On 29 June 2017, the Central Bank of Ireland (the “Central Bank”) published a discussion paper seeking views on whether the current rules contained in the Consumer Protection Code 2012 (the “CPC”) remain appropriate and effective in protecting consumers in relation to the digital provision of regulated financial services, including insurance products (the “Discussion Paper”). In light of the rapidly evolving fintech environment, the Central Bank aims to generate discussion on how consumers may be better protected by the CPC or indeed, if the CPC needs amendment to facilitate innovative technologies that may benefit consumers. 

The responses to the Discussion Paper will be considered by the Central Bank for any potential future policy outputs in the area of consumer protection. The Central Bank also indicated that it may publish a consultation paper relating to the digitalisation of financial services in 2018.

The Discussion Paper focuses on the 6 key areas of the CPC where the risks and benefits of digitalisation affect consumers most, as follows:

1. Access

   Technology enables consumers access to a broader spectrum of financial services but it can restrict access for consumers where a product was traditionally available offline and it is now only available digitally.

2. Information

   While increased digitalisation and access allows for a greater product range, it can lead consumers to making quick, uninformed decisions.

3. Suitability

   Technology can facilitate the provision of financial products and services tailored to a customer’s needs and circumstances but the determination of suitability is dependent on all necessary information supplied by consumers being accurate and being used correctly and without bias.

4. Complaints

   While advancements in technology may make it easier for consumers to complain, it may lead to increased fragmentation in the advice and distribution process making it harder to track the end-to-end consumer journey and allocate responsibility accordingly.

5. Claims handling

   Although technology may allow consumers to invoke and engage more easily with the claims process, the complexity of the relevant new technologies may present difficulties for consumers to understand and challenge in seeking redress.

6. Record-keeping

   Notwithstanding the benefits of technology in storing vast amounts of consumer data, there are significant challenges in ensuring such data is securely maintained.

In the Discussion Paper, the Central Bank observes that the rules in the CPC are “technology-neutral”, meaning that the same standards of regulation apply to both digital marketplaces and traditional marketplaces. However, the Central Bank acknowledges that previous iterations of the CPC were developed in line with the traditional retail financial services markets and given the progression in digitalisation and the accompanying risks and benefits, the Central Bank wants to ensure that consumers’ best interests continue to be protected. In particular, the Central Bank is seeking feedback on the following areas: 

• the main risks arising from the increased digitalisation of financial services (including whether other “new” related risks should be addressed by the CPC e.g. cybersecurity);
• the innovations that are likely to develop in the Irish market and which innovations are most likely to impact consumers;
• whether consumers are adequately protected under existing consumer protection rules contained in the CPC;
• if the CPC needs to be enhanced in specific areas;
• whether there are impediments in the CPC to firms adopting technologies that may be beneficial to consumers; and
• if the Central Bank should be more innovative in how it engages with stakeholders. 

The Central Bank is seeking feedback from interested parties by 27 October 2017. To view the Discussion Paper, please click here. 

Contributed by Catherine Carrigy 

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