Changes from report parliamentary committee draft to plenary report

AddedStricter requirements may include requiring any such fees, commissions or non-monetary benefits to be returned to the customers or offset against fees paid by the customer.

AddedThe stricter requirements of a Member State referred to in this paragraph shall be complied with by all insurance intermediaries or insurance undertakings, including those operating under the freedom to provide services or the freedom of establishment, when concluding insurance contracts with customers having their habitual residence or establishment in that Member State.

Added4a. Member States shall require that, where an insurance intermediary or insurance undertaking distributing insurance-based investment products informs the customer that advice is given on an independent basis, the insurance intermediary or insurance undertaking:

Added(a) assesses a sufficiently large number of insurance products available on the market which are sufficiently diversified with regard to their type and product providers to ensure that the customer’s objectives can be suitably met and are not limited to insurance products issued or provided by entities having close links with the insurance intermediary or insurance undertaking;

Added(b) does not accept and retain fees, commissions or any monetary or non-monetary benefits paid or provided by any third party or a person acting on behalf of a third party in relation to the provision of the service to customers.

AddedThis paragraph shall not prevent insurance intermediaries whose legal status qualifies them as independent, from presenting themselves as not contractually tied to a specific insurance undertaking if they indicate that they receive inducements.

Added5. The Commission shall be empowered to supplement this Directive by adopting delegated acts in accordance with Article 38 to further specify:

Added(a) how insurance intermediaries and insurance undertakings are to comply with the principles set out in this Article;

Added(b) the criteria for assessing compliance of insurance intermediaries and insurance undertakings paying or receiving inducements with the obligation to act honestly, fairly and professionally in accordance with the best interests of the customer.

Added▌

AddedBest interest of customers

Added1. Member States shall require that, when providing investment services or, where appropriate, ancillary services to consumers, an insurance undertaking or an insurance intermediary acts honestly, fairly and professionally in accordance with the best interests of its consumers and complies, in particular, with the obligations set out in this Article and Article 17.

Added1a. Member States shall ensure that in order to act in the best interest of the customer▌, when providing investment advice to customers on insurance-based investment products, insurance undertakings and insurance intermediaries are obliged:

Added(a) to inform the customer of the range of insurance-based investment products or, where applicable, underlying investment options assessed by the insurance undertaking or insurance intermediary, and to provide such advice on the basis of an assessment of an appropriate range of insurance-based investment products or, where applicable, underlying investment options, suited to the customer's needs. The range of insurance-based investment products shall reflect the business model of the insurance undertaking or insurance intermediary.

AddedWhere insurance undertakings and insurance intermediaries are tied by exclusive partnerships, they may build the appropriate range of insurance-based investment products among products or, where applicable, underlying investment options offered by only one insurance undertaking. In that case, customers shall be informed thereof in accordance with the applicable requirements, in particular Article 29(1), point (a) (ii).;

Added(b) to recommend the most efficient insurance-based investment product or, where applicable, underlying investment options among the insurance-based investment products identified as suitable for the customer pursuant to Article 30(1) and offering similar features, taking into consideration its performance, level of risk, costs and charges reported pursuant to Article 25(1c) and, if an equivalent product with higher costs is recommended, to justify this on objective grounds and keep records of that justification;

Added(c) ▌

Added(ca) not to place the financial or other interest of the insurance undertaking or insurance intermediary ahead of the interests of the client;

Added(d) to recommend an insurance-based investment products which insurance cover is consistent with the customer’s insurance demands and needs.

Added1b. Where insurance undertakings and insurance intermediaries are subject to an inducement ban, the conditions of this Article shall be presumed to be fulfilled. The national competent authority may reverse that presumption if an insurance undertaking or insurance intermediary does not comply with the provisions of this Article.

Added1c. EIOPA may organise and conduct a mandatory peer review in cooperation with national competent authorities regarding the implementation of the obligations laid down in this Article.

Added2. The Commission shall be empowered to supplement this Directive by adopting delegated acts in accordance with Article 38 to further specify how insurance intermediaries and insurance undertakings are to comply with the principles set out in this Article.

AddedThose delegated acts shall take into account the nature of the services offered or provided to the customer, the nature of the products, and where applicable, underlying investment options, being offered or considered, including different types of insurance-based investment products, or where applicable, underlying investment options.’;

Added(22) Article 30 is amended as follows:

Added(a) the following paragraph -1 is inserted:

Added‘-1. Member States shall require that insurance intermediaries and insurance undertakings distributing insurance-based investment products assess the suitability or appropriateness of insurance-based investment products and, where applicable, underlying investment options to be recommended to or demanded by customers in good time before the customers are bound by an insurance contract or offer. Each of these assessments shall be carried out on the basis of proportionate and necessary information about the customer as obtained by the insurance intermediary or insurance undertaking in accordance with the requirements set out in this Article.

AddedMember States shall ensure that insurance intermediaries and insurance undertakings distributing insurance-based investment products explain to customers the purpose of the suitability or appropriateness assessment before any information is requested from them. Member States shall ensure that insurance intermediaries and insurance undertakings distributing insurance-based investment products warn customers, in a standardised format, of all of the following:

Added(a) that the provision of inaccurate or incomplete information may impact negatively the quality of the assessment to be made by the insurance intermediary or insurance undertaking

Added(b) that the absence of information prevents the insurance intermediaries and insurance undertakings distributing insurance-based investment products from determining whether the service or financial instrument envisaged is suitable or appropriate for the customer and from providing advice.

AddedMember States shall ensure that insurance intermediaries and insurance undertakings distributing insurance-based investment products provide customers, upon their request, with a report on the information collected for the suitability or appropriateness assessment. That report shall be presented in a standardised format, as developed by EIOPA.

