Central Bank Of Ireland Publishes CP158 – The Consultation Paper On The Consumer Protection Code – Financial Services

On 7 March 2024, the Central Bank published a Consultation Paper
on the Consumer Protection Code (CP158).

CP158 seeks feedback on the Central Bank’s proposed
revisions to the existing Consumer Protection Code
(CPC). The proposed revisions aim to modernise the
CPC and seek to assist firms in effectively incorporating
customers’ interests into their commercial decision-making,
through “securing customers’ interests”. The Central
Bank has explained that the concept of “securing customers
interests” does not introduce new customer best interests
obligations for firms but instead seeks to provide firms and their
customers with increased clarity on already existing
requirements.

As part of CP158, the Central Bank has published the following
draft legislation and guidance as Annexes to CP158:

• Annex 3 – Draft Central Bank Reform Act 2010 (Section 17A)
  (Standards for Business) Regulations (the “Standards
  for Business“);




• Annex 4 – Draft Central Bank (Supervision and Enforcement) Act
  2013 (Section 48) (Conduct of Business) Regulations (the
  “General Requirements“);




• Annex 5 – Draft Guidance on (1) Securing Customers’
  Interests (Part 1) and (2) Draft Guidance on Protecting Consumers
  in Vulnerable Circumstances (Part 2) (“Draft
  Guidance“).

The Draft Standards for Business will align with proposed
“business conduct standards” referenced in the Central
Bank (Individual Accountability Framework) Act 2023. It will
include standards relating to governance, resources and risk
management, along with firm conduct standards, which build on and
update the existing General Principles of the CPC. These Standards
for Business will be complemented by Supporting Standards for
Business which provide further detail on firms obligations. All
“regulated financial service providers” will be required
to comply with such business conducts standards once they have been
finalised and enter into force, with the limited exception of those
firms providing MiFID services and/or crowdfunding services (on the
basis that both of these types of firms are already subject to
equivalent regimes under EU legislation) and credit union savings
and lending activities.

The General Requirements will reflect existing, enhanced and new
requirements and will address structural fragmentation by bringing
a number of existing Central Bank standalone codes and rules
together in one place. The cross-sectoral requirements will cover,
inter alia, digitalisation, informing effectively, customers facing
vulnerability, advertising and complaints resolution. The sector
specific requirements will cover the provision of consumer banking,
credit and arrears, insurance, investments and crowdfunding. The
General Requirements will apply to all regulated financial service
providers, other than reinsurance undertakings, firms providing
MiFID services, and credit union savings and lending activities.
The Central Bank has indicate that while the General Requirements
will not apply to firms providing MiFID services, rules aimed at
protecting consumers when purchasing unregulated products or
services should also apply to MiFID services. As a result, the
Central Bank is proposing to amend the Central Bank (Supervision
and Enforcement) Act 2013 (Section 48(1)) (Investment Firms)
Regulations 2023 to include similar provisions as in the General
Requirements.

The proposed Guidance on Securing Customers’ Interests will
explore the need for firms’ culture, strategy, business model,
decision-making, systems, controls, policies, processes and
procedures to reflect a consumer focus. This will include new
requirements for firms to take all necessary steps so that
customers understand both the regulatory status of the products and
the protections that do not apply to the unregulated product or
service. The Central Bank indicates that it expects firms providing
MiFID services and/or crowdfunding services to consider and apply
this guidance in the context of their obligation to ‘act
honestly, fairly and professionally in accordance with the best
interests of its clients’ under the legislative regimes
applicable to them.

In addition to the CPC, the Central Bank has clarified that it
will develop explainers and guides and it will explore how digital
tools can be utilised to present information in accessible
form.

In its related press release, the Central Bank has outlined that
it expects to publish the revised CPC in early 2025. The Central
Bank is proposing a 12-month period for implementation of the
revised CPC, starting from the final date of publication of the
revised CPC.

The public consultation on CP158 is open until 7 June 2024.

A copy of CP158 is accessible here.

A copy of the related press release by the Central Bank on CP158
is accessible here.

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.