018

L.N. 239 of 2018

INSURANCE DISTRIBUTION ACT

(CAP. 487)

Insurance Distribution (Penalties and other Measures)

Regulations, 2018

IN EXERCISE of the powers conferred by article 3(2) (a), (h)

and (i) and article 52 of the Insurance Distribution Act, the Minister

responsible for the regulation of Financial Services, after consultation

with the Malta Financial Services Authority, has made the following

regulations:-

(1) The title of these regulations is the Insurance Citation, scope

and

Distribution (Penalties and other Measures) Regulations, 2018.

commencement.

(2) The purpose of these regulations is to implement, in part,

Articles 31 and 33 to 35 of the Insurance Distribution Directive.

These regulations shall come into force on the 1 st October

(3)

2018.

(Regulation 4)

Penalties which are enforceable by prosecution in the courts of Malta

First

Third

Second Column

Column

Column

Level

Fine (multa)

Imprisonment

not less than €230 but not more than not more than three

€18,600

months

not less than €9,300 but not more

not less than one month

than €93,200

but not more than six

months

not less than €46,600 but not more

not less than six months

than €466,000

but not more than four

years.

The provisions of these regulations shall apply, as

applicable, to

(a)

persons registered or enrolled under the Act;

(b) authorised insurance undertakings and authorised

reinsurance undertakings carrying out insurance distribution

activities and reinsurance distribution activities;

(c) European intermediaries which have established a L.N. 238 of

branch in Malta in terms of the European Passport Right for 2018.

Intermediaries Regulations, 2018, with respect to the matters for

which the competent authority as the host Member State is

responsible in terms of Article 7(2) of the Insurance Distribution

Directive;

(d) European intermediaries which are subject to L.N. 238 of

enhanced supervision by the competent authority, in terms of 2018.

regulation 5 of the European Passport Right for Intermediaries

Regulations, 2018 and Article 7(1) of the Insurance Distribution

Directive;

(e) European intermediaries which provides services in L.N. 238 of

Malta in terms of the European Passport Right for Intermediaries 2018.

Regulations, 2018.

(Regulation 4)

Administrative penalties which may be imposed by the competent

authority without recourse to a court hearing

First

Third

Second Column

Column

Column

Level

Penalty

Daily penalty

not less than €1,000 but not more than not less than €15 but not

€23,000

more than €35

not less than €23,000 but not more

not less than €25 but not

than €50,000

more than €75

not less than €50,000 but not more

not less than €60 but not

than €150,000

more than €116.

(1)

In these regulations, unless the context otherwise

"the Act" means the Insurance Distribution Act;

"administrative penalty" means a penalty which may be

imposed and is recoverable by the competent authority without

recourse to a court hearing;

"the competent authority" means the Malta Financial

Services Authority established by the Malta Financial Services

Authority Act;

"court penalty" means a penalty which is enforceable by

prosecution in the courts of Malta;

"Financial Services Tribunal" shall be construed in

accordance with article 50 of the Act;

"insurance-based investment product" has the same

meaning as is assigned to it by article 2 of the Act; and

"Insurance Distribution Rules" has the same meaning as is

assigned to it by article 2 of the Act;

"Schedule" means a schedule to these regulations.

(2) Words and expressions used in these regulations which are

also used in the Act but which are not defined herein, shall have the

same meaning as in the Act.

(Regulation 5)

