Protecting the Consumer: Consumer Protection Code 2012 Enterprise Risk Services 17 November 2011

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1 Protecting the Consumer: Consumer Protection Code 2012 Enterprise Risk Services 17 November 2011

2 Overview BACKGROUND TO REVISED CONSUMER PROTECTION CODE ( CPC ). CONSULTATION PROCESS. SCOPE. CHANGES: 10 key changes and how to comply - CONCLUSION. 2 Consumer Protection Code 2012

3 Consumer Protection Code: Timeline July 2006 Consumer Protection Cod e May 2008 Addendum to CPC Themed Inspections January 2012 Consumer Protection Code 2012 June 2011 CP 54 October 2010 CP Deloitte Touche Tohmatsu

4 BACKGROUND TO CONSUMER PROTECTION Aim: ensure best interests of consumers are protected. CPC cuts across existing areas of law and codes of conduct: Data Protection; Consumer Credit Directive; Distance Selling Regulations; Payment Services Directive; Investment Intermediaries Act; Pensions Act; Code of Conduct for Mortgage Arrears. Revised CPC effective from January Some leeway: 6 months to allow for full implementation. 4 Consumer Protection Code 2012

5 SCOPE OF CONSUMER PROTECTION CODE 2012 In Scope Credit Institutions Insurance Undertakings Investment Business Firms Investment Intermediaries Mortgage Intermediaries Payment Institutions Electronic Money Institutions Credit Unions when acting as Insurance intermediaries Home Reversion Firms Out of Scope Services provided by regulated entities to persons outside the State; MiFID services Moneylending under Consumer Credit Act 1995 Reinsurance business Bureau de change business Credit Union activities, other than when acting as insurance intermediaries The provision of credit involving a total amount of credit of less than 200 Hire Purchase and consumer hire agreements 5 Consumer Protection Code 2012

6 10 changes made by CPC Deloitte & Touche

1. ADVERTISING WHAT S NEW? Provision of key information which is likely to influence consumers pre-sale. Prominent information on charges/fees/remuneration agreements.

7 1. ADVERTISING WHAT S NEW? Provision of key information which is likely to influence consumers pre-sale. Prominent information on charges/fees/remuneration agreements. Warnings on benefits/risks and characteristics of product. HOW TO COMPLY? Glossy brochures replaced by warning notices. Compliance in marketing. 7 Consumer Protection Code 2012

8 2. ASSESS SUITABILITY WHAT S NEW? Information-gathering: Investment objectives; Knowledge and experience; Attitude to risk; Financial circumstances. Consequences of failing to gather information. HOW TO COMPLY? New fact find or know your customer ( KYC ) documentation. Re-papering of existing clients for purchase of products after 1 January. 8 Consumer Protection Code 2012

3. VULNERABLE CUSTOMERS WHAT S NEW? Requirement to identify consumers as vulnerable if required. Central Bank guidance: require assistance in making decisions.

9 3. VULNERABLE CUSTOMERS WHAT S NEW? Requirement to identify consumers as vulnerable if required. Central Bank guidance: require assistance in making decisions. Inherent part of the KYC process. HOW TO COMPLY? Process/procedure to assess vulnerability. Training for client-facing staff. Changes to KYC/fact find documentation. 9 Consumer Protection Code 2012

10 4. AFFORDABILITY ASSESSMENT WHAT S NEW? Assessment of affordability must be completed. Is consumer in a position to repay credit on terms advanced? Stricter stress testing in relation to mortgage applications. HOW TO COMPLY? Extra layer to loan application process. Provide evidence of assessment to consumer. Top-up loans subject to new provisions. 10 Consumer Protection Code 2012

11 5. REFUSAL OF CREDIT APPLICATION WHAT S NEW? Unsuccessful applicants may require explanation for refusal. Regulated entities required to write to consumers. Possible further appeal to Credit Review Office (if NAMA-bank). HOW TO COMPLY? Processes to assess applications for credit to be transparent. Data access requests. Record keeping. 11 Consumer Protection Code 2012

12 6. CONFLICTS OF INTEREST WHAT S NEW? Policy appropriate to the nature, scale and extent of activities. Overtones of MiFID requirements. Identify conflicts and manage appropriately to ensure no damage caused. HOW TO COMPLY? New written procedures required. Review of business activities. If conflict exists, disclosure required. 12 Consumer Protection Code 2012

