Out-Law News | 11 Mar 2020 | 10:48 am | 2 min. read
The Central Bank of Ireland has published a report (31-page / 2.3MB PDF) setting out what it sees as the biggest risks to consumers of financial services, along with details of what firms should be doing to minimise those risks. Among the issues it identified were a lack of consumer-focused culture in firms; and the risks posed by Brexit, technology and the current coronavirus outbreak.
The report also sets out the Central Bank's own programme of work around consumer protection planned for the next year including a "substantial review" of the Consumer Protection Code 2012 (as amended); examining the practice of price differentiation in the Irish motor and home insurance markets; and "risk-based" reviews in the insurance intermediary, asset management and payments sectors.
Appropriate action will need to be taken to ensure that policies and procedures of financial services providers protect the best interests of consumers.
Financial services expert Lisa Matthews of Pinsent Masons, the law firm behind Out-Law, said: "The 2020 Consumer Protection Outlook shows the commitment of the Central Bank of Ireland to protecting consumers".
"Irish regulated financial services providers will need to familiarise themselves with the report and the risks which have been identified for consumers of financial services. Appropriate action will need to be taken to ensure that policies and procedures of such providers meet the Central Bank's expectations and that they protect the best interests of consumers," she said.
Gráinne McEvoy, the Central Bank's director of consumer protection, said: "Consumer protection begins with the financial services firms. They are responsible for selling products that meet their customers' needs both now and into the future".
"The Central Bank regulates financial conduct with the aim of ensuring that the best interests of consumers and investors are protected. Our vision is of a trustworthy financial system supporting the wider economy, where firms and individuals adhere to a culture of fairness and high standards. This is a vision which we expect the industry must share and deliver on," she said.
The Central Bank's recommendations for firms are based on its previous work, including its 2018 review of behaviour and culture in Irish retail banks. This review found a lack of collective understanding of what 'consumer focus' actually means, and that consumer focus was not always embedded in banks' structures, processes and systems.
While Irish banks should already be taking action in response to the findings of the 2018 review, the Central Bank is now keen to see other regulated financial firms "put consumers at the heart of their business", according to the report. Firms must comply with the requirements of the Central Bank's Consumer Protection Code, which includes acting honestly and fairly in the best interests of their customers, and should put "appropriate contingency plans in place to be able to deal with major operational events", including emerging risks associated with the coronavirus outbreak.
"It is interesting to see reports in the Irish press yesterday that Irish banks are considering offering customers impacted by the coronavirus outbreak short holidays on loan repayments," said Matthews.
Other risks to consumers highlighted by the Central Bank as ones to which firms should pay particular attention were those associated with irresponsible unsecured lending; ineffective disclosure by firms about the benefits, risks and costs of financial products; poor governance and oversight of outsourcing arrangements; and information technology and cyber risk.
31 Oct 2019