The draft law1 (the "Draft") published in July proposes a number of changes for the entire financial sector. One of the changes concerns the rules on the imposing of fines by the Polish Financial Supervision Authority (the "PFSA") on managing persons of insurance and reinsurance undertakings.
What will change?
The changes to the rules on the imposing of fines by the PFSA on managing persons of insurance and reinsurance undertakings include:
- the introduction of a “faster” path for imposing fines (without the need for a so-called obligating decision);
- expanding the catalogue of persons on whom a fine may be imposed;
- increasing the limits on fines.
Failure to comply with the recommendations of the PFSA is sufficient for a fine to be imposed
Currently, if an insurance or reinsurance undertaking fails to comply with the PFSA's individual recommendations within a specified period of time, the PFSA may issue a decision obliging it to implement those recommendations. Then, if the decision is not executed, the PFSA may take further supervisory measures, including imposing a fine on a member of the management board or a proxy. The Draft provides that the PFSA will be able to impose a fine immediately in the case of non-compliance with the recommendations. Thus, it will not be necessary for the PFSA to issue an obligating decision – imposing an obligation to comply with the recommendations.
The PFSA will be able to impose a fine on a supervisory board member
The Draft extends the list of individuals on whom the PFSA will be able to impose a fine by including supervisory board members. This means that fines may be imposed on members of the management board, members of the supervisory board or proxies of insurance or reinsurance undertakings who performed their functions during the period set by the PFSA for implementing its recommendations or during the period in which the breaches occurred.
Increase of the maximum amount of a fine
Currently, a fine may be imposed on members of the management board and proxies in the maximum amount corresponding to three times their average monthly remuneration from the last 12 months, and if the average monthly remuneration from the last 12 months cannot be established - up to PLN 100,000. The draft proponent, following the example of the regulations binding in the banking sector, proposes to increase the maximum amount of the fine to PLN 20,000,000 (ca. EUR 4,500,000).
It is important to note that the draft proponent also proposes to specify a catalogue of circumstances that will be taken into account when determining the amount of the fine (e.g. the gravity and duration of the breach, the scale of the benefits obtained, or the willingness to cooperate with the PFSA).
The Draft is currently at the opinion stage. We encourage you to contact us to obtain detailed information on the proposed legislative changes and their impact on the activities of insurance and reinsurance undertakings.
 A draft bill to amend certain legal acts in connection with ensuring the development of the financial market and the protection of investors in that market.