Central Bank rules will make cost of mortgage incentives clear to consumers – The Irish Times
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New rules to better protect consumers from financial abuse, fraud and unregulated activities are “much needed and long overdue”, the Compliance Institute says. But it could be another two years before they come into force, it warns.
The Central Bank is reviewing a consumer protection code it set up 12 years ago. Among the areas covered are mortgage cashback offers and automatic renewals in areas like insurance.
In its submission to the public consultation process around the rules, Compliance Institute chief executive Michael Kavanagh said the review of the code was timely. “A lot has changed in the world since the last consumer protection code was introduced in 2012 … and the code needs to reflect this,” he said.
Among the Central Bank proposals are new rules to help consumers better understand the impact of mortgage incentives, such as cashbacks and switching bonuses, on the overall cost of their mortgage.
“We would support any measures which will make it easier for consumers to select the best mortgage deals as ultimately, for most people, a mortgage is one of the biggest financial commitments they will ever have,” Mr Kavanagh said.
The regulator also says consumers should need to proactively opt-in to automatic renewals for certain types of insurance, such as gadget and travel insurance rather than the current regime where they need to actively opt out of such a process if they do not want premiums to roll over – something many consumers do not understand,
The Central Bank also wants to force financial institutions to make it absolutely clear to customers when they are purchasing products or dealing with firms it regulates, and when they are not.
“It can be very difficult for some consumers to tell the difference between an unregulated firm or product and a regulated one and the repercussions of dealing with an unregulated firm or product can be very serious for a consumer and indeed, could be to their financial detriment,” Mr Kavanagh said.
He said other proposed new rules around financial abuse were “commendable” and a recognition of the huge toll this practice can have on people. He said recent figures show that fraud has become much more of an issue since the consumer protection code was first introduced.
“Financial abuse could see some elderly and vulnerable people lose their life savings – or even change their will against their wishes,” he said.
Consultation on the new plans ends on Friday but it will be early next year before the final regulations are likely to be in place. There will then be a 12-month window before they apply in full.
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