Pôle. Assurance Banque Epargne. Annual report - PDF

Pôle Assurance Banque Epargne Annual report 2010 Contents Introduction Message from the AMF Chairman... 4 Message from the ACP Chairman... 5 Part 1 Remit 1.1 Customer and investor protection tasks specifi

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Pôle Assurance Banque Epargne Annual report 2010 Contents Introduction Message from the AMF Chairman... 4 Message from the ACP Chairman... 5 Part 1 Remit 1.1 Customer and investor protection tasks specifi c to the ACP and the AMF Autorité de contrôle prudentiel New consumer protection tasks Specifi c consumer protection powers A separate Business Practices Supervision Department... 7 Interview with Pauline De Chatillon Autorité des marchés fi nanciers Remit Powers Resources... 9 Interview with Natalie Lemaire The Joint committee s remit Part 2 Activities 2.1 Assurance Banque Épargne Info Service (ABE IS): the common gateway Objectives Inauguration Interview with Astrid De la Bouillerie and Stéphane Kunesch Coordinating priorities for the supervision of business practices Persons and activities concerned Inspections in Outlook Interview with Marguerite Yates and Pierre-Xavier Soule-Susbielles Coordinating intelligence-gathering and monitoring of advertising campaigns Objective Marketing of complex fi nancial instruments Interview with Guillaume Eliet and Barbara Souverain-Dez Conclusion Final Word from Joint committee Coordinator Fabrice Pesin Appendices The appendices are available for consultation in the French version of the annual report. 3 INTRODUCTION Message from the AMF Chairman The AMF-ACP Joint committee is one year old. It can be rightly proud of what it has achieved over the past twelve months. We had high hopes at the outset, and it has not let us down, either when coordinating our inspections or when providing services and information under our shared banner. In sum, the Joint committee proves that together we are more effective and hence more credible. But the main reason I am satisfi ed is that, slowly but surely, a common culture of regulation and supervision is spreading among the two authorities operational teams that cooperate within the Joint committee. They share the same determination to make customers the primary focus of the system for regulating the fi nancial products on offer and to provide the investor community with a consistent approach to the protection of savings, regardless of which products, market participants and distribution channels are involved. That way, we can eliminate blind spots and overlaps in our respective systems without sacrifi cing our effi ciency or effectiveness. The most striking evidence of the fact that we had passed a milestone and, in doing so, broken a taboo came on 15 October 2010 with the publication of an AMF position and an ACP recommendation on the marketing of complex products. This set a precedent that must guide our work in the years ahead, both in form and in substance. In any case, that is the cross-cutting approach that the AMF is putting forward in the vitally important public consultation organised by the European Commission on Packaged Retail Investment Products (PRIPs). Building directly on our domestic work, the AMF is advocating upward harmonisation of the requirements applicable to disclosure and advice as well as the marketing rules applicable to all products marketed to consumers. I think I can safely say that, to some extent, we have been pioneers in this regard. We were spurred on by the recommendations on fi nancial product marketing made in the report submitted by Jacques Delmas- Marsalet to the fi nance minister in 2005, as well as those made by Bruno Deletré in his report on fi nancial supervision in France (2008) and subsequently on monitoring compliance with professional requirements to fi nancial sector customers (2009). European and North American regulators are now following in our footsteps and the G-20 has taken up these issues. This success brings obligations, for the AMF, naturally, where the Retail Investor Relations Department headed by Natalie Lemaire, who is also the AMF correspondent of the Joint committee Coordinator, is redoubling its efforts, but also for the Joint committee, which must now build on its achievements and become a permanent part of the regulatory landscape. Jean-Pierre Jouyet 4 Message from the ACP Chairman Driven by constant innovation, the growing complexity of fi nancial products all too often results in informational asymmetries between sellers and their customers. To remedy that imbalance, consumer protection rules had to be placed on the fi nancial sector. So new standards were drawn up, both in France and at European level, to regulate business practices more effectively in both the banking and the insurance sectors. Furthermore, learning lessons from the fi nancial and banking crisis, the French government tasked the ACP with protecting banking and insurance customers, with a two-fold objective: carry out closer oversight of compliance with professional obligations