AddedEIOPA shall develop draft regulatory technical standards to determine the explanation and warning referred to in the second subparagraph and the format and content of the report referred to in the third subparagraph.

AddedEIOPA shall submit those draft regulatory technical standards to the Commission by [OJ: insert date 18 months after the date of entry into force].

AddedPower is delegated to the Commission to adopt those regulatory technical standards in accordance with Article 10 of Regulation (EU) No 1094/2010.’;

Added(b) paragraphs 1, 2 and 3 are replaced by the following:

Added‘1. Without prejudice to Article 20(1), when providing advice on insurance-based investment products, the insurance intermediary or insurance undertaking shall obtain the information regarding:

Added- the customer’s knowledge and experience in the investment field relevant to the specific type of insurance-based investment product or, where applicable, underlying investment options, offered or demanded, and the client’s financial situation,

Added- its ability to bear full or partial losses,

Added- investment needs and objectives, including any sustainability preferences, and risk tolerance, so as to enable the insurance intermediary or the insurance undertaking to recommend to the customer the insurance-based investment products that are suitable for that person and that, in particular, ▌risk tolerance, ability to bear losses, its sustainability preferences and the need for ▌diversification.

Added▌

AddedWhen providing advice that involves switching between underlying investment options, insurance intermediaries and insurance undertakings shall obtain the necessary information on the customer’s existing underlying investment options and the recommended new investment options and shall analyse the expected costs and benefits of the switch, so that they are reasonably able to demonstrate that the benefits of switching are expected to be greater than the costs.

Added2. Without prejudice to Article 20(1), Member States shall ensure that, where an insurance-based investment product is sold without advice, the insurance intermediary or insurance undertaking shall ask the customer to provide information regarding that person’s knowledge and experience in the investment field relevant to the specific type of insurance-based investment product or, where applicable, underlying investment assets, offered or demanded ▌so as to enable the insurance intermediary or the insurance undertaking to assess whether the insurance-based investment product or products envisaged are appropriate for the customer.

AddedWhere the insurance intermediary or insurance undertaking considers, on the basis of the information received under the first subparagraph, that the product is not appropriate for the customer, the insurance intermediary or insurance undertaking shall warn the customer. That warning shall be provided in a standardised format and shall be recorded.

AddedThe insurance intermediary or insurance undertaking shall not proceed with the distribution of an insurance-based investment product subject to a warning indicating that the product of service is not appropriate, unless the customer asks to proceed with it despite such warning and the insurance undertaking accepts to conclude the contract at the demand of the customer. Both the demand of the customer and the acceptance by the insurance undertaking shall be recorded.

AddedEIOPA shall develop draft regulatory technical standards to determine the format and content of the warning referred to in the second subparagraph.

AddedEIOPA shall submit the draft regulatory technical standards to the Commission by [OJ: insert date 18 months after the date of entry into force].

AddedPower is conferred on the Commission to adopt those regulatory technical standards in accordance with 10 of Regulation (EU) No 1094/2010.

Added3. Without prejudice to Article 20(1), where no advice is given in relation to insurance-based investment products, Member States may derogate from the obligations referred to in paragraph 2 of this Article, allowing insurance intermediaries or insurance undertakings to carry out insurance distribution activities in relation to insurance-based investment products within their territories without the need to obtain the information or make the determination provided for in paragraph 2 of this Article where all of the following conditions are met:

Added(a) the insurance distribution activities relate to either of the following:

Added(i) insurance-based investment products which only provide investment exposure to the financial instruments deemed non-complex under Directive 2014/65/EU and do not incorporate a structure which makes it difficult for the customer to understand the risks involved;

Added(ii) other non-complex insurance-based investment products for the purpose of this paragraph;

Added(b) the insurance distribution activity is carried out at the initiative of the customer;

Added(c) the customer has been clearly informed that, in the provision of the insurance distribution activity, the insurance intermediary or the insurance undertaking is not required to assess the appropriateness of the insurance-based investment product or insurance distribution activity provided or offered and that the customer does not benefit from the corresponding protection of the relevant conduct of business rules. Such a warning shall be provided in a standardised format.

Added(d) the insurance intermediary or insurance undertaking complies with its obligations under Articles 27 and 28.

AddedAll insurance intermediaries or insurance undertakings, including those operating under the freedom to provide services or the freedom of establishment, when distributing insurance-based investment products to customers having their habitual residence or establishment in a Member State which does not make use of the derogation referred to in this paragraph shall comply with the applicable provisions in that Member State.

AddedEIOPA shall develop draft regulatory technical standards to determine the format and content of warning referred to in the first subparagraph, point (c).

AddedEIOPA shall submit the draft regulatory technical standards to the Commission by [OJ: insert date 18 months after the date of entry into force].

AddedPower is conferred on the Commission to adopt those regulatory technical standards in accordance with 10 of Regulation (EU) No 1094/201039.’;

Added(c) paragraph 5 is replaced by the following:

Added'5. Member States shall ensure that insurance intermediaries or insurance undertakings provide the customer with adequate reports on the insurance distribution activities on a durable medium. Those reports shall contain periodic communications to customers, taking into account the type and the complexity of insurance-based investment products involved and the nature of the service provided to the customer and shall contain, where applicable, the costs associated with the transactions and services undertaken on behalf of the customer.

AddedMember States shall ensure that insurance intermediaries or insurance undertakings, when providing advice on insurance-based investment products, provide the customer sufficiently before the conclusion of the contract and on a durable medium, with a suitability statement specifying the advice given and how that advice meets the preferences, objectives and other characteristics of the customer. The provision of such statement shall be made sufficiently in advance before the customer is bound by an insurance contract or offer to ensure that the customer gets enough time to review it, and where necessary, obtain additional information or clarifications from the insurance intermediary or insurance undertaking.