INSURANCE DISTRIBUTION (PENALTIES AND OTHER MEASURES) REGULATIONS

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

SUBSIDIARY LEGISLATION 487.08

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

REGULATIONS

1st October, 2018

LEGAL NOTICE 239 of 2018.

(1)

The title of these regulations is the Insurance

Distribution (Penalties and other Measures) Regulations.

(2)

The purpose of these regulations is to implement, in part,

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

(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

not more than three

than €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

than €466,000

months 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

branch in Malta in terms of the European Passport Right for

Intermediaries Regulations 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

enhanced supervision by the competent authority, in terms of

regulation 5 of the European Passport Right for Intermediaries

Regulations and Article 7(1) of the Insurance Distribution

Directive;

(e)

European intermediaries which provides services

in Malta in terms of the European Passport Right for

Intermediaries Regulations.

(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

not less than €15 but

than €23,000

not more than €35

not less than €23,000 but not more

not less than €25 but

than €50,000

not more than €75

not less than €50,000 but not more

not less than €60 but

than €150,000

not more than €116.

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

(1)

In these regulations, unless the context otherwise

requires

"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

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

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

First

Third

Second Column

Column

Column

Penalty

Article

Offence

Level

52(1)(a)

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

52(1)(b) with

Acting as an insurance intermediary and

reference to 6

carrying out insurance intermediaries activities

in or from Malta without registration or

enrolment

52(1)(b) with

Disclosing of information relating to the affairs

reference to

of an enrolled person or a client of an enrolled

46(4)

person other than in specified circumstances

52(1)(c)

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

52(1)(d)

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

52(1)(e)

Obstructing a person exercising rights conferred

by the Act or any regulations, Insurance

Distribution Rules or Conduct of Business

Rules made thereunder

52(2)

Knowingly being a party to, or procuring or The penalty

aiding and abetting, any contravention of any

level

provision of the Act or any regulations made applicable to

thereunder or any Insurance Distribution Rules the principal

or Conduct of Business Rules

offence

Any other offence arising under any provision of the Act not

specifically provided for in this Schedule

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

(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

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

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

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

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

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

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

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

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

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

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

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

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

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

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)

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

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)

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

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

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

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

1 to 3

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

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

Third Schedule, with a corresponding general description of the 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

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

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

Insurance Business (Penalties for Offences and Infringements)

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

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

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

person by virtue of article 54 of the Act.

The competent authority shall exercise its supervisory

powers, including its investigatory powers and its powers to impose

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

the 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

INSURANCE DISTRIBUTION

(PENALTIES AND OTHER MEASURES)

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

competent authority under the provisions of the Act and of any

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;

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(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

INSURANCE DISTRIBUTION

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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

amount of administrative penalties imposed in terms of these

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

registered or enrolled under the Act, and on authorised insurance

undertakings or authorised reinsurance undertakings, carrying out

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;

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(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

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

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

INSURANCE DISTRIBUTION

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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.

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