Following a thorough review process, the Central Bank of Ireland has launched the revised Consumer Protection Code, marking a cardinal moment in the modernisation of Irish financial services.

The update mirrors a growing global trend of regulators moving toward a more consumer-centric future, largely driven by the rise of digitalisation.

The code, designed to replace the 2012 iteration, will take effect after a 12-month implementation period. The existing code will continue to apply to regulated firms in the meantime.

Broadgate explores the key changes to the code and their potential impact on compliance in more detail below.

Updates to the Consumer Protection Regulations

You can find an explainer of the updates on the consumer hub of the Central Bank’s website here.

Against the backdrop of a fast-changing industry, the revised Consumer Protection Regulations introduce several significant changes to reinforce consumer safeguards, which include clarification on greenwashing. These changes can be broadly categorised as follows:

  • Enhanced Digitalisation Focus – firms that provide services through digital technology are now required to ensure their technology is designed and implemented with a customer focus. This includes requirements for clear and concise online disclosures.

o   Given the state of the current race to integrate novel technologies in financial services, we’re likely to see plenty of process realignment here.

  • Increased Transparency and Disclosure Agreements – with the introduction of a new Standard for Business, firms are required to ‘effectively inform their customers in their disclosures and communications.’ The change is intended to move away from tick-box compliance exercises.

o   Firms will need to review and revise their disclosure materials to ensure compliance with the new requirements. This will involve simplifying complex information and presenting it in an accessible format.

  • Product Oversight and Advertising Requirements, Including Greenwashing – the code includes further requirements on product oversight to ensure that products are fit for purpose and target markets are correctly identified. This now explicitly includes a requirement for firms to ensure that any sustainability claims made about products or services are accurate and not misleading, to prevent greenwashing.

o   This will require firms to implement robust verification processes capable of substantiating any sustainability claims, including third-party certifications. In some cases, this will involve redesigning product marketing materials, necessitating greater cross-functional collaboration.

  • Protecting Customers in Vulnerable Circumstances – the updated regulations place a stronger emphasis on identifying and protecting customers in vulnerable circumstances, requiring firms to implement specific procedures. This includes the introduction of safeguarding training.

o   Technological implementation has the potential to make a resounding impact in this space, provided that firms can achieve a parallel culture shift.

  • Opt-in Renewal – the introduction of ‘opt-in’ renewal for dental, pet, gadget and travel insurance is aimed at reducing the likelihood that consumers ‘pay for products they no longer need or that aren’t suitable for them.’

o   Firms will need to develop systems to track and manage opt-in preferences and be prepared for potential changes in renewal rates. This may also require firms to create a more robust system for consumers to easily cancel policies.

  • Expanded Scope – the scope of the Consumer Protection Code has been extended to cover businesses with turnover of less than €5m in the past year. This significantly broadens the regulatory landscape, bringing a new and diverse segment of businesses under consumer protection standards. The Central Bank now essentially has oversight of a much larger cohort.

o   Decision-makers should be prepared for compliance costs to rise in light of the CPC’s expanded scope. There’s also a chance this change will influence policy discussion in other jurisdictions.

Interestingly, the revised regulations establish a wider definition for vulnerable customers, acknowledging that consumer circumstances can render individuals vulnerable at different points in their lives.

It’s a perspective that necessitates a more dynamic and responsive approach from financial institutions, and it’s somewhat unusual to see this from regulators, who have historically focused on static categories.

Connect with Broadgate’s Regulatory Specialists

If you’re interested in strengthening your compliance function with regulatory-approved talent ahead of the CPC implementation deadline, Broadgate’s consultants are equipped to support you. Connect with our regulatory specialists to find out more about our services: [email protected].