ACPR on-site inspections: the stages, and how to prepare

Who decides on an inspection, and why

The Autorité de contrôle prudentiel et de résolution (ACPR⁠), the French prudential supervision and resolution authority, carries out desk-based and on-site inspections of insurance undertakings. Its Secretary General organises these inspections (Article L. 612-23 of the Code monétaire et financier, the French Monetary and Financial Code, or CMF). According to the conduct charter published by the ACPR, the Secretary General sets the inspection programme within the priorities fixed by the Supervisory Board (collège de supervision); a mission can nevertheless be launched at any time.

In insurance, the ACPR says that it targets activities or undertakings with risk factors that justify in-depth investigation. The mission can be general or thematic (one business line, one type of risk, one set of rules), or it can check that weaknesses identified in an earlier inspection have been corrected. It can be extended to subsidiaries, to the persons who control the undertaking, to the other companies in the group, and to agents and persons to whom functions or operational activities have been entrusted (Article L. 612-26 CMF).

Opening the mission

The Secretary General can order a mission by a letter that states its purpose and names the inspectors; the letter is shown to the undertaking on request (Article R. 612-22 CMF). In insurance, some inspectors also act under a standing accreditation with the undertaking. Under the charter, the head of mission informs the undertaking of the launch, the purpose and the make-up of the team, then meets senior management to present the stages of the inspection and, where applicable, its indicative duration.

During the mission

Inspectors can require the production of, and check, any books, registers, contracts and documents, obtain copies and access IT tools and data. The undertaking makes the documents available to them, together with “qualified staff” to provide information (Article R. 612-26 CMF). The Secretary General can also summon and hear any person subject to the ACPR’s supervision (Article L. 612-24 CMF). In urgent cases, the inspectors can draw up official records (procès-verbaux), signed by the head of mission and by the inspected undertaking (Articles L. 612-27 and R. 612-26 CMF).

For the senior managers of an insurance undertaking, three kinds of conduct are criminal offences: obstructing the inspection, failing to answer requests for information after a formal notice, and knowingly providing inaccurate information. The penalty is one year’s imprisonment and a €15,000 fine (Article L. 310-28 of the Code des assurances, the French Insurance Code).

The charter also governs the inspectors’ conduct: they give neither advice nor personal opinions, and they are limited to read-only access to information systems. The undertaking can appoint a coordinator and be assisted by the person of its choice.

The report and the right to respond

Every on-site inspection leads to a report. The draft is brought to the attention of senior management, who can submit observations; the final report records them (Article L. 612-27 CMF).

The charter describes the sequence:

• a meeting on the main findings, sometimes preceded by a preliminary draft so that factual errors can be flagged;
• the sending of the draft report, with a response period set in the covering letter, in principle at least fifteen calendar days;
• the annexing of the undertaking’s written observations and of the mission’s reply, which together form the final report.

Sending the final report closes the on-site work. The outcome is communicated to the board of directors or to the body acting in its place. It cannot be passed on to third parties without the ACPR’s prior consent, except in the cases provided for by law (Article L. 612-27 CMF).

Possible outcomes

Under the charter, the outcome takes the form of a follow-up letter from the Secretary General or, on the Secretary General’s proposal and by decision of the Supervisory Board or of its Chair, administrative measures (mesures de police administrative) or the opening of disciplinary proceedings. These outcomes can be combined.

• Warning (mise en garde) (Article L. 612-30 CMF): against practices likely to endanger the interests of customers or insured persons, after senior management has been given the opportunity to explain.
• Formal notice (mise en demeure) (Article L. 612-31 CMF): to take, within a set period, the measures needed to comply; a periodic penalty payment can be attached.
• Protective measures (Article L. 612-33 CMF): including special supervision, restrictions on activities, suspension of senior managers and, for an insurer, suspension or restriction of the payment of surrender values, switches or policy advances.
• Temporary administrator (Article L. 612-34 CMF).
• Enforcement proceedings: a panel of the Supervisory Board examines the inspection report with a view to opening proceedings; its chair notifies the grievances, and the Commission des sanctions (the ACPR’s enforcement committee) appoints a rapporteur (Article L. 612-38 CMF). The person concerned can consult the file, be assisted by counsel and has at least thirty clear days to submit written observations (Articles R. 612-36 and R. 612-38 CMF). Sanctions range from a disciplinary warning (avertissement) to full withdrawal of authorisation, possibly with a financial penalty; the decision is, in principle, made public (Article L. 612-39 CMF).

Appeals

Decisions of the Commission des sanctions can be challenged by a full-jurisdiction appeal (recours de pleine juridiction) before the Conseil d’État (France’s highest administrative court), within two months of their notification (Article L. 612-16 CMF). More broadly, the Conseil d’État hears, at first and last instance, appeals against decisions taken by the ACPR in its supervisory capacity (Article R. 311-1 of the Code de justice administrative, the French Code of Administrative Justice). Alongside an appeal on the merits, an application for suspension (référé-suspension) can be made if urgency justifies it and if a ground of challenge raises serious doubt as to the lawfulness of the decision (Article L. 521-1 of the same code).

Preparing: practical steps

• Keep documentation up to date: procedures, minutes of governance bodies, reports of the control functions, follow-up of earlier recommendations.
• Appoint a coordinator whose position allows them to organise interviews and the transmission of documents, and who is available, or replaced, throughout the mission, as the charter provides.
• Keep a record of exchanges: log of requests, documents provided, agreed response dates. The charter expects prompt answers, within a reasonable period agreed with the inspectors.
• Involve senior management in the launch meeting and the presentation of findings, where their attendance is expected.
• Prepare the response to the draft report from the findings meeting onwards: factual errors, points the mission did not see, reasoned disagreements, corrective measures already under way.
• Anticipate the outcome: a dated and monitored remediation plan, which a later mission will be able to check.