Court Penalties

Third

Second Column

Column

Penalty

Offence

Level

Obtaining by deceit registration or enrolment under

the Act, or pursuant to any provisions of this Act or

any regulations, Insurance Distribution Rules or

Conduct of Business Rules made thereunder

Acting as an insurance intermediary and carrying

out insurance intermediaries activities in or from

Malta without registration or enrolment

Disclosing of information relating to the affairs of

an enrolled person or a client of an enrolled person

other than in specified circumstances

Any person who is knowingly a party to the

carrying out of insurance distribution activities or

reinsurance distribution activities, with a fraudulent

intent or for a fraudulent purpose

Altering, suppressing, concealing, destroying or

refusing to produce any document which is

lawfully required to be produced by any person

under the Act or under any regulations made

thereunder

Obstructing a person exercising rights conferred by

the Act or any regulations, Insurance Distribution

Rules or Conduct of Business Rules made

thereunder

Knowingly being a party to, or procuring or aiding The penalty

and abetting, any contravention of any provision of

level

the Act or any regulations made thereunder or any applicable to

Insurance Distribution Rules or Conduct of the principal

Business Rules

offence

Any other offence arising under any provision of the Act not

specifically provided for in this Schedule

(1) For the purposes of these regulations, penalties are

divided into court penalties which are enforceable by prosecution in

the courts of Malta and administrative penalties, and

"court penalties” shall be construed in accordance with the

provisions of the First Schedule; and

"administrative penalties" shall be construed in accordance

with the provisions of the Second Schedule.

(2) With respect to a penalty of any level specified in the first

column of the First Schedule which is a court penalty, the penalty shall

be either the corresponding fine (multa) specified in the second

column thereof or the corresponding period of imprisonment specified

in the third column thereof, or both such fine (multa) and

imprisonment.

(3) Without prejudice to the administrative penalties that may

be imposed by the competent authority in terms of regulation 10(1)(e)

and (f), with respect to an administrative penalty of any level specified

in the first column of the Second Schedule the penalty shall be the

corresponding amount specified in the second column thereof and

where the competent authority deems necessary, the corresponding

amount for each day during which the infringement continues

specified in the third column thereof.

(Regulation 5)

In this Schedule “Administrative Penalties” are those made under and

for the purposes of article 3(2)(h) of the Act

Administrative Penalties

First

Third

Second Column

Column

Column

Penalty

Article

Offence

Level

10(1)(a)(iv)

Failure of a person enrolled in the Agents List,

Managers List or the Brokers List to maintain at all

times an amount of unencumbered own funds as

determined by Insurance Distribution Rules

10(1)(a)(v)

Failure of enrolled person to have in its favour at

all times a professional indemnity insurance or

other comparable guarantee satisfying the

requirements of article 10(1)(a)(v)

11(2)

Opening a branch or setting up or acquiring a

subsidiary, in Malta, without the approval of the

competent authority

11(3)

Carrying out of insurance distribution activities or

reinsurance distribution activities from a branch in

Malta under the management of a person other than

a person who is a registered person under the Act

11(4)

Carrying out insurance distribution activities or

reinsurance distribution activities, opening a

branch, office or other place of business, or setting

up or acquiring a subsidiary, in a country outside

Malta, without the written consent of the competent

authority

12(1)(b)

Failure of a foreign company enrolled in the

Agents List, Managers List or Brokers List to have

in Malta at all times a branch, or a representative,

or both

13(4)

Failure of person or company to comply with any

condition of registration or enrolment

14(2)

Failure of displaying at the place of business in a

part accessible to the public a certificate of

registration or enrolment

14A

Failure of an intermediary or of its employees,

carrying out insurance distribution activities or

reinsurance distribution activities, to comply with

continuing professional training and development

requirements as may be determined by means of

Insurance Distribution Rules and, or Conduct of

Business Rules, as applicable, issued for the

purposes of article 14A

17(4)

Failure of person having his name struck off the

Agents Register, Managers Register or Brokers

Register or person having its name struck off the

Agents List, Managers List or Brokers List to

surrender to the competent authority a certificate of

registration or enrolment or any official copies

thereof

19(1)(e)

Failure of an enrolled company or a foreign

company in relation to its business in Malta to

dissolve and wind up following the issue of an

order by the competent authority

20(1)

Failure of enrolled person to keep in a separate

account monies held in a fiduciary capacity in

accordance with requirements as may be

determined by Insurance Distribution Rules made

for the purpose of article 20

Failure of enrolled person to effect and hold a

fidelity bond as respects its insurance distribution

activities in accordance with requirements as may

be determined by Insurance Distribution Rules

made for the purpose of article 21

Failure of enrolled company to notify the

competent authority in writing, within a specified

period, the name and the other particulars of the

company’s directors and employees who are

registered in the Agents Register, Managers

Register or Brokers Register; or to notify the

competent authority in writing, within a specified

period, any changes occurring among such

directors and employees

Failure of enrolled company to forward annually to

the competent authority a copy of the company’s

financial statements or failure of enrolled person to

forward annually to the competent authority a copy

of the income statements; or to forward such

statements within a specified period or a period as

may be authorised by the competent authority; or to

forward a copy of such statements drawn up in

accordance with the provisions of article 24

25(1)

