Dáil Éireann Debate, Wednesday - 31 March 2021
370. 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. [1850/21]
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 and sits alongside other statutory rules such as the Code of Conduct on Mortgage Arrears, SME Regulations and many conduct rules contained in various EU Directives. 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, the Central Bank has a strong track record of taking enforcement action, with a significant focus on consumer protection in this regard.
The Central Bank has concluded 142 cases under the ASP framework with fines imposed of over €165.9m. Of the 142 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 the Central Bank’s 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 three largest monetary sanctions imposed to date by the Central Bank – Permanent TSB plc sanctioned €21million in 2019, KBC Bank Ireland plc sanctioned €18.3million in 2020 and in March 2021 Ulster Bank sanctioned €37.7million - 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.
In addition, in the first quarter of 2021 the Central Bank delivered the following significant enforcement outcomes:
- reprimanded and fined Keystone Insurance Limited for Code breaches relating to overcharging and a failure to communicate fees clearly to customers;
- reprimanded and fined J&E Davy for regulatory breaches arising from conflict of interest and identification management and compliance with staff dealing rules under MiFID.
The Fitness and Probity regime was introduced in 2011. In the Central Bank’s role as gatekeeper, 107 applications for pre-approval to the Central Bank were withdrawn following involvement of the Central Bank’s Enforcement Division. A further 4 individuals have been refused pre-approval due to fitness and probity concerns. Where the Central Bank identifies individuals in a controlled function who do not comply with the fitness and probity standards the Central Bank will investigate fully and if the evidence supports it, prohibit the individual either indefinitely or for a period of time.
The Central Bank has issued 9 prohibition notices since 2011. The protection of consumers is one of the key considerations when deciding to prohibit an individual.
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.
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 to ensure that the provisions of the Bill are constitutionally sound, and that the correct balance between additional powers for the Central Bank and the protection of individuals' constitutional rights is struck. This engagement is an iterative and ongoing process, substantial progress has been made on clarifying the legal and constitutional issues to be considered.
It is my intention that draft heads of Bill will be presented to Government for approval in the near future.
