Central Bank highlights consumer protection risks and key priorities for 2016 

2 February 2016

  • Risks include lack of consumer-focused culture, product complexity and suitability, changing delivery of financial services.
  • Boards and senior management need to fully consider risks to their customers, and embed the right culture, practices and behaviours within their firms.
  • Central Bank to focus on driving cultural change, mortgages, commission payments , health insurance, structured investment products and insurance claims.

The Central Bank’s Consumer Protection Outlook Report sets out the consumer protection priorities it will be focussing on over the next year as well as highlighting a number of key risks facing consumers of financial services for all regulated firms to fully consider. 

These risks include: the absence of an embedded consumer-focussed culture within firms; design and sale of products which are complex and difficult to understand; and poor standards of service.  There are also risks arising from the way in which firms are moving away from traditional delivery channels and services to online and mobile technologies, as well as the risk of the re-emergence of irresponsible lending.

Director of Consumer Protection, Bernard Sheridan, said:  “Boards and senior management need to consider the risks that their business models, practices and behaviours pose to their customers, and ensure that the right culture is embedded within their firms all the way from the board room to front line staff.  This Outlook Report calls out the responsibility on firms to demonstrate to us that they have consumers’ best interests at the centre of all that they do. 

The Central Bank, through its programme of work, will continue to challenge firms to demonstrate to us, and to their customers, that they are delivering products and services to the highest possible standards.”

The key priorities for the Central Bank this year, as set out in the Outlook Report, include:

  • achieving significant progress on the tracker mortgage examination;
  • driving a more consumer-focussed culture in firms through challenging boards and senior management to demonstrate that they are identifying and addressing consumer risks;
  • an examination of the risks and benefits to consumers of intermediary commission payment structures;
  • rolling out an enhanced authorisation model for assessing applications from firms, including credit servicing firms, retail intermediaries and payment institutions;
  • undertaking themed inspections of the sale of private health insurance, structured investment products and the handling of insurance claims;
  • a supervisory focus on smaller retail firms and increased frequency of firm-specific on-site inspections; and
  • continuing to strengthen the consumer protection framework, and concluding our consultation on  transparency requirements for mortgage lenders.

The full Outlook Report is available here.