to customers and introduce a new policy on supervising business practices. The experience and know-how of the ACP s teams will ensure that tried and tested supervisory methods and tools will be extended to cover business practices, on the basis of enhanced regulations and a set of best practices. For that reason, the ACP is pleased to be able to contribute its investment in the sphere of business practices and its supervisory expertise to the ACP-AMF Joint committee. In just one year, the Joint committee has demonstrated just how useful and effi cient it is. This was aptly illustrated in the rapid creation of a joint information platform, Assurance Banque Épargne Info Service, which handles consumer queries, and in the coordinated approach adopted by the ACP and the AMF to the marketing of particularly complex fi nancial instruments. Protecting consumers of fi nancial services is also one of the work streams of the French Presidency of the G-20. The latest meeting of G-20 fi nance ministers called on the OECD and the Financial Stability Board, among others, to draw up joint principles for consumer protection by October This will provide an opportunity for the ACP and the AMF, in the name of the Joint committee, to make France s voice heard at international level when these issues are addressed. Christian Noyer 5 1 REMIT In France, the Autorité de contrôle prudentiel (ACP) and the Autorité des marchés fi nanciers (AMF) both have a duty to protect customers and investors in their respective jurisdictions, notably life insurance products and bank deposits for the ACP and securities and fi nancial instruments for the AMF. The complementary nature of these jurisdictions gave rise to the Joint com- mittee, formed to ensure close coordination of the two authorities activities in these areas. 1.1 Customer and investor protection tasks specific to the ACP and the AMF Autorité de contrôle prudentiel New consumer protection tasks The ACP was inaugurated on 9 March 2010 with Christian Noyer, Governor of the Banque de France, as Chairman. It was formed from the merger of the licensing authorities (Comité des entreprises d assurances, for insurance institutions, and the Comité des établissements de crédit et des entreprises d investissement, for credit institutions and investment fi rms) and the supervisory authorities (Autorité de contrôle des assurances et des mutuelles, in the insurance sector, and the Commission Bancaire, in banking). It is an independent administrative authority that works to maintain the stability of the fi nancial system and to provide protection for customers, members and benefi ciaries of the banking and insurance institutions under its supervision. Before the ACP, the task of consumer protection in banking and insurance was primarily fulfi lled by supervising the solvency of fi nancial entities to make sure insurers had the means to meet their commitments and 6 bank deposits were not jeopardised by excessive risk-taking. It should be noted that the insurance supervisor, ACAM, had a department specialised in contract law and policyholder relations, which made sure, through its work on individual cases, that reporting institutions complied fully with their obligations towards customers. And for many years, the Banque de France s Infobanque service has been providing general information on banking regulations and the possibility of using the services of the banking ombudsman. The Executive Order of 21 January 2010 founding the ACP now explicitly defi nes the consumer protection tasks and introduces specifi c supervision of business practices Specific consumer protection powers The ACP is responsible for ensuring that the entities under its supervision comply with consumer protection rules stemming from any laws, regulations, codes of conduct approved at the request of industry bodies, or best practices promoted or recommended by their industry associations, and for ensuring that they have adequate resources and procedures for this purpose. These rules govern advertising, pre-contract disclosure and the advice requirement, as well as performance of contracts until expiry. To fulfi l its tasks, including consumer protection, the ACP has supervisory, policing and sanctioning powers. It also has the right to publicly disclose any information it deems necessary to perform its tasks. Supervision of business practices covers all entities falling within the jurisdiction of the ACP, including credit institutions, investment fi rms other than asset management companies, payment institutions, fi nancial holding companies, money changers, insurance institutions, mutual insurance companies and unions governed by Book II of the Mutual Insurance Code and provident institutions. The ACP may also bring insurance intermediaries and intermediaries in banking and payment services under its supervision. On 29 September 2010, the ACP Board decided to set up a Business Practices Commission to inform the Board on matters relating to consumer protection (notably opinions on proposed recommendations). The