The Financial Regulator today presented the final version of its new Consumer Protection Code and the new competency standards for those who provide advice on or sell retail financial products.
Both were developed after extensive consultation with the financial industry and will be implemented over the coming months.
The new code sets out to financial firms how the Regulator expects them to conduct their business dealings with consumers. Over the next few months, as the code is put in place, firms will have to make significant and necessary changes to systems, procedures and documents and conduct staff training in line with provisions of the new code, the Regulator's office said.
Among the many rules in the new code, the Regulator says that a financial institution must not offer unsolicited pre-approved credit facilities, and it may increase a consumer's credit card limit only after a request from the consumer.
Launching its annual report for 2005 today, the Financial Regulator said that by the end of 2005 it was responsible for the supervision of 9,638 firms and funds. It also identified a total of €118m which is being refunded to thousands of customers for charging errors across 36 firms since 2004.
The biggest offenders are scandals involving National Irish Bank, AIB and Bank of Ireland which have been highlighted in the past. Bank of Ireland overcharged for payment protection insurance and is repaying €18m - €3m more than earlier thought. National Irish is paying back €11m for improper charges, while AIB is repaying €34m for foreign exchange overcharging.
The regulator also sounded a note of caution about the level of loans which consumers are not paying back at credit unions.
The report says that during last year, a total of 584 prudential, consumer focused and credit union inspections and reviews were carried out. As part of its role to monitor the safety and soundness of financial services firms, the Regulator analysed over 57,000 returns and authorised 2,178 financial services providers and 582 funds.
A total of 33 reports of suspected criminal offences or breaches of company or competition legislation were made to the relevant agencies and the Financial Regulator also acted on 115 advertising issues.
Today's report says that almost a million copies of the Financial Regulator's publications were distributed during 2005. Its costs surveys also highlighted potential annual savings of up to €2,000 on motor insurance, €1,200 on fixed rate personal loans and €5,000 over the term of a life insurance policy.
The Regulator's website registered a total of 191,844 visits last year, while its consumer help-line had 16,637 calls. Nearly 5,000 people called into its Information Centre in Dublin during the year.
'Building consumer confidence is an ongoing task, while much of the groundwork has taken place in 2005 and into this year, we have now set out our expectations and standards to the financial services industry,' commented Patrick Neary, the Financial Regulator CEO.
'In 2007, we will begin a campaign for consumers to educate them about their rights. We hope that this, combined with our supervisory efforts, will further strengthen the consumer's hand when dealing with regulated firms,' he added.
* The Irish Brokers Association says it is disappointed at 'the opportunity missed by the Financial Regulator to ensure maximum protection under the new Consumer Protection Code'.
The IBA says the Regulator has not gone far enough to ensure that the consumer gets maximum protection. It says it is very disappointed that the Regulator has included wide ranging exemptions for retail banks in relation to 'basic' banking products.
'It was IBA's belief that the new code would bring about a levelling of the playing field from a regulatory/compliance perspective,' commented Pat O'Sullivan, Financial Services Director at the IBA.
'Up to now this has been weighted very much in favour of the retail banks,' he added.
