Information About Products (4.21 - 4.53) 

CLARIFICATION OF SCOPE

Consumer Credit, Payment Services and Electronic Money

  1. Where regulated entities are providing credit under credit agreements which fall within the scope of the European Communities (Consumer Credit Agreements) Regulations 2010 (S.I. No. 281 of 2010), only Provisions 4.7 to 4.11 and 4.26 apply. 
  2. Where regulated entities are providing payment services and/or issuing electronic money, only Provisions 4.7 to 4.11 apply. 

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INFORMATION ABOUT PRODUCTS (4.21 - 4.22)

4.21
Prior to offering, recommending, arranging or providing, a product, a regulated entity must provide information, on paper or on another durable medium, to the consumer about the main features and restrictions of the product to assist the consumer in understanding the product.

To the extent that the contract for the provision of the product is a distance contract for the supply of a financial service under the European Communities (Distance Marketing of Consumer Financial Services) Regulations 2004, the Regulations apply in place of the requirement set out in the first sentence of this provision.

4.22
        
A regulated entity must provide each consumer with the terms and conditions attaching to a product or service, on paper or on another durable medium, before the consumer enters into a contract for that product or service.  To the extent that the contract for the provision of the product is a distance contract for the supply of a financial service under the European Communities (Distance Marketing of Consumer Financial Services) Regulations 2004, the Regulations apply in place of the requirement set out in the first sentence of this provision.     

   

CREDIT (4.23 - 4.29)

4.23         
Prior to credit being approved, a regulated entity must explain to a personal consumer the effect of missing any of the scheduled repayments.  The implications and effects of missing the scheduled repayments must be highlighted in all credit agreement documentation provided to the personal consumer and the following warning statement must also appear in the documentation: 

Warning:
If you do not meet the repayments on your credit agreement, your account will go into arrears.  This may affect your credit rating, which may limit your ability to access credit in the future.

 

4.24        
Where a personal consumer’s formal application for credit is turned down by the regulated entity, it must clearly outline to the personal consumer the reasons why the credit was not approved.  The regulated entity must offer to provide the reasons, on paper or on another durable medium, to the personal consumer. If requested by the personal consumer, the regulated entity must provide the reasons, on paper or on another durable medium, to the personal consumer.

4.25         
Where a regulated entity:

  1. offers credit on a fixed interest rate to a personal consumer; or
  2. offers a personal consumer the option to fix their rate or to switch to a fixed rate, on an existing credit agreement;

the regulated entity must provide, in the credit documentation, a worked example specific to the personal consumer of the early redemption charge in monetary terms and details in relation to the calculation of this charge.

4.26         
Where credit is being offered to a personal consumer by a regulated entity subject to a guarantee, the guarantee documentation must outline the obligations of the guarantor and must contain the following warning statement:

Warning:
As a guarantor of this credit, you will have to pay off the debt amount, the interest and all associated charges up to the level of your guarantee if the borrower(s) do(es) not.  Before you sign this guarantee you should get independent legal advice.

4.27         
Prior to offering, recommending, arranging or providing a loan to a personal consumer for the purpose of consolidating other loans or credit, a regulated entity must provide a personal consumer, on paper or on another durable medium, with an indicative comparison of the total interest they will pay if they continue with the existing facilities and the total interest payable over the term of the consolidated facility on offer.  Any assumptions used must be reasonable and justifiable and must be clearly stated.

4.28         
Where a regulated entity operates a website, it must publish on its website the interest rates for mortgages which are currently available to consumers from that regulated entity.

4.29         
Where a regulated entity offers a mortgage to a personal consumer, the regulated entity must include in the offer document:

  1. the amount of the mortgage;
  2. the interest rate that applies to the mortgage at the date of offer;
  3. the term of the mortgage;
  4. where there is a possibility that the interest rate set out in the offer document may not be the interest rate applicable when the mortgage is drawn down, this must be clearly highlighted. The offer document must also outline the circumstances that would result in such a change to the  interest rate;  and
  5. the length of time for which the mortgage offer is valid, assuming that all details provided by the personal consumer are correct and do not change.

 

INSURANCE PRODUCTS (4.30- 4.40)

4.30         
A regulated entity providing an insurance quotation to a consumer must include the following information in the quotation, assuming that all details provided by the consumer are correct and do not change:

  1. the monetary amount of the quotation;
  2. the length of time for which the quotation is valid; and
  3. the full legal name of the relevant underwriter.

4.31         
A regulated entity must set out clearly in the quotation provided to the consumer any warranties or endorsements that apply to the policy. Where the quotation is provided, on paper or on another durable medium, this information must not be in a smaller font size than other information provided in the document.

4.32         
A regulated entity providing an insurance quotation to a consumer must set out clearly any discounts or loadings that have been applied in generating the quotation.

