On 19 October 2011, the Central Bank of Ireland (the "Central Bank"), published the revised Consumer Protection Code (the "CPC") which came into effect from 1 January 2012 for regulated entities including banks, insurance and investment companies and intermediaries. The publication of the revised CPC follows a year long consultation process which began in October 2010 and involved consultation paper CP 47 and consultation paper CP 54. The revised CPC significantly strengthens existing requirements contained in the original CPC launched in 2006, in key areas such as enhanced disclosure and transparency requirements.

Key Changes:

The revised CPC increases protection for consumers in a number of key areas, including the following:

  • Arrears handling - New rules have been introduced setting out how regulated entities must deal with and treat consumers who are in arrears. Protections, similar to those for mortgage arrears covered under the Code of Conduct on Mortgage Arrears, have now been introduced.
  • Contact with consumers – unsolicited personal or "doorstep" visits to consumers are now prohibited. Strict rules are in place to govern the circumstances in which personal visits are permissible. The number of unsolicited communications with a consumer in arrears has been limited to three in each calendar month.
  • Mis-selling of products - more rigorous 'know your customer' requirements have been introduced whereby regulated entities must gather and record information specifically on the customers' personal circumstances, needs and objectives, financial situation and attitude to risk in order to assess whether a product or service is suitable for a particular consumer. Product producers are required to give detailed information to intermediaries in relation to the investment products they sell on behalf of the product producers, such as identifying the target market of consumers for the product.
  • Vulnerable consumers – the revised CPC contains a definition of "vulnerable customer" and firms are encouraged to apply a greater level of care to a consumer where a vulnerability, for example, a vision or hearing impairment or a lack of knowledge, is identified. Those identified as vulnerable consumers must be provided with the necessary arrangements or assistance to facilitate their dealings with the regulated entity.
  • Errors and complaints resolution – stricter time limits have been imposed for regulated entities to resolve overcharging errors, including the requirement that errors must be fully rectified within six months. Regular analysis of errors and complaints is also required to ensure that regulated entities identify any potential patterns of consumer detriment.

Guidance:

In December 2011, the Central Bank published the Consumer Protection Code 2012 Guidance (the "Guidance"). The purpose of the Guidance is to aid regulated entities in their interpretation and understanding of the provisions of the revised CPC.

The Guidance provides additional clarification in a number of key areas, including the following:

  • Whether email is considered to be a durable medium;
  • The meaning of a 'mortgage' for the purpose of the CPC;
  • Whether the revised CPC seeks to duplicate disclosure requirements set out in the Life Assurance (Provision of Information) Regulations 2001;
  • The level of detail required to be provided in relation to warranties and endorsements set out in provision 4.31 (which set out the information required to be given in customer quotes);
  • Identifying a 'vulnerable consumer';
  • Whether the credit affordability assessment requirements apply retrospectively;
  • How a regulated entity might demonstrate that a claim settlement offer is fair;
  • Whether provision 7.2 (Premium Rebates) prohibits the setting of thresholds for payment of rebates in insurance policy terms and conditions;
  • Whether the unsolicited communications limit in Chapter 8 (Arrears Handling) of the revised CPC applies per product;
  • Whether the arrears handling provisions apply if legal proceedings have been commenced to recover unpaid debts;
  • Clarification regarding the terms 'initialism' and 'acronym'; and
  • Clarification regarding obligations under the Payment Services Directive and provisions 10.1 to 10.6 (Errors and Complaints Resolution).

The guidance serves as a useful tool for regulated entities in clarifying the revised CPC, in terms of its provisions and its application. In an increasingly vigilant environment of consumer protection, this serves as welcome guidance for all concerned.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.