Ongoing obligations for distributors

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The IDD lays down a number of obligations that distributors must respect at all times.

Preventing conflicts of interest

Distributors must act in such a way as to serve your best interests. To this end, they take measures that are effective in detecting and preventing potential conflicts of interest that may adversely affect your interests when distributing insurance-based investment products. Distributors must make sure they do not indirectly serve their own interests or those of other customers instead of yours.

For example, there is a conflict of interest where the distributor is likely to achieve a financial gain or avoid a loss at your expense. The same is true where the distributor has an incentive - financial or other - to put the interests of another customer or group of customers ahead of yours.

If the measures taken by the distributor to prevent or manage conflicts of interest are not sufficient to prevent the risk of damage to your interests, it must inform you of this. In that case, it must provide you with the following information before the insurance contract is concluded:

• a precise description of the conflict of interest in question; • an explanation of the general nature and source of the conflict of interest; and • an explanation of the risks that the conflict presents for you and the measures taken to attenuate these risks.

Following the rules governing remuneration

Where a distributor distributes insurance-based investment products, it is possible that it receives benefits from third parties. These benefits may lead the distributor to favour other interests over yours. Different rules govern these situations, with a view to your protection:

• The distributor cannot be remunerated, nor can it remunerate or evaluate the performance of its staff in a way that is counter to its obligation to act in your best interests. For example, in the form of sales targets that would encourage it to recommend one particular insurance-based investment product to you whereas it could recommend another that would better meet your needs.

• Where the distributor provides insurance distribution services in connection with insurance-based investment products, the distributor may not receive benefits from or pay benefits 4 to third parties unless these:

(i) do not have a detrimental impact on the quality of service it provides you; and (ii) do not impair compliance with its duty to act honestly, fairly and professionally in accordance with your best interests.

Furthermore, organizations that represent the insurance sector have drawn up a code of conduct that further governs the payment and receipt of certain inducements in connection with the distribution of insurancebased investment products. The code sets out:

(i) fundamental principles regarding conflicts of interest and regarding the proportionality of the remuneration to the service provided;

4 Other than those that are necessary or allow for the provision of the service.

(ii) specific rules regarding certain non-monetary types of remuneration. These include rules on the training offered to insurance intermediaries, a limitation on the length of events organized for intermediaries, as well as the geographical zone in which they are held; and (iii) a list of incentives or practices that are prohibited because they are considered to have a detrimental impact on the quality of the service provided to you. For example: trips offered to insurance intermediaries or incentives connected to the sale of certain products where certain conditions are met.

Handling complaints and claims

Distributors are required to ensure that any claims you file with them about an insurance contract or an insurance distribution service you have received are examined in an expert and honest way and that you receive a reply in all circumstances.

Procedure to follow if you wish to file a claim or complaint

If you wish to file a claim about an insurance distribution service or an insurance product, you can first approach the complainthandling service of your distributor.

Under certain circumstances, you can also contact the Insurance Ombudsman, who will play the role of an impartial mediator between your distributor and yourself. Moreover, it is also possible to initiate legal proceedings, notably, if any of the aforementioned claim procedures do not result in a solution to your problem.

You can also address questions to the FSMA, bearing in mind that the FSMA is not authorized to intervene in any disputes between you and your distributor.