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THE CONSUMER PROTECTION CODE 2012

THE CONSUMER PROTECTION CODE 2012. Chief Operations Officer Gerry Quinn. Governor Patrick Honohan. Deputy Governor Central Banking Stefan Gerlach. Deputy Governor Financial Regulation Matthew Elderfield. Organisation chart – Financial Regulation. Enforcement Peter Oakes.

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THE CONSUMER PROTECTION CODE 2012

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  1. THE CONSUMER PROTECTION CODE 2012

  2. Chief Operations OfficerGerry Quinn GovernorPatrick Honohan Deputy GovernorCentral BankingStefan Gerlach Deputy GovernorFinancial RegulationMatthew Elderfield Organisation chart – Financial Regulation EnforcementPeterOakes Credit Institutions SupervisionJonathanMcMahon Insurance SupervisionFionaMuldoon MarketsGarethMurphy Consumer ProtectionBernard Sheridan Policy & RiskPatrickBrady

  3. Supervisory Approach: A new way forward Assertive Risk-Based Supervision Underpinned by Credible Enforcement Deterrent Assertive • More challenging of firms – on business models as well as controls • Opportunity for (time limited) dialogue – Central Bank needs to be satisfied concerns are taken seriously Risk-Based Supervision • Emphasis on conclusive mitigation of identified risks • PRISM (Probability Risk and Impact SysteM) Framework Credible Enforcement Deterrent • Enhanced enforcement capability • Identified enforcement priorities (e.g., systems and controls, overcharging, low impact firms) SafeguardingStability, Protecting Consumers

  4. Consumer Protection Directorate’s Mission “Getting It Right for Consumers” “We work together and with others to strengthen and maintain protection for all consumers so that the financial sector works better for them, now and in the future”.

  5. CURRENT REGULATORY FRAMEWORK • Code of Conduct on Mortgage Arrears • Code of Conduct for licensed Moneylenders • Code of Conduct for business lending to SMEs • Code of Conduct on the switching of current accounts with lending institutions • Minimum Competency Requirements • Consumer Protection Code • EU Directives • Markets in Financial Instruments Directive (MiFID) • Payment Services Directive • Consumer Credit Directive • Insurance Mediation Directive

  6. Minimum Competency Code 2011

  7. Background • Minimum Competency Requirements introduced 1 January 2007 • Consultation Paper issued June 2010 • Fitness and Probity Regime • Central Bank Reform Act 2010 • Central Bank Reform Act 2010 (Sections 20 and 22) Regulations 2011 • Fitness and Probity Standards • Minimum Competency Code 2011 published 1 September 2011, effective 1 December 2011

  8. What has changed?

  9. Legislative basis • Part 1 imposed under Central Bank Reform Act 2010 • Applies to persons exercising certain controlled functions • Part 2 imposed under various sectoral legislation • Applies to regulated firms • Responsibility now on persons carrying out controlled functions as well as on regulated firms • Regulated firms must not permit a person to perform a controlled function unless satisfied that the person complies with the standards set out in the Code and the person has agreed to abide by those standards.

  10. Clarification on scope • The Code applies to persons • providing advice to consumers on retail financial products • arranging or offering to arrange retail financial products for consumers • the exercise of a specified function • Clarification that the Code applies to: • Restructuring and rescheduling of loans • Amendments to insurance policies • Services provided over the internet

  11. Retail Financial Products • Retail financial products restructured: • Life assurance • Pensions • Savings and investments • Personal general insurance • Commercial general insurance • Private medical insurance and associated insurances • Housing loans, home reversion agreements and associated insurances • Consumer credit agreements and associated insurances.

  12. Specified Functions • Specified functions amended • assisting consumers in making a claim • determining the outcome of claims by consumers • reinsurance mediation • direct management or supervision of accredited persons • adjudicating on complaints

  13. The Minimum Competency Standards • A person subject to the Code must either: • a) have completed a recognised qualification, or • b) be a grandfathered person, or • c) be a new entrant participating in a training process under supervision of a qualified or grandfathered person, or • d) be performing a prescribed script function, and • in the case of a) and b) above, be compliant with the CPD requirements.