4.33         
A regulated entity must, when offering a motor insurance policy to a consumer, set out clearly for the consumer the basis on which an insurance undertaking may calculate the value of the vehicle for the purposes of settling a claim where the vehicle is deemed to be beyond economic repair following a road traffic accident, fire or theft.

4.34         
A regulated entity must state the full legal name of the relevant underwriter on all insurance policy documentation and renewal notices issued to a consumer.

4.35         
A regulated entity must explain to a consumer, at the proposal stage, the consequences for the consumer of failure to make full disclosure of relevant facts, including:

  1. the consumer’s medical details or history; and
  2. previous insurance claims made by the consumer for the type of insurance sought.

The explanation must include, where relevant,    

  1. that a policy may be cancelled;
  2. that claims may not be paid;
  3. the difficulty the consumer may encounter in trying to purchase insurance elsewhere; and,
  4. in the case of property insurance, that the failure to have property insurance in place could lead to a breach of the terms and conditions attaching to any loan secured on that property.  

4.36         
Prior to a consumer completing a proposal form for a permanent health insurance policy, a regulated entity must explain to the consumer  

  1. the meaning of disability as defined in the policy;
  2. the benefits available under the policy; 
  3. the general exclusions that apply to the policy; and 
  4. the reductions applied to the benefit where there are disability payments from other sources. 

4.37         
Prior to a consumer completing a proposal form for a serious illness policy, a regulated entity must explain clearly to the consumer the restrictions, conditions and general exclusions that attach to that policy.

4.38         
When offering a property or motor insurance policy to a consumer, a regulated entity must, where relevant, explain to the consumer that, in the event of a claim, the regulated entity may appoint its own builder or other expert to undertake restitution work on a property or motor vehicle.

4.39         
Where an insurance undertaking refuses to quote a consumer for motor or property insurance, it must, within five business days of the refusal:

  1. in the case of motor insurance, provide the consumer with its refusal and its reasons for refusing cover, on paper or on another durable medium, and notify the consumer of their right to refer the matter to the Declined Cases Committee and the method of doing so.
  2. in the case of property insurance, inform the consumer of its refusal and its reasons for refusing cover and notify the consumer that failure to have property insurance in place could lead to a breach of terms and conditions attaching to any loan secured on that property.  The regulated entity must inform the consumer that they can request that this information be provided, on paper or on another durable medium, and must provide this information, on paper or on another durable medium, to the consumer if so requested.

4.40         
Prior to offering, recommending, arranging or providing an insurance policy where the premium may be subject to review by the insurance undertaking during the term of the policy, a regulated entity must:

  1. explain clearly to the consumer the risk that the premium may increase; and
  2. provide the consumer with details of the period for which the initial premium is fixed.

 

The following warning statement must be included on the application form for the product:

Warning:
The current premium [‘may’ or ‘will’ – delete as appropriate] increase after [insert period of time for which the premium is fixed]
.

This provision does not apply where the premium may be subject to review as a result of an alteration to the policy that is requested by the consumer.

LIFETIME MORTGAGES AND HOME REVERSION AGREEMENTS (4.41-4.45)

4.41        
Prior to offering, recommending, arranging or providing a lifetime mortgage to a personal consumer, a regulated entity must inform the personal consumer of the consequences of purchasing a lifetime mortgage, and provide the following information to the personal consumer on paper or on another durable medium:


  1. the circumstances in which the loans will have to be repaid;
  2. details of the interest rate that will be charged;
  3. an explanation of the impact of the rolling up of the interest over the duration of the loan;
  4. an indication of the amount required to repay the loan at maturity;
  5. the effect on the existing mortgage, if any; and
  6. an indication of the likely early redemption costs which would be incurred if the loan was redeemed on the third and fifth anniversary of the loan and at five yearly intervals thereafter.

 

4.42
Prior to offering, recommending, arranging or providing a home reversion agreement to a personal consumer, a regulated entity must inform the personal consumer of the consequences of entering a home reversion agreement and provide the following information to the personal consumer on paper or on another durable medium:

  1. the circumstances in which the agreement comes to an end;
  2. the effect on the personal consumer’s existing mortgage, if any; and
  3. in the case of a variable-share contract, an indication of the potential change in the breakdown of the  ownership of the property between that held by the home reversion company and the personal consumer, over the duration of the agreement. 

4.43
Any assumptions used by the regulated entity to generate the information required by Provisions 4.41 and 4.42 above, must be reasonable and justifiable and must be clearly stated in the information provided to a personal consumer.

4.44         
Prior to offering, recommending, arranging or providing a lifetime mortgage or a home reversion agreement to a personal consumer, a regulated entity must ensure that the personal consumer is made aware of the importance of seeking independent legal advice regarding the proposed transaction.

4.45         
A regulated entity must include the relevant warning statements set out below on the following, where they contain information regarding a lifetime mortgage or home reversion agreement:

  1. an application form;
  2. any other document provided to the personal consumer; and
  3. on its website.   

