- Consumer Protection Outlook 2020 identifies key cross-sectoral risks to consumers of financial services
- Sets out the Central Bank’s clear expectations of what regulated financial services providers should do to minimise the risks to consumers
- Calls out the Central Bank’s consumer protection priorities for the year ahead, including key policy and supervisory work
The Central Bank has today published the Consumer Protection Outlook 2020, which sets out the key risks to consumers of financial services which the Central Bank identified during its annual sectoral risk analysis. The report also sets out the Central Bank’s expectations of what firms should do to minimise those risks and protect their customers.
The key cross-sectoral risks which firms must address are:
- Lack of a consumer-focused culture in firms;
- Irresponsible unsecured lending;
- Ineffective disclosure by firms about the benefits, risks and costs of financial products;
- Poor governance and oversight of outsourcing arrangements;
- Information Technology and cyber risks; and
- Risks arising from Brexit.
Gráinne McEvoy, 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 in to the future. The Central Bank expects all firms to consider each risk we have identified in this report and to take all appropriate action to protect consumers”.
In line with the expectation that firms adopt a consumer-focused culture, the Central Bank also expects firms to protect consumers from risks that may emerge from COVID-19.
“We expect regulated firms to have appropriate contingency plans in place to be able to deal with major operational events, should they occur, and we are working with the financial sector to ensure that firms are responding effectively to the evolving situation”, continued Director McEvoy. “We also expect that all regulated firms comply with the requirements of the Central Bank’s Consumer Protection Code including acting honestly and fairly in the best interest of their customers”.
The report also sets out the Central Bank’s own consumer protection priorities for 2020 which are informed both by its sectoral risk analysis and an assessment of where its interventions have the greatest potential to minimise risks for consumers.
The Central Bank’s priorities are to:
- Strengthen the consumer protection framework by advancing a substantial review of the Consumer Protection Code;
- Drive firms to embed effective consumer-focused cultures, including examining the practice of price differentiation in the Irish motor and home insurance markets;
- Work to ensure the fair treatment of borrowers in mortgage arrears, including challenging firms to demonstrate how they are putting in place long-term sustainable and appropriate arrangements for those borrowers;
- Deploy assertive risk-based supervision including undertaking reviews in the insurance, intermediaries, asset management, and payments sectors;
- Further enhance the Central Bank’s gatekeeping process so that only firms that meet the standards required can provide financial products and services to consumers; and
- Influence and shape the domestic, European and international regulatory framework through a number of policy initiatives.
Director McEvoy added “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. I look forward to engaging with firms in the near future to ensure they address the risks we have highlighted”.