Department of Finance’s Financial Consumer Protection Roadmap

On 13 September 2023, Ireland’s Department of Finance published the Financial Consumer Protection Roadmap, outlining consumer protection legal and policy initiatives that are being developed to address and respond to the changing landscape of the financial services industry, including certain initiatives that were recommended in the Department of Finance’s Retail Banking Review 2022. In particular, the Roadmap discusses developments in the areas of credit, consumer protection, digitalisation and security and individual accountability, which are to be delivered over the next two years.

Credit

  • The Central Bank of Ireland (Central Bank) will continue to effectively engage with regulated entities to ensure they meet the expectations set out in the Department of Finance’s Retail Banking Review 2022 regarding the protection of mortgage consumers. In particular, the Central Bank will seek to ensure that borrowers are supported as rate increases begin to have an effect, eligible borrowers who are looking to switch mortgage product are facilitated and borrowers facing financial difficulties are offered alternative repayment arrangements, where appropriate.
  • The Government will set up an inter-Departmental group to propose new or enhanced policy or operational measures and initiatives to address long term mortgage arrears in the market. The group will be chaired by the Department of Finance and comprise the Departments of Justice, Housing, Local Government and Heritage and Social Protection, together with the relevant agencies under the remit of those Departments.
  • The European Council has approved​ the proposed Consumer Credit Directive​, which aims to enhance the protection for consumers applying for credit and will repeal and replace the current Consumer Credit Directive (Directive 2008/48/EC). Ireland will be required to publish its transposition measures within 2 years of the new Directive being published in the EU Official Journal.
  • The Credit Servicing Directive (Directive (EU) 2021/2167), which provides for a harmonized EU wide framework for the servicing of non-performing mortgages and other credit agreements and the safeguarding of borrowers subject to those contracts, is due to be transposed by 29 December 2023.

Consumer Protection

  • The Central Bank is due to publish a consultation paper on the reform of the Consumer Protection Code 2012 (CPC) in December 2023. The requirements in the CPC will be enhanced and incorporated into Regulations issued by the Central Bank and will comprise of general business standards, cross sectoral requirements and sector specific requirements. The new Regulations are expected to come into effect in late 2024 and be further revised in 2025.
  • In April 2023, the Government approved a General Scheme of the Financial Services and Pensions Ombudsman (Amendment) Bill. The new legislation will ensure that the Financial Services and Pensions Ombudsman (FSPO) continues to discharge its statutory functions in line with the Constitution following the Supreme Court ruling in the ‘Zalewski Case’. The amendments will improve legal clarity to reinforce the statutory basis of the FSPO, which is a key element of the consumer protection framework in Ireland.
  • Following recommendations in the Retail Banking Review, the Department of Finance is focused on developing legislation to address ‘access to cash’ and access to bank branches:
    • The Retail Banking Review recommended that the Department prepare a heads of Bill for ‘access to cash’ legislation in 2023 to require ATM operators to be authorised and supervised by the Central Bank, and to provide the Central Bank with responsibility and powers to protect the resilience of the cash system, including the authorisation and supervision of cash-in-transit firms in respect of their cash handling activities.
    • The Retail Banking Review also recommended legislation to require banks to submit robust, board approved assessments to the Central Bank when they are planning to significantly alter the services provided through branches or when planning to close a branch. These assessments should examine the impact on customers, the suitability of alternative service provision arrangements, and the plans for migrating customers to them, especially at-risk customers.

Digitalisation and Security

  • The Markets in Crypto-Assets Regulation (Regulation (EU) 2023/1114) will protect customers using crypto-assets (including asset-reference tokens and e-money tokens) that are not currently regulated. It will come into effect on a phased basis from June 2024 and cover areas such as transparency, disclosure, authorisation and supervision of transactions.   
  • The current legal framework for financial services contracts concluded at a distance is due to be revised by a new Directive that will repeal the existing Distance Marketing Directive (Directive 2002/65/EC), while including rules regarding financial services contracts concluded at a distance within the scope of the Consumer Rights Directive (Directive 2011/83/EU). Once the European Council formally adopts the proposed text, the Directive will be published in the EU Official Journal and enter into force 20 days later. Member States will then have 24 months to transpose the rules into national law and another six months to apply them.
  • The Department highlighted the planned changes to the legislative framework for the provision of payment services in the EU via a new Payment Services Directive (PSD 3) and Payment Services Regulation. The draft proposal for the new payment services package was announced by the European Commission in June 2023.
  • The European Commission published a proposal in October 2022 for a Regulation on instant credit transfers in euro to make it mandatory for payment service providers that currently offer standard SEPA credit transfers (which are next-day) to offer instant SEPA credit transfers to their customers and to offer an IBAN checking mechanism to payers. The proposal is currently under interinstitutional negotiation.
  • The Department of Finance will prepare a National Payments Strategy, for publication in 2024, which will set out a roadmap for the future evolution of the payments system, taking account of developments in digital payments, cash usage and future changes for the purposes of the planned ‘access to cash’ legislation.

Individual Accountability Framework

  • Part of the Central Bank (Individual Accountability Framework) Act 2023 came into force in April 2023. The remaining provisions of the act will come into force in December 2023 and July 2024:
    • The conduct standards, the new certification requirement under the fitness and probity regime and the provisions that bring holding companies within the application of the fitness and probity regime will apply from 29 December 2023.
    • The Senior Executive Accountability Regime will apply from 1 July 2024.
  • For further information regarding the Individual Accountability Framework please visit our IAF hub.

For further information on any of the developments outlined in the Financial Consumer Protection Roadmap, please contact Patrick Brandt (Partner), Kevin Allen (Partner), Christopher Martin (Of Counsel), Louise Hogan (Associate), Sarah Lee (Senior Knowledge Lawyer) or any member of ALG's Financial Regulation Advisory team.

Date published: 09 November 2023