Commission is chaired by Emmanuel Constans, a member of the ACP Board. It has 16 members chosen for their expertise in consumer protection issues in banking and insurance A separate Business Practices Supervision Department The Business Practices Supervision Department covers both banking and insurance. Its task is to supervise full compliance with regulations dealing with contracts and business practices by the institutions and bodies under ACP supervision. At the end of 2010, it had a staff of around sixty. It is directly involved in drafting recommendations defi ning best practices for marketing and consumer protection and in the approval process for codes of conduct submitted by industry associations. The organisational structure of the new department is adapted to its specifi c features: fi rst, each unit of the new department has dual powers for both banking and insurance; second, each unit has a dual role in prevention and in supervision. They may rely on different sources of information (e.g. complaints, in the case of the Information and Complaints Unit) but they produce similar results: risk factor identifi cation, supervisory reports and related follow-up action, proposals for recommendations on best practices in each industry. 7 1 REMIT The Department is made up of four units The Contract and Risk Intelligence Unit is responsible for monitoring advertising, new products and contracts and for supervising direct marketing, as well as the consumer protection resources and procedures implemented by institutions and bodies; The Intermediaries Supervision Unit verifi es that banking and insurance intermediaries comply with licensing and operating requirements (disclosure and advice obligations, agreements between intermediaries and producers, links with industry bodies); The Information and Complaints Unit runs the joint banking and insurance consumer helpline (Assurance Banque Épargne Info Service - ABE-IS). It analyses the complaints received by the ACP, routing them to the appropriate persons, and audits the complaints units of institutions and bodies. It also has links with ombudsmen; The Coordination Unit liaises with European authorities (European Banking Authority, European Insurance and Occupational Pensions Authority) on consumer protection issues, and with the Advisory Committee on the Financial Sector (CCSF) the AMF, and the Directorate General for Consumers, Competition and Fraud Prevention (DGCCRF). INTERVIEW Interview with Pauline de Chatillon Pauline de Chatillon, you head the new Business Practices Supervision Department at the ACP. How do you see its tasks? Consumer protection, along with maintaining fi nancial stability, is one of the two fundamental tasks of the ACP. Consumer protection was previously seen primarily as a prudential issue, but we now take a comprehensive approach to it and incorporate the aspect of business practices. The department s core task is to ensure that the legal framework for consumer protection is actually enforced. How do you go about your tasks? In three ways: Supervision of business practices used by insurance and banking institutions and by their intermediaries: supervising the quality of information provided to customers, including advertising; ensuring that professionals comply with their advice requirement; monitoring the quality of the responses to customer complaints. Coordination: We have a genuinely comprehensive approach to ensure proper coordination of consumer protection stakeholders: the AMF-ACP Joint committee, the Consultative Commission on Business Practices, the Directorate General for Consumers, Competition and Fraud Prevention (DGC- CRF), ombudsmen, etc. Prevention: we work proactively to prevent poor business practices through recommendations, monitoring of advertising and new products, and by proposing regulatory changes at the national, European and international levels. How does the department obtain information about current business practices? The department monitors the market through the customer queries and complaints that it receives as a result of its dealings with consumer associations and ombudsmen. It also has ongoing discussions with industry bodies and banking and insurance groups. It analyses the information contained in the internal audit reports of the entities under its supervision, as well as insurance contracts, new savings products offered by banks and the advertising for these contracts and products. On-site inspections are used to ensure that the entities under supervision comply with consumer protection rules. 