Failure of enrolled person to submit to the

competent authority any information which is

necessary for the purposes of supervision, or to

submit that information within a specified period;

25(2)

Failure of enrolled persons to forward annually to

the competent authority statements in respect of

insurance distribution activities or reinsurance

distribution activities carried out by such person, or

to forward such statements in the form, content and

manner as may be determined by Insurance

Distribution Rules made for the purposes of article

25(2)

Failure of enrolled person to notify the competent

authority in writing of ceasing to carry out

insurance distribution activities or reinsurance

distribution activities, or to comply with any

condition made by the competent authority in the

permit to cease the business

27(2) or (3)

Failure of enrolled company to inform the

competent authority in writing of altering its

financial year

28(1)

Failure of person enrolled under article 13 of the

Act to appoint approved auditor

28(5)

Failure of auditor to give notice in writing to the

competent authority if he resigns, does not seek re-

appointment, qualifies the audit report, or failure to

specify reasons in the case of resignation

28(6)

Failure of enrolled company to give notice in

writing to the competent authority if it receives

notice of a resolution to appoint as auditor a person

other than the retiring auditor or not to re-appoint

the retiring auditor

28(7)

Failure of enrolled person to notify the competent

authority in writing, or to notify the competent

authority in writing within a specified period, the

reasons for terminating the appointment of the

enrolled person’s auditor

28(8)

Failure of enrolled person to change auditor if so

required by the competent authority

28(12) or (14)

Failure of auditor to inform the competent

authority of any of the matters, facts and decisions

provided by article 28(12) or (14)

31(1)

Negotiating, arranging or procuring with an

unauthorised undertaking a contract of insurance

relating to a risk situated in Malta or a commitment

where Malta is the country of the commitment

unless otherwise approved

32(3)

Failure of enrolled person to register with the

competent authority an underwriting agreement

made or entered into by the person

32(4)

Accepting of business of insurance under an

underwriting agreement, by an enrolled person,

without such underwriting agreement being duly

registered by the enrolled person with the

competent authority

33(1)

Acting as a tied insurance intermediary and

carrying out tied insurance intermediaries activities

without registration in any Tied Insurance

Intermediaries Company Register of an

undertaking and without enrolment in the Tied

Insurance Intermediaries List

34(1)

Failure of authorised undertaking appointing

persons to act as tied insurance intermediaries and

to carry out tied insurance intermediaries activities

on its behalf, to establish and maintain the Tied

Insurance Intermediaries Company Register of the

undertaking; or to establish and maintain the Tied

Insurance Intermediaries Company Register of the

undertaking in accordance with requirements as

may be determined by Insurance Distribution Rules

made for the purpose of article 34

36(2)

Failure of authorised undertaking to enrol in the

Tied Insurance Intermediaries List a person

registered by the undertaking as a tied insurance

intermediary in the Tied Insurance Intermediaries

Company Register established and maintained by it

under article 37

36(3)

Failure of authorised undertaking to furnish a

person in whose name a certificate of enrolment is

issued with that certificate or an official copy

thereof

36(4)

Failure of person enrolled in the Tied Insurance

Intermediaries List of displaying at the place of

business in a part accessible to the public the

certificate of enrolment or an official copy thereof

37(2)

Failure of company enrolled in the Tied Insurance

Intermediaries List carrying out tied insurance

intermediaries activities from more than one place

of business, to carry out those activities from each

place of business by a person who is a fit and

proper person to carry out such activities and who

possesses appropriate knowledge and ability as

determined by Insurance Distribution Rules issued

for the purposes of article 35

37(4)

Seeking appointment and registration in the Tied

Insurance Intermediaries Company Register of

more than one authorised undertaking carrying on

long term business in respect of any one class of

long term business

37(5)

Seeking appointment and registration in the Tied

Insurance Intermediaries Company Register of

more than one authorised undertaking carrying on

general business in respect of any one class, or any

one group of classes, of general business

37(8)

Failure of person or company to comply with any

condition of enrolment

38(1)

Failure of the tied insurance intermediary to keep

in a separate account monies held in a fiduciary

capacity in accordance with requirements as may

be determined by Insurance Distribution Rules

made for the purposes of article 38

40(1)