  14. Prescribed Script Function • Where a person operates within a narrow and rigid set of criteria and according to a prescribed script and routine, the following requirements apply: • Script devised by qualified or grandfathered person • Training by firm or part of recognised qualification • Training kept up to date • Refer requests for information or advice outside the script to qualified or grandfathered person • Supervised by qualified or grandfathered person • Firms must monitor and maintain records

  15. Recognised Qualifications • Restructure of CIP and QFA • Accredited Product Adviser for each category of retail financial product

  16. Grandfathering • Grandfathering arrangements retained • Assessments may still be carried out up to 31 December 2012 subject to: • Carrying out activity on 1 January 2007 • Four years’ experience in eight-year period prior to 1 January 2007 • Assessment and certification by regulated firm • Completion of all CPD from 1 January 2008 to date of assessment • Statement of Grandfathered Status to be completed by all firms by 1 January 2013

  17. New Entrants • New entrants must participate in training programme that includes: • Initial training – organised by firm or part of recognised qualification • Supervision by qualified or grandfathered person • Working towards a recognised qualification: • Register for first available sitting • Work on consistent and timely basis • Maintain records • Timeframe – maximum four years

  18. New Entrants • A regulated firm must: • inform the new entrant, before commencing the activity, of the requirement to obtain a qualification within four years; • agree a plan for obtaining a recognised qualification and monitor the new entrant’s progress; and • where an opportunity to sit an examination is not availed of by a new entrant, the regulated firm must document the reasons why.

  19. New Entrants • Detailed supervision requirements, including: • All documentation to be checked and signed off • New entrant to be accompanied by qualified or grandfathered person for an initial period • Regular meetings and contact between supervisor and new entrant • Each supervisor must supervise no more than seven new entrants • Reduction in level of supervision based on assessment • Supervision of tied agents by product producer provided the tied agent is tied only to that product producer

  20. Continuing Professional Development (CPD) • Change from three-year cycle to annual requirement • 15 formal hours per year • At least one hour for each function undertaken • At least one hour relating to ethics • Person who is qualified and grandfathered – 15 formal hours

  21. Continuing Professional Development (CPD) • Surplus hours may not be carried forward • Shortfall may be made up by end of following year provided no other shortfall within previous five years • Firm must have procedures to ensure compliance with CPD requirements

  22. Register and Certificate of Competency • Firms must maintain a Register of Accredited Persons • Persons failing to complete required CPD more than once in any five-year period must be removed from Register • Certificate of Competency to be provided to consumers seeking confirmation that person is appropriately qualified or grandfathered

  23. Finally… • Minimum competency standards are a key component of our consumer protection measures • The new Code builds on the framework introduced in 2007 and provides more clarity in a number of areas • The restructuring of the main recognised qualifications provide a wider range of professional development opportunities for those who provide financial advice and services in specific areas

  24. What is the Code?

  25. PURPOSE OF THE CODE: To Strengthen Protection for Consumers By:

  26. SOME OF THE ISSUES RAISED:

  27. Consumer Protection Code & Feedback to CP54

  28. STRUCTURE OF THE 2012 CODE - CHAPTERS • Scope of the Code • General principles • General Requirements • Provision of information • KTC & Suitability • Post-sale information requirements • Rebates and claims processing • Arrears handling • Advertising • Errors and complaints resolution • Records and compliance

  29. CHAPTER 2: GENERAL PRINCIPLES (12)

  30. CHAPTER 2: GENERAL PRINCIPLES

  31. Chapter 3: 57 general requirements

  32. Chapter 4: 61 PROVISION OF INFORMATION REQUIREMENTS

  33. Chapter 4: PROVISION OF INFORMATION (2)

  34. Chapter 4: PROVISION OF INFORMATION (4)

  35. Chapter 5: KTC & SUITABILITY 24 requirements:

  36. Chapter 5: KNOW THE CUSTOMER & SUITABILITY (2)

  37. Chapter 6: Post-sale information 19 requirements

  38. Chapter 7: rebates and claims processing 21 requirements

  39. Chapter 8: 14 Arrears handling provisions

  40. Chapter 9: 52 advertising requirements

  41. Chapter 10: 6 Errors resolution requirements

  42. Chapter 10: 6 Complaints resolution requirements

  43. NEXT STEPS

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