Central Bank Consumer Protection Outlook Report 2022

The Central Bank of Ireland (CBI) has issued its Consumer Protection Outlook Report for 2022.

In it, the CBI have identified five areas of risk for consumers of financial services in Ireland today and have outlined their expectations of financial services providers (FSPs) in relation to each of those areas of risk. To the forefront of the CBI's expectations is the requirement to carry on business with the needs and best interests of the consumer at the heart of commercial decisions. Other over-arching issues are compliance with legislation with regard to disclosures and assessment of suitability of products for particular consumers and ensuring there are sufficient resources in place to deliver high quality service. Other key issues identified by the CBI are outlined below.

Poor business practices and weak business processes

With regard to business practices, FSPs should:

• put in place robust product governance and oversight arrangements covering the design, sale and delivery of their products
• ensure that such products meet the needs of the individual consumers identified for the product
• be clear on the reasons why a product or service is being offered to a consumer and why it is suitable for that consumer
• monitor products over time to ensure they are performing as intended and remain suitable for the target market
• ensure, when errors or operational incidents occur, that consumers are treated fairly and put back in the position they would have been in had the error or incident not occurred

Ineffective disclosures to consumers

The CBI expects FSPs to provide clear, easily understood, information in a timely manner to consumers. Key information such as risks and benefits, fees and exclusions, should be disclosed upfront. Information on digital media should be as clear as information delivered by traditional media.

The changing operational landscape

FSPs should actively identify and address risks to consumers arising from changes in the operational landscape. They should clearly delineate for the consumer between regulated and unregulated products, especially where they are offered within the same digital environment. This is especially important in the case of unregulated products carrying special risks such as virtual assets.

Technology-driven risks to consumer protection 

FSPs should have well-defined and comprehensive information technology and cybersecurity risk management frameworks. They should have effective measures to mitigate the risk of fraud and scams and be proactive in identifying and dealing with cases of fraud or scams. FSPs should also demonstrate that they have appropriate oversight of any delegated or outsourced arrangements and that any risks associated with such activities have been appropriately considered and are being managed effectively.

The impact of shifting business models

Proactively assess the risks and consumer impact a commercial decision may pose to new and existing customers, and develop comprehensive action plans to mitigate these risks whilst ensuring that customers understand what changes mean for them. Have the customer service capacity and structures in place to meet expected service levels to provide a timely and customer focused service through all channels. Consider the impact of their decisions on vulnerable customers and provide the assistance necessary. This should include specific and effective processes and communication plans to support vulnerable customers. Only design and bring to market products with features, charges, and risks that meet the needs of consumers identified for the product.

Our work in respect of these Key Cross Sectoral Risks

As well as building for the future, we will follow through on steps to provide fairer outcomes for consumers, including:

• Introducing a ban on ‘price walking’ in the motor and home insurance markets, so that consumers are not penalised for their loyalty
• Ensuring that borrowers in long-term mortgage arrears are dealt with fairly, by reference to their individual circumstances, with a view to resolving arrears cases
• Continued oversight of how insurance firms deal with business interruption claims to make sure those claims are handled properly
• Scrutinising the consolidation and structural transactions in the retail banking sector. Our aim here is that firms exiting the Irish market and the acquiring firms protect consumers’ interests, prioritise consumer needs and outcomes and ensure continuity of access to basic financial services. We will also contribute to the Retail Banking Review being led by the Department of Finance
• Monitoring and challenging retail banks, retail credit firms and credit servicing firms on mortgage loan transactions to ensure consumers’ best interests are protected in line with legislative requirements and supervisory expectations
• Undertaking thematic reviews and further supervisory engagement on the suitability of long-term life assurance products, product governance and costs & charges in the investment sector
• Continuing our work at European level on the consideration of value for money in unit-linked products