The Central Bank has published its new consumer protection code, outlining the rules and business standards for regulated financial firms when dealing with the public.

The code was written following an extensive review, and firms have a year to put it into practice. Its provisions will apply from March 2026.

The review comprised of a discussion paper, public survey, public consultation as well as engagement with consumer and industry stakeholders, and the code is supposed to reflect the way financial services are provided in the digital world, and build in protections in the existing code.

The Central Bank said the modernised code is centred on an obligation for firms to secure customers’ interests and take proactive responsibility for consumer protection.

It also enhances consumer protections across a range of areas, including:

• Digitalisation – firms must be customer-focused in the design and implementation of digital services.
• Informing effectively – a shift from requiring firms to disclose information, to informing effectively. 
• Mortgage switching - firms must meet new disclosure requirements on switching options and the cost of incentives on the overall cost of credit of a mortgage.
• Provision of unregulated activities by regulated firms - firms must ensure customers can have no impression or misunderstanding that they are purchasing regulated products and services, where that is not the case.
• Firms must be vigilant to the evolving risks of frauds and scams, and take appropriate actions to protect customers.
• Protecting consumers in vulnerable circumstances - an updated definition of vulnerability, recognising that customers can move in and out of circumstances that make them vulnerable.
• To tackle the risk of greenwashing, firms will be required to ensure they communicate clearly on climate and sustainability features of products.
• Enhanced requirements in the areas of consumer credit, small and medium-sized enterprises (SMEs) protections, insurance and investments and pensions.

Gabriel Makhlouf, governor of the Central Bank, described the modernisation of the code as "a significant milestone for the protection of consumers of financial services in Ireland, and is built on the strong foundations of its predecessor."

“The ways in which we as consumers buy, use and engage with financial services are changing significantly. 

"These changes reflect new preferences, provide new opportunities and meet different needs on the part of individuals, households and businesses.

"But they also create new challenges and new risks in the financial sector that we supervise and for the consumers we protect," he continued.

"In the face of this changing ecosystem, we need to adapt, evolve and transform.  In fact, all of us – firms, regulators, advocates, media – need to work together to secure customers’ interests as they seek to navigate their financial affairs and to plan for their financial futures."

In reviewing the code, Makhlouf said the Central Bank focused on modernising the regulatory framework to reflect the provision of financial services in a digital world.

"Consumers will benefit from a package of protections that better reflect how they are accessing financial services in the modern world," he added. 

"Regulated firms will benefit from an integrated regulatory format, and a clearer articulation of their Code obligations, complementing the work they are already doing.

"We are also publishing comprehensive guidance to support firms, and we will continue to engage with stakeholders over the next 12 months as we work towards effective implementation."

Michael Kavanagh, CEO of the Compliance Institute, described the review as "timely and much needed," adding that "a lot has changed" since the code was introduced in 2012.

Kavanagh said the Compliance Institute strongly supports clarification and guidance on unregulated activities, new guidance on what constitutes financial abuse, new warnings to be included in advertising for lifetime mortgages, and the new onus on financial institutions to make clear the additional costs to consumers availing of mortgage incentives.

"The Central Bank has previously said it is concerned that mortgage incentives, such as cashback and other bonuses, could unduly distort a borrower’s choices in the short term, and hinder a borrower’s opportunity to choose the optimal mortgage for them based on the total cost of credit over the lifetime of the mortgage," he said.

"We would support any measures which will make it easier for consumers to select the best mortgage deals as ultimately for most people, a mortgage is one of the biggest financial commitments they will ever have. We believe this new onus will be helpful in that regard.”

Paul O'Brien, managing partner for Ireland at Albany Beck, warned however that firms may face challenges in revising their existing product offerings and ensuring that they are designed with customer benefits in mind.

Otherwise, he believes the revised code is a positive step in consumer protection, citing increased transparency on charges and fees and more effective communication tailored to customer needs,

"This revision brings significant evolution in firms’ behaviour towards protecting consumers, with specific focus on their obligations to protecting vulnerable customers as well as preventing financial abuse," he concluded.

Photo: (l-r) Gabriel Makhlouf and Derville Rowland. (Pic: Supplied)