8 1.1.2 Autorité des marchés financiers Remit The Autorité des marchés fi nanciers (AMF) was founded by the Financial Security Act of 1 August It is an independent public authority with legal personality. Its remit is to safeguard investment in fi nancial instruments, ensure that investors receive material information and maintain the integrity of fi nancial markets. It works in close coordination with the other banking and fi nancial supervisory authorities: the Banque de France and the Autorité de contrôle prudentiel (ACP). The AMF is active in European and global fi - nancial regulation through its participation in the relevant international bodies (European Securities and Markets Authority ESMA, International Organization of Securities Commissions IOSCO, the Financial Stability Board FSB) and through its cooperation with its counterparts in other countries Powers The AMF: makes rules (General Regulation, positions set forth in its Instructions and Recommendations, etc.); issues licenses (approvals, authorisations); monitors and supervises markets and market participants, with the power to investigate specifi c transactions; offers mediation at the request of the parties concerned to settle disputes between retail investors and investment services providers or issuers Resources The AMF is made up of a Board and an Enforcement Committee. It also relies on fi ve Consultative Commissions, including a Retail Investors Consultative Commission, a Scientifi c Advisory Board and 428 employees as of 31 December Starting from the principle that its primary task must be to protect investment and investors, the AMF has devoted a large part of its New Strategy Proposals to enhancing its action with regard to all the links in the fi nancial market chain that contribute to investor protection. The New Strategy Proposals were announced by AMF Chairman Jean-Pierre Jouyet in June They set out three main objectives: enhance investment protection and bolster the confi dence of individual investors and shareholders; deliver better risk monitoring, control, enforcement and compensation for damages; play a more active role in efforts to increase the attractiveness of the French markets, for the benefi t of investors and the fi nancing of the country s economy. For the fi rst objective, the AMF supervises the quality of the information contained in the various documents used to market fi nancial 9 1 REMIT products to consumers. It also makes sure that when products are marketed, whether by investment services providers or by fi nancial investment advisers, these professionals fulfi l their obligations, especially with regard to the obligation to provide advice. For that reason it initiated mystery shopping campaigns in 2010 to investigate how fi nancial products were actually being marketed. Awareness and training programmes for professionals and, more specifi cally, for compliance offi cers in management companies and investment services providers, are also part of efforts towards achieving this objective. By issuing alerts, the AMF encourages consumers to be vigilant about the inherent risks in investing in certain fi nancial products. It also engages in activities of a more general nature aimed at educating the general public by preparing and distributing brochures and through educational activities carried out with the fi nancial literacy institute, Institut de l Éducation Financière du Public. The AMF s Ombudsman handles queries and requests for out-of-court dispute settlement from investors. The AMF recently introduced new tools for supervising advertising in all media (brochures, newspapers, Internet, radio and television). It also created a Retail Investor Relations Department (DREP) that covers all activities aimed at investors. The AMF can also initiate sanctions proceedings against regulated professionals or any other person that jeopardises investor protection by committing a breach of fi nancial regulations concerning a fi nancial instrument admitted to trading on a regulated market or an organised multilateral trading facility. The Board makes the decision to initiate sanction proceedings. After hearing both sides, the Enforcement Committee rules on the substance of the case and has the power to impose a fi nancial penalty and/or a disciplinary sanction 1. Interview with Natalie Lemaire Natalie Lemaire, you have recently been appointed to head the AMF s new Retail Investor Relations Department. What can you tell us about the roadmap for this new department? Creating the Retail Investor Relations Department is an integral part of AMF s New Strategy Proposals. It refl ects the regulator s determination to make its investor protection duty one of its top-ranking concerns. Its objectives in this area are fourfold: improve knowledge of retail investors behaviour and fi nancial product marketing practices INTERVIEW optimise all the AMF s communications aimed at investors provide effective mediation that is fair and complies with the law and, as the AMF correspondent, ensure successful leadership for the AMF-ACP Joint committee Any decision by the AMF to impose sanctions may be appealed to the Paris Court of Appeals or, in the case of professionals, to the Conseil d État. Your tasks include understanding retail investors behaviour. How would you define their current behaviour? Following the crisis, investors are looking for fi nancial products that seem safe, which often means products with full or partial capital guarantees.
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