Failure of authorised undertaking striking the name

of a person off its Tied Insurance Intermediaries

Company Register to notify the competent

authority in writing of that striking off or of the

date of effect of that striking off

40(2)

Failure of authorised undertaking to strike the

name of

a person off its Tied Insurance

Intermediaries Company Register on grounds of

unfitness and improperness or because the person

concerned has acted fraudulently, or dishonestly, or

in such manner as to cease to be trustworthy

40(2)

Failure of authorised undertaking to notify the

competent authority in writing the reasons for

striking off that name when the undertaking strikes

the name of a person off its Tied Insurance

Intermediaries Company Register on specified

grounds

40(4)(a)

Failure of authorised undertaking to strike the

name of a person off its Tied Insurance

Intermediaries Company Register if so required by

the competent authority

40(7)

Failure of authorised undertaking to comply with a

directive of the competent authority to hasten the

process as striking the name of a person off its Tied

Insurance Intermediaries Company Register if so

required by the person concerned

40(8)

Failure of authorised undertaking to surrender to

the

competent authority the certificate of

enrolment, or any official copies thereof, issued in

the name of a person whose name has been struck

off its Tied Insurance Intermediaries Company

Register

41(2)

Failure of a person to comply with any measure

taken by the competent authority for the purpose of

article 41(2)

Acting as a tied insurance intermediary and

carrying out tied insurance intermediaries activities

on behalf of a European insurance undertaking or

of an insurance intermediary registered under

Article 3 of the Insurance Distribution Directive in

a Member State or EEA State other than Malta,

without enrolment in the Tied Insurance

Intermediaries List

43A(1)

Acting as an ancillary insurance intermediary and

carrying out ancillary insurance intermediaries

activities without registration in any Ancillary

Insurance Intermediaries Company Register of an

authorised undertaking or of an enrolled insurance

broker, and without enrolment in the Ancillary

Insurance Intermediaries List

43B(1)

Failure of authorised undertaking or enrolled

insurance broker appointing a person to act as

ancillary insurance intermediaries and to carry out

ancillary insurance intermediaries activities on its

behalf, to establish and maintain the Ancillary

Insurance Intermediaries Company Register of the

undertaking or insurance broker; or to establish and

maintain the Ancillary Insurance Intermediaries

Company Register of the undertaking or insurance

broker in accordance with requirements as may be

determined by Insurance Distribution Rules made

for the purpose of article 43B(1)

43D(2)

Failure of authorised undertaking or enrolled

insurance

broker to enrol in the Ancillary

Insurance Intermediaries List a person registered

by the undertaking or insurance broker as an

ancillary insurance intermediary in the Ancillary

Insurance

Intermediaries Company Register

established and maintained by it under article 43E

43D(3)

Failure of authorised undertaking or enrolled

insurance broker to furnish a person in whose

name a certificate of enrolment is issued with that

certificate or an official copy thereof

43D(4)

Failure of person enrolled in the Ancillary

Insurance Intermediaries List of displaying at the

place of business in a part accessible to the public

the certificate of enrolment or an official copy

thereof

43E(4)

Failure of company enrolled in the Ancillary

Insurance Intermediaries List carrying out ancillary

insurance intermediaries activities from more than

one place of business, to carry out those activities

from each place of business by a person who is a fit

and proper person to carry out such activities and

who possesses appropriate knowledge and ability

as determined by Insurance Distribution Rules

issued for the purposes of article 43C

43E(9)

Failure of person or company to comply with any

condition of enrolment

43F(1)

Failure of the ancillary insurance intermediary to

keep in a separate account monies held in a

fiduciary capacity in accordance with requirements

as may be determined by Insurance Distribution

Rules made for the purposes of article 43F

43H(1)

Failure of authorised undertaking or enrolled

insurance broker striking the name of a person off

its Ancillary Insurance Intermediaries Company

Register to notify the competent authority in

writing of that striking off or of the date of effect of

that striking off

43H(2)

Failure of authorised undertaking or enrolled

insurance broker to strike the name of a person off

its Ancillary Insurance Intermediaries Company

Register on grounds of unfitness and improperness

or because the person concerned has acted

fraudulently, or dishonestly, or in such manner as to

cease to be trustworthy

43H(2)

