15 February 2017
- Report highlights potential risks to consumers
- Firms have an obligation to help consumers fully understand risks and benefits associated with financial products
- Priorities include the tracker mortgage examination, the conduct of a series of risk assessments on a range of firms and themed inspections.
In order to consistently deliver the right outcomes for their customers, firms must put consumers’ interests at the centre of everything they do. This starts with firms understanding the risks faced by their consumers, not only from the products and services they buy, but also from the behaviour of the firms themselves and the wider market and environment.
The Consumer Protection Outlook Report sets out the consumer protection priorities of the Central Bank and highlights a number of consumer risks that boards and senior management of all regulated firms need to fully consider.
The key risks facing consumers, highlighted in the Report, include the absence of a consumer-focussed culture, the growth in new lending and technological innovation. There are also risks to consumers from the ongoing low interest rate environment and from poor product design and marketing.
Director of Consumer Protection, Bernard Sheridan said: “All firms have a responsibility to help their customers make the right decisions. This responsibility arises not only when selling new products and services but throughout the whole relationship with the customer. This means looking at the relationship through the lens of the customer and not purely from the firms’ perspective. The Central Bank, as part of its consumer protection mandate, works to ensure fair treatment of consumers by financial firms through setting regulations, monitoring compliance and challenging firms to demonstrate how they are delivering for their customers. We will also continue, where necessary, to take the appropriate supervisory and enforcement actions to ensure that consumers are being protected.”
Key priorities for the Central Bank this year, as set out in the Report, include:
- The ongoing Tracker Mortgage Examination;
- The review into the payment of commissions to intermediaries;
- An examination on how technology-driven innovation relates to existing Central Bank Codes;
- Review of the Consumer Protection Code for Licensed Moneylenders;
- Conducting a series of targeted consumer protection risk assessments on a range of firms, with a focus on culture, performance management, sales incentives and product oversight and governance; and
- Undertaking themed inspections, including publication of the outcomes, of the sale of niche/add-on insurance products, retail intermediaries’ compliance with minimum standards, payment institutions’ safekeeping of client funds and retail intermediaries which are acting as managing general agents on behalf of insurance companies.
The report is available here.