From Compliance to Confidence – Why Strong Audit Functions Are Essential in Europe’s IDD Era

Compliance remains a moving target, and supervisory scrutiny is intensifying. These are the key takeaways from the European Insurance and Occupational Pensions Authority (EIOPA) 5th Annual Report, launched this year, on administrative sanctions and other measures under the Insurance Distribution Directive (IDD). 

With over 1,500 IDD-related sanctions issued across 20 EU/EEA Member States in 2023 alone, insurers and intermediaries are under increasing pressure to embed a customer-centric, risk-aware culture that aligns with both regulatory expectations and market best practices. Monetary penalties imposed for non-compliance amounted to €326,073 in 2023, with temporary bans on management functions applied in some cases.  

From our vantage point at Pro Global, the report underlines the critical role of robust governance, proactive oversight, and integrated assurance, which are fundamental principles to our audit and business practices. While the volume of sanctions declined from the previous year, the quality and thematic focus of regulatory actions have shifted, reflecting a more nuanced, principle-based supervisory approach. 

The growing focal point of product oversight and governance 

A clear trend emerging from the report is the intensified enforcement of Product Oversight and Governance (POG) rules. Breaches related to inadequate target market definition, product testing, and ineffective review mechanisms have increased, with regulators in multiple jurisdictions now imposing cease-and-desist orders and administrative measures for non-compliance. 

This shift toward product governance reflects a broader push for customer-centricity and value for money, both cornerstones of the IDD. Insurers and intermediaries must now not only design appropriate products but also continuously demonstrate that those products deliver fair outcomes throughout their lifecycle. 

Conduct and organisational standards in the spotlight 

The report also highlights persistent breaches of conduct and organisational requirements, particularly under Articles 10 and 17 of the IDD. Many sanctions related to professional and organisational inadequacies, registration failures, and poor complaints handling. Furthermore, Article 17, requiring firms to act honestly, fairly, and professionally in the customer’s best interest, is increasingly cited in enforcement cases. 

While not formally considered an IDD breach, a notable example from France illustrates regulators’ focus on conduct and transparency in non-life distribution. According to a report published on 21 June 2023 by the French Consumer Protection Authority, 49 sanctions were imposed after the investigation of 147 insurance distributors.  

Breaches included misleading practices related to phone canvassing, legal fees insurance coverage, and incomplete refunds following the early cancellation of insurance contracts. Though these sanctions were imposed under national consumer protection rules and are not included in the official IDD figures, they underscore the growing scrutiny of sales practices and the importance of providing clear, complete, and accurate information to consumers, particularly in non-life insurance lines. 

How Pro Global can support you 

At Pro Global, we specialise in helping insurers and intermediaries anticipate and  exceed regulatory expectations as they grow and develop their business. Our Audit team brings deep expertise in multit-territory  insurance governance, compliance, and risk assurance, offering independent assessments, targeted reviews, and full-service co-sourced or outsourced audit support. 

We help you identify and address gaps in your IDD compliance framework, enhance your and your intermediaries’ POG arrangements, and align your audit function with evolving regulatory priorities. Whether you’re preparing for a supervisory review or building out your internal assurance capabilities, our tailored solutions provide confidence, clarity, and compliance. 

A strong, independent audit function is a strategic enabler. It builds resilience, enhances stakeholder confidence, and provides the clarity and assurance needed to grow sustainably in a complex environment. If you’re ready to move from compliance firefighting to proactive governance that adds value, our Audit & Advisory team is here to help you lead from a position of strength. 

Contact Pro Global’s Audit team today to discuss how we can strengthen your compliance framework and enhance stakeholder trust: getintouch@pro-global.com