Failure of authorised undertaking or enrolled

insurance broker to notify the competent authority

in writing the reasons for striking off that name

when the undertaking or insurance broker strikes

the name of a person off its Ancillary Insurance

Intermediaries Company Register on specified

grounds

43H(4)(a)

Failure of authorised undertaking to strike the

name of a person off its Ancillary Insurance

Intermediaries Company Register if so required by

the competent authority

43H(7)

Failure of authorised undertaking or enrolled

insurance broker to comply with a directive of the

competent authority to hasten the process as

striking the name of a person off its Ancillary

Insurance Intermediaries Company Register if so

required by the person concerned

43H(8)

Failure of authorised undertaking or enrolled

insurance broker to surrender to the competent

authority the certificate of enrolment, or any

official copies thereof, issued in the name of a

person whose name has been struck off its

Ancillary Insurance Intermediaries Company

Register

43I(2)

Failure of a person to comply with any measure

taken by the competent authority for the purposes

of article 43I(2)

43J

Acting as an ancillary insurance intermediary and

carrying out ancillary insurance intermediaries

activities on behalf of a European insurance

undertaking or of an insurance intermediary

registered under Article 3 of the Insurance

Distribution Directive in a Member State or EEA

State other than Malta, without enrolment in the

Ancillary Insurance Intermediaries List

43L

Failure of an authorised insurance undertaking and

an authorised reinsurance undertaking to inform, at

least once a year, the competent authority of the

names of the individuals within their management,

who are responsible for the insurance distribution

activities or reinsurance distribution activities of

the undertaking, in the form, manner and content

and within such date as may be determined by

Insurance Distribution Rules made for the purposes

of article 43L

43M(1)

Failure of an authorised insurance undertaking or

an authorised reinsurance undertaking to ensure

that their employees carrying out insurance

distribution activities or reinsurance distribution

activities, possess appropriate knowledge and

ability as determined by means of Insurance

Distribution Rules issued for the purposes of article

43M(1)

43M(2)

Failure of an authorised insurance undertaking or

of an authorised reinsurance undertaking or their

employees, carrying out insurance distribution

activities or reinsurance distribution activities, to

comply with continuing professional training and

development requirements as determined by means

of Insurance Distribution Rules and, or Conduct of

Business Rules issued for the purposes of article

43M(2)

43N

Failure of an authorised insurance undertaking or

an authorised reinsurance undertaking, carrying out

insurance distribution activities or reinsurance

distribution activities, to submit to the competent

authority any information which is necessary for

the purposes of supervision, or to submit that

information within the specified period

43O

Failure of an authorised insurance undertaking

1 to 3

carrying out insurance distribution activities to

comply with Conduct of Business Rules issued for

the purposes of article 43O

44(1)

Failure of registered or enrolled person to notify

the competent authority in writing of any material

change in documentation provided, or required to

be provided, by or under any provision of the Act

44(2)(a)

Failure of enrolled company to submit in writing to

the competent authority for its approval particulars

of any proposed addition or alteration to the

company’s memorandum or articles of association

or other instrument constituting the company

44(2)(b)

Failure of the enrolled company to inform the

competent authority of the names of the persons

holding a qualifying shareholding in the company

and the percentage of such holding in the form,

manner and content within such date as determined

by Insurance Distribution Rules made for the

purpose of article 44(2)(b)

44(3)(a)

Failure of a person enrolled under Part III of the

Act to notify the competent authority on a

continuous basis with any change or circumstance

which may give rise to the existence of close links

within the meaning of article 10

44(3)(b)

Failure of a tied insurance intermediary to notify

any authorised undertaking appointing it, on a

continuous basis, with any change in the

information provided in article 37(1A)

44(3)(c)

Failure of an ancillary insurance intermediary to

notify any authorised undertaking or an insurance

broker, appointing it, on a continuous basis, with

any change in the information provided in article

43E(2)

44(3)(d)

Failure of an authorised undertaking appointing,

registering and enrolling a tied insurance

intermediary or an ancillary insurance intermediary

under Part VIII and Part VIIIA, respectively, to

notify the competent authority, on a continuous

basis, with any change in the information provided

in article 37(1A) and 43E(2), respectively, as

notified by the tied insurance intermediary or

ancillary insurance intermediary concerned

44A(1)

