Press Release 28 October 2010
New Rules to Strengthen Consumer Protection Measures
Tá an preasráiteas seo ar fáil as gaeilge chomh maith
The Central Bank of Ireland today published a consultation paper on the statutory Consumer Protection Code (Code), outlining proposed new requirements for regulated firms when dealing with consumers in addition to strengthening existing regulations in key areas. The Code originally came into full effect in July 2007 and the proposed changes are part of an ongoing drive to strengthen consumer protection measures.
Bernard Sheridan, Assistant Director General, Consumer Protection said ‘Consumer protection remains a high priority area for the Central Bank and this review of the Code is the most significant strengthening of consumer protection requirements for financial firms since the Code was first introduced three years ago. The new rules and stricter requirements for firms in how they deal with consumers will enhance the level of protection for consumers in their dealings with regulated financial services firms.’
‘Some of the main proposed changes to the Code include a definition of a vulnerable customer, more rigorous suitability requirements, the imposition of strict time limits in dealing with overcharging errors and extending disclosure requirements. We will also be building capacity to monitor product developments in the financial services industry and the consultation includes proposals that product producers must, when designing new investment products, identify the target market for which the product is likely to be suitable’, he said.
The most significant measures proposed in the revised Code include:
- More prescriptive know the consumer requirements. Firms will be required to gather and record information specifically on the customers’ personal circumstances, needs and objectives, financial situation and attitude to risk;
- More rigorous requirements for assessing whether a product or service is suitable for a consumer and meets the consumer’s needs and objectives;
- A definition of vulnerable consumer is proposed and firms must apply a greater level of care to a consumer if a vulnerability is identified;
- Enhanced disclosure and transparency requirements;
- New requirements that product producers, when designing new investment products, must identify the target market, the nature and extent of risks inherent in the product and the level, nature, extent and limitations of any guarantees attached to the product;
- New requirements for assessing affordability, including income verification and stress testing repayments. Provisions similar to those proposed for the handling of mortgage arrears are being proposed for handling personal debt; and
- More prescriptive requirements on handling of errors, including requirements that errors must be fully rectified in six months, regulated entities must test internal control systems on a regular basis, where an error is not resolved within 30 days the error must be reported to the Central Bank and a log of all errors must be maintained within firms.
In addition to seeking views on the significant measures outlined, the consultation also seeks views on specific issues including information that must be given to consumers about products, further limitations on unsolicited contacts with consumers, the treatment of vulnerable consumers and on the operation of the Code of Conduct on the Switching of Current Accounts with Credit Institutions.
The Central Bank is seeking views on the proposed amendments and consultation questions by 10 January 2011 with a view to publishing the revised Code in mid-2011. All submissions received will be published on www.centralbank.ie.