The Central Bank published its Discussion Paper: Consumer Protection Code Review yesterday, kicking-off a three-stage process which will culminate in a new retail conduct framework by the end of 2024 - the new framework will take the form of Regulations, rather than a Code. 

Securing consumers' best interests: Against the backdrop of technological innovation, changing consumer preferences and the important role that the financial system will play in the transition to carbon neutral, the Central Bank is looking for public feedback on a number of issues.  The overarching theme of the Discussion Paper is 'securing consumers' best interests', both in terms of the availability and choice of financial products and services, and firms acting in the best interests of consumers.

8 additional themes: In addition to that overarching theme, the Discussion Paper sets out eight additional themes for discussion, which take account of the ongoing work by the OECD to update the High Level Principles on Financial Consumer Protection - among the key themes being addressed by the OECD as part of that exercise are digitalisation, sustainable finance and financial wellbeing.  The eight additional themes covered by yesterday's Discussion Paper are (1) innovation and disruption, (2) digitalisation, (3) unregulated activities, (4) pricing, (5) informing effectively, (6) vulnerability, (7) financial literacy, and (8) climate matters.

Timing: 

  • The Discussion Paper is open for feedback until 31 March 2023, and the Central Bank plans to publish a feedback statement by the end of Q2 2023.  
  • The second stage of the process will see the publication of a formal Consultation Paper in Q4 2023, with the Central Bank's proposals for reform. 
  • The third and final stage will see the publication of a feedback statement on the Consultation Paper in 2024, with new regulations to replace the Code coming into effect later in 2024.

Other notable points from the Discussion Paper: 

  • The Central Bank notes, at various stages throughout the Discussion Paper, the Government's ongoing work on the Retail Banking Review, the results of which are due to be presented in a report to the Minister for Finance in November 2022.  The output from that review is also expected to inform the approach taken to consumer protection over the coming years.  
  • Once the current migration of bank accounts is complete, the Central Bank has signalled that it may also look at whether its Switching Code needs to be updated to address any gaps arising from that process.  
  • A particularly interesting section of yesterday's Discussion Paper sets out the Central Bank's thoughts on whether it would be useful to develop guidance on what it means for a firm to act in the best interests of its customers and potential customers.  
  • In the context of innovation and disruption, it is considering enhancing its pre-application engagement process with those that are new to the authorisation application process.  It also plans to consult, in 2023, on enhancements to its Innovation Hub.  
  • As mentioned in its recent response to the Department of Finance's consultation on its Retail Banking Review, the Central Bank also plans to publish findings from a recent mortgage refinancing field trial shortly which focused on specific behavioural obstacles encountered by holders of variable rate mortgages who want to refinance.  The Central Bank is expected to propose changes on how mortgage lenders present information to consumers on potential savings from mortgage switching following publication of its findings.

For more information, or to discuss any of the above matters in more detail, please get in touch with the authors or any other members of our market-leading Financial Regulation Group