For lifetime mortgages:

Warning:
While no interest is payable during the period of the mortgage, the interest is compounded on an annual basis and is payable in full in circumstances such as death, permanent vacation of or sale of the property.

and;

Warning:
Purchasing this product may negatively impact on your ability to fund future needs.


For home reversion agreements:

Warning:
The money you receive may be much less than the actual market value of the share in your home.

and;
Warning:
Purchasing this product may negatively impact on your ability to fund future needs.

INVESTMENT PRODUCTS (4.46 -4.53)

4.46
Prior to offering, recommending, arranging or providing an investment product, other than a tracker bond, a regulated entity must provide a consumer with information on the following, where relevant:

  1. capital security;
  2. the risk that some or all of the investment may be lost;
  3. leverage and its effects;
  4. any limitations on the sale or disposal of the product;
  5. restrictions on access to funds invested;
  6. restrictions on the redemption of the product;
  7. the impact, including the cost, of exiting the product early;
  8. the minimum recommended investment period;
  9. the risk that the estimated or anticipated return on the investment product will not be achieved;
  10. the potential effects of volatility in price, fluctuation in interest rates, and/or movements in exchange rates on the value of the investment; and
  11. the level, nature, extent and limitations of any guarantee and the name of the guarantor.

This information must be provided in a stand-alone document except where such information is already required to be disclosed under the Life Assurance (Provision of Information) Regulations 2001 or any other regulations made under Section 43D of the Insurance Act 1989 concerning provision of information for life assurance policies and where such information is disclosed to the consumer in a manner which complies with such Regulations.

4.47         
A regulated entity must include the following warning statement with all illustrations:

Warning:
These figures are estimates only.  They are not a reliable guide to the future performance of your investment.

4.48         
Where a prospectus, other than a prospectus falling within the scope of the Prospectus Directive (2003/71/EC), represents or contains the terms of a contract between a regulated entity and one or more of its consumers, this fact must be clearly stated in the prospectus.

4.49         
A regulated entity must provide the following information in a prominent position in a tracker bond product brochure, if any, and on a tracker bond application form:

a. for investments in products that do not promise a 100% return of a consumer’s capital on maturity, the following warning statement:

Warning:
The value of your investment may go down as well as up. You may get back less than you invest.

b. where the promised return is known but is less than the initial 100% invested by a consumer the following warning statement:

Warning:
If you invest in this product you could lose [xx]% of the money you invest.

c. if the promised return of capital is only applicable on a specific date, this date and the following  warning statement:   

Warning:
If you cash in your investment before [specify the particular date] you may lose some or all of the money you invest.
 

d. if there is no access to funds for the term of the product, the following warning statement:

Warning:
If you invest in this product you will not have any access to your money for [insert time required before the product matures].

e. the nature, extent and limitations of any guarantee attaching to the product and the name of the ultimate provider of any guarantee.

4.50         
A product producer of a tracker bond must produce and issue a “Key Features Document” of a type referred to in Appendix A to this Code to any intermediary that offers that tracker bond to consumers.  Where the information required by the Key Features Document is otherwise already provided to the consumer as required under the Life Assurance (Provision of Information) Regulations 2001 or any other regulations made under Section 43D of the Insurance Act 1989 requiring the provision of information to consumers regarding life
assurance policies, the regulated entity is not obliged to include that information in the Key Features Document.

4.51         
A regulated entity must provide a consumer with a Key Features Document prior to the consumer signing an application form for a tracker bond.  
Where relevant, the Key Features Document must explain to the consumer that the consumer’s return on his or her investment will be capped/limited.

4.52         
Where a regulated entity offers a consumer the facility to borrow funds to invest in a tracker bond, the regulated entity must give the consumer an illustration showing:

  1. the year-by-year and total interest payments the consumer is likely to have to pay in respect of the funds borrowed to invest in the tracker bond, until the date the product matures;
    1. for this purpose only, the fixed interest rate offered by the lender for the period to the date of the promised, payment under the tracker bond, must be used.
    2. where the lender does not offer a fixed interest rate over this period, an equivalent open market fixed interest rate should be used for this purpose.
  2. the equivalent compound annual rate of the promised payment under the relevant tracker bond must be shown prominently; and
  3. the difference between the promised payment under the tracker bond and the total projected outgoings of the consumer (i.e. interest payments related to the funds borrowed to invest, any capital repayments related to such borrowings and any capital investment by the consumer other than the borrowed funds) over the period to the date of promised payment under the tracker bond.

4.53
Prior to offering, recommending, arranging or providing a Personal Retirement Savings Account (PRSA), a regulated entity must provide a consumer with the information set out in Appendix B to this Code.  Where a non-standard PRSA is offered or recommended to a consumer the regulated entity must also complete the declaration set out in Appendix C to this Code.