Dáil Éireann Debate, Thursday - 26 November 2020
117. Deputy Pearse Doherty asked the Minister for Finance if he will consider legislation to strengthen the consumer protection code; his views on the lack of enforcement action taken by the Central Bank for breaches of the code; and if he will make a statement on the matter. [39230/20]
View answerThe Central Bank’s Consumer Protection Code 2012 (the Code) is a statutory Code issued pursuant to Section 117 of the Central Bank Act 1989. The Central Bank has the power to administer sanctions for a contravention of the Code under Part IIIC of the Central Bank Act 1942. The provisions of the Code are binding on regulated entities and must, at all times, be complied with by regulated entities.
The Code is a key component of the strong consumer protection framework in place for consumers of regulated financial service providers. The Code sets out the requirements that regulated entities must comply with when dealing with consumers in order to ensure a similar level of protection for consumers, regardless of the type of financial services provider. The Code sets out important protections in a range of areas, including in relation to pre-contractual and post-sale information, assessing suitability, claims processing, error and complaints resolution, arrears handling and advertising.
Since 2012, the Code has been strengthened a number of times, via addenda, to provide additional protections for consumers. These amendments include new requirements around variable rate mortgages, mortgage switching measures, and intermediary inducements.
A review of the Code is currently underway by the Central Bank. A public consultation on the Central Bank’s proposals for amendments will take place in 2021 giving all stakeholders an opportunity to make submissions. This review will also include transferring the Code into regulations in line with the regulation making powers given to the Central Bank in the Central Bank (Supervision and Enforcement) Act 2013.
The Central Bank has advised me that it continues to give focus to the Consumer Protection Codes in both its supervisory and enforcement work.
It is important to note that the Central Bank’s work to protect consumers is delivered across the entirety of the Bank, and is not just confined to the Code. The breadth of its mandate enables it to harness its collective wide-ranging policy, economic, financial stability and regulatory expertise in working to protect consumers. The stability of the system, and the resilience of firms within it, are as essential in protecting consumers and investors as our statutory codes of conduct, policy development, assertive supervision, authorisation gatekeeping and robust enforcement powers.
On the issue of enforcement, it is not the case that there has been a lack of enforcement action.
The Central Bank has a broad range of tools, which it carefully deploys in appropriate circumstances, including the imposition of sanctions but up to and including the revocation of authorisations and the refusal and prohibition of individuals. The Central Bank has taken a number of actions in these areas in furtherance of its consumer protection mandate.
Since 2006 the Central Bank has concluded 139 cases under its Administrative Sanctions Procedure framework with fines imposed of €123.98m. Of the 139 outcomes, 22 were imposed against individuals. The Central Bank has also taken action to revoke 28 firms’ authorisations on an involuntary basis. A further 13 firms were refused authorisation to undertake regulated activities.
While its enforcement work spans the entirety of its mandate and is wider than the Code alone, the Central Bank has a strong enforcement record in respect of outcomes which are integral to the Code. In this regard, the two largest monetary sanctions imposed to date by the Central Bank – Permanent TSB plc sanctioned €21million in 2019 and KBC Bank Ireland plc sanctioned €18.3million in 2020 - evidence the Central Bank’s commitment to taking robust enforcement action with real deterrence value where serious and significant breaches of the Code are committed.
Ultimately for all cases, whether they are specifically based on a breach of the Code, or another sector of legislation, it is important to note that while a case may not have been settled under the Code, protecting consumers is at the centre of all of the Central Bank’s enforcement outcomes.
Regarding legislation to strengthen consumer protection, the Programme for Government includes a Senior Executive Accountability Regime (SEAR), which will be the centrepiece of the forthcoming Central Bank (Amendment) Bill. The key focus of this legislation is to drive positive behaviour and encourage a culture of high standards that delivers better and fairer outcomes for consumers.
Officials in my Department are currently engaging with the Attorney General's Office in advance of submitting draft heads of Bill to Government so as to ensure that the correct balance is struck between appropriate additional powers for the Central Bank and the protection of individuals' constitutional rights.
It is my intention that draft heads of Bill will be presented to Government for approval in the near future.