Failure of person to obtain in writing the consent of

the competent authority to acquire, increase, reduce

or divest itself of a qualifying shareholding in an

enrolled company

44A(3)

Failure of enrolled company and its directors to

notify the competent authority of a person’s

intention to acquire increase, reduce or divest itself

of a qualifying shareholding in the company

44A(5)

Failure of directors and qualifying shareholders of

an enrolled company to notify the competent

authority where the company intends to merge with

another company, or to undergo reconstruction or

division, or to increase or reduce its nominal or

issued share capital or to effect any material change

in voting rights

44A(6)

Failure of person to furnish the information

required to be furnished as may be determined by

Insurance Distribution Rules made for the purposes

of article 44A

44A(8)

Failure of any person or any enrolled company to

comply with an order issued by the competent

authority

44A(9)

Failure of a foreign company enrolled under the

Act to submit the information to the competent

authority, not later than thirty days from the change

or occurrence

44B

Failure of an insurance agent or an insurance

broker enrolled under the Act to utilise the services

of intermediaries enrolled under Parts VIII and

VIIIA, as set out in the said Parts, or which are

registered under Article 3 of the Insurance

Distribution Directive or falling under Article 1(3)

of the said Directive

48(1)

A person using the word "insurance" as part of his

or its description or title or making any such use on

any letter paper, in any notice or advertisement, or

in any other similar manner, without the written

permission of the competent authority

48(2)

Failure of foreign company or third country

insurance undertaking or third country reinsurance

undertaking to add any explanatory particulars to

the company’s or undertaking’s name as directed

by the competent authority

Any other infringement against any other provisions of the Act or any

regulations, Insurance Distribution Rules or Conduct of Business

Rules made thereunder, and failure of a person to comply with any

condition, limitation, or requirement, or to satisfy any directive or

order made or given under the Act or any regulations, Insurance

Distribution Rules or Conduct of Business Rules, and not specifically

provided for in this Schedule

(1) Any person found guilty of an offence for having Imposition of

contravened a provision of the Act mentioned in the first column of the court

and

Third Schedule, with a corresponding general description of the administrative

penalties.

offence set out in the second column thereof, shall be liable to the

corresponding penalty of the level specified in the third column of the

said Schedule.

(2) For any failure by any person to comply with any provision

of the Act mentioned in the first column of the Fourth Schedule,

consisting in the corresponding act or omission described in the second

column thereof, the competent authority may by notice in writing

impose by way of an administrative penalty on the person concerned

the corresponding penalty specified in the third column of the said

Schedule, taking into account all the relevant circumstances as

specified in regulation 11.

(3) Any description in the second column of the Third and

Fourth Schedules of any offence, infringement and failure as

respectively referred to in sub-regulation (1) and (2) shall not be relied

on in interpreting the provision to which the offence or failure

corresponds.

The penalties specified in the Fourth Schedule to the Application of

Insurance Business (Penalties for Offences and Infringements) certain

prescribed by

Regulations, prescribed by virtue of the Insurance Business Act, with the

Business

reference to articles 29 to 31A of the said Act, shall apply with respect (Penalties for

to infringements of the said articles as made applicable to the enrolled Offences

Infringements)

person by virtue of article 54 of the Act.

Regulations.

The competent authority shall exercise its supervisory Supervisory

powers, including its investigatory powers and its powers to impose powers

powers to

penalties, in such a way as to ensure full and complete adherence to the impose

penalties.

requirements and obligations arising out of the Act and any

regulations, Insurance Distribution Rules and Conduct of Business

Rules issued thereunder, and any delegated acts and technical

standards that may be issued under the Insurance Distribution

Directive, either directly or in collaboration with overseas regulatory

authorities, in terms of law and as warranted by the relevant

circumstances, and shall take all measures necessary to ensure that

such administrative penalties are implemented.

(1) Without prejudice to articles 52 and 53 of the Act and

to the supervisory powers of the competent authority referred to in

regulation 7, the competent authority may impose administrative

penalties and other administrative measures in respect of breaches of

the provisions of the Act and of any regulations, Insurance

Distribution Rules and Conduct of Business Rules issued thereunder,

and of any delegated acts and technical standards that may be issued

under the Insurance Distribution Directive.

