In January 2025 the High Court upheld the findings of the Financial Services Tribunal and found that section 14 of the Insurance Act of 2017 does not require the prior approval by the Prudential Authority of the appointment of a director. Prudential Standard GOI 4, which requires the Prudential Authority to “approve directors and auditors before they are appointed”, adds a requirement to section 14 which does not exist.
Section 14(1) requires the appointment of directors to be approved by the Prudential Authority, and the appointment “takes effect only if the Prudential Authority approves the appointment.” Four directors were appointed to the boards of life and non-life insurers between March and April 2020 without prior approval. The Prudential Authority approved the appointments retrospectively in June 2021 “purely to prevent unbusinesslike results”, but sought to impose administrative penalties for alleged non-compliance with section 14.
The Court found that “logically and practically, there cannot be approval before appointment”, and rejected the argument that approval should have been sought within 30 days of the appointment. There is no such requirement in the Insurance Act nor in GOI 4. The Prudential Authority itself had granted the approval retrospectively which had the effect that the approval and appointment occurred from the outset.