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Irish Central Bank issues proposed changes to consumer protection code

Revisions to Ireland’s consumer protection code (CPC) detailed in a recently published Central Bank consultation paper reflect a modernisation of the code and address current regulatory priorities, including protecting consumers from risks posed by digitalisation and scams, an expert has said.

The Consultation Paper on Consumer Protection Code (96 pages / 1.98 MB) was published on 7 March and includes revisions to the general requirements of the CPC as well as the publication of the much-anticipated Standards for Business (also known as Business Standards), provided for under the Individual Accountability Framework (IAF).

The Standards for Business seek to ensure that the behaviour of people working in regulated firms meets certain standards and contributes to the firm’s compliance with the CPC.

Lisa Carty, financial services expert at Pinsent Masons, said: “The changes being proposed in the revised CPC along with the introduction of the IAF show a clear intention from the Central Bank to prioritise consumer protection and consumer outcomes in an evolving financial services sector.” The proposed updates to the CPC  come at a time of broader reforms at the Central Bank.

The Standards for Business will apply in full to all regulated firms dealing with consumers, except markets in financial instruments directive (MiFID) firms, crowdfunding services, and core credit union activities. It is, however, proposed that the rules in the Standards for Business governing unregulated products will be applied to MiFID firms and that the rules governing advertising will be applied to crowdfunding firms.

The first Standard of Business requires that a firm “at all times…secures its customers’ interest” and will only apply to firms' dealings with Irish consumers. Each of the other Standards of Business will apply to all regulated firms’ dealings with current and potential customers more broadly, including small and medium enterprises.

Proposed revisions to the general requirements of the CPC aim to address current, topical challenges and developments facing consumers in financial services. Broadly, the changes focus on securing customers’ interests, digitalisation, informing effectively, mortgage credit and switching, unregulated activities, frauds, and scams, protecting consumers in vulnerable circumstances, and climate risk.

The updated general requirements will include new protections combined with existing requirements and will consolidate a number of existing Central Bank codes together in one place. For example, the new CPC will consolidate the Code of Conduct on Mortgage Arrears, the High-Cost Credit Providers Regulations, and the Insurance Requirements Regulations 2022.

The Central Bank has also published related guidance on securing customers’ interest (30 pages / 657 KB) as well as guidance on protecting consumers in vulnerable circumstances (15 pages / 651 KB) which will apply to regulated firms.

The Bank confirmed that it will expect MiFID firms and crowdfunding services to take the guidance into account in the content of their obligations to “act honestly, fairly, and professionally in accordance with the best interests of its clients” under the Irish MiFID regulations and the EU Crowdfunding Regulation.

“The proposals make it clear that although MiFID firms and crowdfunding services may not deal directly with consumers, they will not escape their obligations to treat their customers fairly,” Carty added.

Firms may also be required to rethink consumer communication methods to ensure they are in line with the update. Carty said: “Another key theme coming from the reforms is an expectation that firms will communicate more effectively with consumer and ensure that ambiguities are removed from consumer communications.”

The consultation period will be open for feedback for three months, closing on 7 June. The final regulations are expected in 2025, and with a 12-month transition period, it is estimated that the new framework will apply in full from 2026.

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