13 7. ROLE OF INTERMEDIARIES WHAT S NEW? Clarification of independence of brokers. Must offer fair analysis of market: Sufficiently large number of products assessed; and Recommendation in accordance with professional criteria. 75% threshold of total turnover. HOW TO COMPLY? Appears that 75% threshold must be assessed on annual basis. Brokers to consider how independent they really are. 13 Consumer Protection Code 2012

14 CONFLICTS OF INTEREST and INTERMEDIARIES WHAT S NEW? Break direct connection between intermediary s remuneration and sales volume Sales targets prohibited in order to retain appointment. Onus on regulated entity to ensure no detriment to consumer. HOW TO COMPLY? Review intermediary network and re-negotiate arrangements in place. Central Bank expects all product producers to review policy in this area. 14 Consumer Protection Code 2012

15 8. ARREARS HANDLING WHAT S NEW? Written procedure required. Similar to Code of Conduct for Mortgage Arrears ( CCMA ) timelines: 10 days; 31 days; 3 months in arrears. No more than three unsolicited communications in any month. HOW TO COMPLY? Systems to record all communications including attempted communications. Training for field officers and customer collections. Ensure third parties engaged are aware of provision. 15 Consumer Protection Code 2012

16 9. COMPLAINTS RESOLUTION WHAT S NEW? Onus on regulated entities to resolve complaints. Maintain log of complaints with detailed information and timelines. Trend analysis on a regular basis : systemic or isolated incidents. HOW TO COMPLY? Ensure comprehensive records maintained and kept up to date. Record timelines (as 5/20/40 day timelines unchanged). Consideration as to who will analyse complaints and presenting findings. 16 Consumer Protection Code 2012

17 10. ERRORS HANDLING WHAT S NEW? Requirement to have written procedures in place and maintain log. 6 months to remedy systemic errors and effect refunds. Report error to Central Bank within 45 days if not resolved. HOW TO COMPLY? Procedures to identify and remedy errors and ensure no repeat. Procedure to notify affected customers in timely manner. 17 Consumer Protection Code 2012

TO CONCLUDE. Considerable development of consumer protection since 2006. Evident extra protections for consumers means work for regulated entities.

18 TO CONCLUDE. Considerable development of consumer protection since Evident extra protections for consumers means work for regulated entities. Documentation is key: record keeping, written policies and procedures etc. Cannot be viewed in isolation. 44 DAYS BEFORE CPC GOES LIVE. 18 Consumer Protection Code 2012

19 Questions 2008 Deloitte Touche Tohmatsu

20 Contact Contact Deloitte should your organisation require assistance: Colm McDonnell Partner, Enterprise Risk Services Sinead Ovenden Director, Regulatory Compliance Services John Higgins Manager, Regulatory Compliance Services Consumer Protection Code 2012

21 21

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.

These materials and the information contained herein are provided by Deloitte & Touche and are intended to provide general information on a particular subject or subjects and are not an exhaustive

The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business.

22 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. These materials and the information contained herein are provided by Deloitte & Touche and are intended to provide general information on a particular subject or subjects and are not an exhaustive treatment of such subject(s). Accordingly, the information in these materials is not intended to constitute accounting, tax, legal, investment, consulting or other professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. These materials and the information contained therein are provided as is, and Deloitte & Touche makes no express or implied representations or warranties regarding these materials or the information contained therein. Without limiting the foregoing, Deloitte & Touche does not warrant that the materials or information contained therein will be error-free or will meet any particular criteria of performance or quality. Deloitte & Touche expressly disclaims all implied warranties, including, without limitation, warranties of merchantability, title, fitness for a particular purpose, non-infringement, compatibility, security and accuracy. Your use of these materials and information contained therein is at your own risk, and you assume full responsibility and risk of loss resulting from the use thereof. Deloitte & Touche will not be liable for any special, indirect, incidental, consequential or punitive damages or any other damages whatsoever, whether in an action of contract, statute, tort (including, without limitation, negligence) or otherwise, relating to the use of these materials or the information contained therein. If any of the foregoing is not fully enforceable for any reason, the remainder shall nonetheless continue to apply Deloitte & Touche. All rights reserved 2008 Deloitte Touche Tohmatsu

Presentation to the Royal Institute of Chartered Surveyors. The Emerging Face of NAMA. Presented by Denis Murphy Director, Deloitte Debt Advisory

Presentation to the Royal Institute of Chartered Surveyors The Emerging Face of NAMA Presented by Denis Murphy Director, Deloitte Debt Advisory Background to NAMA Massive growth in property related lending