(2) The administrative penalties and other administrative

measures taken pursuant to sub-regulation (1) shall be effective,

proportionate and dissuasive.

(3) The competent authority may, by notice in writing and

without recourse to a court hearing, impose administrative penalties or

other administrative measures, relating to breaches of the provisions of

the Act and of any regulations, Insurance Distribution Rules and

Conduct of Business Rules issued thereunder, which are applicable to

persons registered or enrolled under the Act, to authorised insurance

undertakings and authorised reinsurance undertakings, carrying out

insurance distribution activities or reinsurance distribution activities in

terms of the Act and to the members of the Board of Directors of such

enrolled persons and insurance and reinsurance undertakings, where

applicable, and to any other natural or legal persons who, under

Maltese law, are responsible for such breach.

(1) The competent authority shall have all the

investigatory powers that are necessary for the exercise of its

functions.

(2) In the exercise of its powers to impose administrative

penalties and other measures, the competent authority shall cooperate

closely with overseas regulatory authorities to ensure that any such

sanctions and measures produce the desired results pursuant to the

Insurance Distribution Directive and to the Act and any regulations,

Insurance Distribution Rules and Conduct of Business Rules issued

thereunder. The competent authority shall also coordinate its actions

with such authorities when dealing with cross-border cases, while

ensuring that the conditions are met for legitimate data processing in

accordance with Regulation (EU) 2016/679 of the European

Parliament and of the Council of 27 April 2016 on the protection of

natural persons with regard to the processing of personal data and on

the free movement of such data, and repealing Directive 95/46/EC

(General Data Protection Regulation), as amended from time to time.

(1) Without prejudice to the powers conferred on the Breaches,

competent authority under the provisions of the Act and of any penalties

other measures.

regulations issued thereunder, in the event of any breaches of the

Conduct of Business Rules, in relation to the distribution of insurance-

based investment products, by an insurance intermediary registered or

enrolled under the Act or by an authorised insurance undertaking, the

competent authority may impose on such intermediary or undertaking,

at least, the following administrative penalties and other measures

(a) a public statement, which identifies the natural or

legal person responsible for the breach and the nature of such

breach;

(b) an order requiring the natural or legal person

responsible for the breach to cease the conduct and to desist from

a repetition of that conduct;

(c) in the case of an insurance intermediary registered or

enrolled under the Act, the striking off of the name of such

intermediary from the Agents Register, Managers Register,

Brokers Register, Agents List, Managers List, Brokers List or

Tied Insurance Intermediaries List, as referred to in articles 16

and 41 of the Act, as applicable;

(d) a temporary suspension of any member of the Board

of Directors of an insurance intermediary enrolled under the Act

or of an authorised insurance undertaking, who is held

responsible for the breach;

(e) in the case of a legal person, notwithstanding the

penalties specified in the Second Schedule, the following

maximum administrative penalties may be imposed

(i) up to five million euro (€5, 000, 000) or up to 5

% of the total annual turnover according to the last

available accounts approved by the Board of Directors.

Where the legal person is a parent undertaking or a

subsidiary of a parent undertaking which has to prepare

consolidated financial accounts according to Directive

2013/34/EU of the European Parliament and of the Council

of 26 June 2013 on the annual financial statements,

consolidated financial statements and related reports of

certain types of undertakings, amending Directive 2006/43/

EC of the European Parliament and of the Council and

repealing Council Directives 78/660/EEC and 83/349/EEC,

the relevant total turnover shall be the total annual turnover

according to the last available consolidated accounts

approved by the Board of Directors or equivalent body of

the ultimate parent undertaking; or

(ii) up to twice the amount of the profits gained or

losses avoided because of the breach, where those can be

determined;

(f) in the case of a natural person, notwithstanding the

penalties specified in the Second Schedule the following

maximum administrative penalties may be imposed

(i)

up to seven hundred thousand euro (€700, 000);

or

(ii) up to twice the amount of the profits gained or

losses avoided because of the breach, where those can be

determined.

