knowledge 10 February 2025 |

Steer clear of conduct unbecoming: Revised Code of Conduct for PRSA providers

PRSA providers (defined in the Pensions Act 1990 to mean, broadly, authorised investment firms and authorised insurance undertakings which produce, market or sell PRSA products) now have six months to ensure they are compliant with the requirements of the Code (as detailed below), which is effective from 1 August 2025.

Key sections of the Code:

1. Co-operation: PRSA providers must maintain open and cooperative relationships with the Authority, participating in meetings with the Authority as required. Providers must also adhere to specific guidance from the Society of Actuaries in Ireland on the preparation of statutorily required documentation related to PRSA products which aims to ensure that all actuarial aspects of the PRSA product are compliant with the regulatory standards set by the Authority.

2. Conflicts of Interest: As with the IORP II requirements applicable to occupational pension schemes, PRSA providers are required to put in place a comprehensive written conflicts of interest policy with specific requirements for identifying, managing and disclosing conflicts of interest. Unavoidable conflicts must be disclosed to PRSA contributors “as soon as reasonably practicable” in clear, understandable language, detailing the nature, risks, and management of the conflict. Before proceeding with any investment in which a conflict arises, PRSA providers must obtain active confirmation from the relevant contributor that it is in order to do so. Copies of all confirmations must be retained by the PRSA provider.

3. Risk Warning: The Code includes a standardised risk warning that must be provided to PRSA contributors in advance of any investment in unregulated investment products which highlights the potential risks and lack of regulatory protections. The introduction of a standardised risk warning for unregulated investments ensures that contributors are better informed about the risks involved.

4. Product Oversight and Governance: PRSA providers (excluding life assurance companies) must identify target markets for their products, taking “reasonable steps” to ensure that products are distributed to the identified target market. The aim is to ensure compatibility with the contributors' needs and characteristics. The target market for each product must be reviewed, at a minimum, on an annual basis. The processes used by PRSA providers to (i) identify and (ii) review target markets must be documented, kept for audit purposes and made available to the Authority on request.

Next steps:

To ensure that they will be in a position to comply with the Code by the August 2025 deadline, PRSA providers should:

(i) Compliance audit: conduct a review of current practices to ensure compliance with the Code;  

(ii) Administrative review: review internal administrative processes and procedures in order to ascertain whether any additional layer of administration needs to be implemented, particularly in relation to communications to PRSA contributors and risk warning procedures; and

(iii) Policy development: create and implement a written conflicts of interest policy.

McCann FitzGerald LLP can assist with any queries PRSA providers may have in relation to compliance with the requirements of the Code.