Revised code to govern way lenders interact with customers

UNSOLICITED DOOR-TO-DOOR sales calls from financial institutions are to be banned under a revised Consumer Protection Code which comes into effect from the beginning of next year.

The code, drawn up by the Central Bank and published this morning, will also impose restrictions on how frequently lenders can contact borrowers in arrears, and compel lenders to come up with workable solutions for people in difficulties. It also puts in place restrictions on how financial institutions can advertise.

The code covers all regulated entities including banks and insurance and investment companies. It is “the most significant strengthening of protections for consumers of financial institutions” since the first code was published in 2006, the Central Bank said.

“Consumer protection is a key priority for the Central Bank and the publication of the revised code is the culmination of a significant review and consultation process to strengthen the existing consumer protection framework,” director of consumer protection Bernard Sheridan said.

Lenders will be forbidden from making unsolicited contacts with consumers in arrears on a range of loans including credit cards, personal loans and buy-to-let mortgages on more than three occasions in any one month and a “priority has to be to come up with a solution” to the arrears, Mr Sheridan said.

They will also have to rewrite the terms and conditions on financial products in “plain English” and if they highlight a product’s benefits they will be compelled to highlight restrictions as well.

Mr Sheridan told The Irish Times some financial institutions had resisted the changes being made on advertising rules and how often they can contact customers in arrears but he said the bank’s main concern was the protection of consumers.

More prescriptive requirements are to be introduced in terms of information regulated entities must gather under the “Knowing the Consumer” process, to assess whether a product or service is suitable for a particular consumer.

The concept of a “vulnerable consumer” is to be introduced and all regulated entities will have to consider whether there is any evidence of vulnerability – for example a vision or hearing impairment or a lack of knowledge, experience or financial capability. They must provide vulnerable consumers with assistance.

There are now limited timeframes for regulated entities to resolve errors affecting consumers, and detailed records of complaints and errors must be maintained. Regular analysis is required to identify potential patterns of consumer detriment.

To promote more responsible mortgage lending, the acceptance of self-certified declarations of income has been banned and there are stricter requirements for affordability testing.