(2) Without prejudice to the powers conferred on the

competent authority under the provisions of the Act and of any

regulations issued thereunder, the competent authority may impose

any administrative measures, including an order requiring the natural

or legal person responsible for the breach to cease the conduct and to

desist from a repetition of that conduct, at least, in the event of the

following

(a) breaches of article 6 of the Act, by a person acting as

an insurance intermediary, a reinsurance intermediary or an

ancillary insurance intermediary, and carrying out insurance

distribution activities and reinsurance distribution activities, as

applicable, without registration or enrolment;

(b) an authorised undertaking, an authorised reinsurance

undertaking, an insurance intermediary or reinsurance

intermediary using the insurance or reinsurance distribution

services, as applicable, of persons referred to in paragraph (a);

(c) a person obtaining enrolment under articles 13, 37

and 43E of the Act, through false statements or any other

irregular means;

(d) breaches of provisions the Act and Insurance

Distribution Rules or Conduct of Business Rules issued

thereunder, relating to requirements transposing Article 10 of the

Insurance Distribution Directive;

(e) conduct of business requirements set out in Conduct

of Business Rules.

The competent authority shall, when determining the Determination

amount of administrative penalties imposed in terms of these of

penalties and

regulations, or when taking other measures to be imposed on persons other

by the

registered or enrolled under the Act, and on authorised insurance competent

undertakings or authorised reinsurance undertakings, carrying out authority.

insurance distribution activities or reinsurance distribution activities,

take into account all the relevant circumstances, including, where

appropriate

(a)

the gravity and the duration of the breach;

(b) the degree of responsibility of the natural or legal

person responsible for the breach;

(c) the financial strength of the natural or legal person

responsible for the breach, as indicated by the annual income of

the natural person or the total turnover of the legal person, as

applicable;

(d) the importance of profits gained or losses avoided by

the natural or legal person responsible for the breach, in so far as

they can be determined;

(e) the losses for customers and third parties caused by

the breach, in so far as they can be determined;

(f) the level of cooperation of the natural or legal person

responsible for the breach with the competent authority;

(g) measures taken by the natural or legal person

responsible for the breach to prevent repetition of such breach;

and

(h) any previous breaches by the natural or legal person

responsible for the breach.

(1) The competent authority shall establish effective Reporting of

mechanisms to enable and encourage the reporting to it, of possible or breaches.

actual breaches of the provisions of the Act or of any regulations,

Insurance Distribution Rules and Conduct of Business Rules issued

thereunder.

(2) The mechanisms referred to in sub-regulation (1) shall, at

least, include

(a) specific procedures for the receipt of reports on

breaches and their follow-up;

(b) appropriate protection, at least against retaliation,

discrimination or other types of unfair treatment, for employees

of insurance or reinsurance intermediaries enrolled under the Act

or of authorised insurance undertakings or authorised

reinsurance undertakings, carrying out distribution activities,

and, where possible, for other persons, who report infringements

committed within such intermediaries or undertakings; and

(c) protection of the identity of both the person who

reports the breach and the natural person who is allegedly

responsible for the breach, at all stages of the procedure unless

such disclosure is required by Maltese law in the context of

further investigation or subsequent administrative or judicial

proceedings.

In accordance with the provisions of article 50 of the Act

any person upon whom the competent authority has imposed an

administrative penalty in accordance with the provisions of regulation

5(2) may appeal in writing to the Financial Services Tribunal against

the decision of the competent authority.

Where a notice imposing an administrative penalty is

served on a person and

(a) such person fails to appeal within such time as an

appeal may be entered, and fails to pay the penalty so imposed;

or

(b) appeals within such time to the Financial Services

Tribunal and the appeal is withdrawn or the Tribunal confirms

the penalty in the amount fixed by the competent authority or in

an amount reduced by it, and the penalty is not paid within

fifteen days from the date of the withdrawal of the appeal or the

date when the Tribunal confirms the penalty as aforesaid, then,

in every case, the competent authority shall be entitled to take

civil action to recover the amount due to it and the administrative

penalty shall be due to the competent authority as a civil debt.

(1) The Insurance Intermediaries (Penalties for Offences

and Infringements) Regulations, hereinafter referred to as "the revoked

regulations", are hereby revoked.

(2) Nothing in these regulations shall be deemed to affect

anything done, or omitted to be done under the revoked regulations

prior to the coming into force of these regulations.