A First Look - Changes And Clarifications To The Proposals In CP 158 On The CPC

1. Changes and Clarifications to Securing Customers Interests

• Acting on behalf of a customer
  Clarified that 'acting in the best interests' and 'securing customers' interests' in the context of the CPC does not mean that a financial services firm is 'acting on behalf of' a customer, or in any way taking responsibility for making decisions that could and should be made by the customer themselves. In placing obligations on firms, the securing customers' interests obligations do not remove responsibility from their customers.
• Assisted Decision Making Act
  Clarified that the proposals do not conflict with the Assisted Decision Making Act ("ADMA"). The guidance outlines for firms how the requirements apply in order to support firms in understanding their obligations under the CPC and the ADMA.
• Proportionality
  Clarified that while all consumers should be afforded the same level of protection and all firms have the same responsibility to secure customers' interests, not all firms are expected to meet their obligations in the same way.
  1. Firms should focus on the customer outcomes that may result from their actions, considering what a firm can know, or can reasonably be expected to know, at a relevant time.
  2. Securing customers' interests does not mean that individual customers will always be protected from poor outcomes. It does not impose an open-ended duty that goes beyond the scope of the firm's role and its ability to determine or influence customer outcomes, or protect customers from all potential harms.
• Individual Accountability Framework
  Clarified that the concept of reasonable steps reflected in the Individual Accountability Framework ("IAF") is intentionally not replicated in the Securing Customers' Interests Standards for Business. The IAF provides for the concept of reasonable steps in respect of the conduct standards set out in primary legislation in the Central Bank Reform Act 2010 because those standards apply to individuals performing functions. This, the Central Bank explains, can be distinguished from obligations imposed on firms. This reflects the range of resources available to firms and the Central Bank's expectations on how these should be effectively deployed in a way that secures customers' interests.
  Clarified that complying with the obligation to secure customers' interests requires firms to take ownership of how they meet this obligation – "Crucially, this is not a compliance obligation owned by risk or compliance staff, but one owned by the whole organisation."
  The CPC does not prescribe what can or should be done by firms in every particular scenario or set of individual circumstances. It articulates what is required of firms generally so that firms can determine for themselves what actions they should be taking to secure their customers' interests.
  The way in which a business measures its success should include consideration of outcomes for its customers.
• Application to MiFID firms
  Clarified that by applying the Guidance on Securing Customers' Interests to MiFID firms, the Central Bank is seeking to ensure a consistent level of protection for all consumers in Ireland when they are engaging with financial services providers
  Confirmed that the guidance does not conflict or overlap with the MiFID Regulations, with which all EU firms must comply when providing MiFID services, but rather provides guidance on how the Central Bank expects firms to meet their obligations under the MiFID Regulations.
  The CPC applies for the benefit of Irish consumers. The Central Bank explains that it expects MiFID firms and crowdfunding service providers based in other EU countries to consider this guidance when they provide services to consumers in Ireland. When Irish firms are providing MiFID services to consumers in other EU Member States, the expectation is that firms adopt a consistent approach in relation to securing all their customers' interests, whether those customers are in Ireland or abroad.
• Specific changes to Guidance on Securing Customers' Interests
  Changed the Guidance on Securing Customers' Interests to:
  1. include the addition of an example of securing customers' interests during digital delivery;
  2. articulate the Central Bank's expectation of firms where customers make poor or unwise decisions;
  3. clarify expectations of firms when dealing with customers on an execution only basis; and
  4. clarify how proportionality will operate and the types of steps that firms are expected to take to secure their customers' interests. The CPC will continue to apply in a way that is appropriate for firms of all sizes, business models and levels of complexity

2. Changes and Clarifications to Digitalisation

The Central Bank explained that to enhance supports for consumers when using digital platforms, and to support firms in implementing the requirements, it has developed guidance to support implementation of the digitalisation requirements in the CPC. This guidance covers areas including filtering of information, scrolling and use of hyperlinks and can be found in the overarching General Guidance on the Consumer Protection Code ("General Guidance").

In the Feedback Statement, the Central Bank highlights the following elements of the original proposal which have either changed or are clarified:

• Pauses
  Changed the proposed requirement on pause statements to focus on the need for firms to consider the impact that the dynamic of online transactions can have on consumer decision-making. In addition, to apply pause statements where the risk is high of consumers entering into transactions that may be unsuitable due to the speed and ease of the online process. This requirement is supported by the General Guidance which provides examples of online transactions where this risk arises (see Box 3 of the General Guidance).
• Filtering
  Removed the proposed filtering requirement and instead have provided guidance in the General Guidance on how filtering can be used to support consumer decision–making online (see Box 1 of the General Guidance).
• Durable Medium
  Developed guidance to clarify that a 'durable medium' can include digital formats (see Box 2 of the General Guidance).
  Reviewed the use of 'written consent' requirements in the CPC. Where appropriate, the Central Bank has updated these requirements to include oral consent. However, there are some circumstances where the Central Bank maintains that consumers are best protected if written consent is required. Where the CPC only requires consent, this can be given verbally or in writing. Where the CPC requires written consent it must be in writing only (which includes via email).
• Digital Platform and interaction with AI
  Clarified that the term "digital platform" in the CPC describes a channel where the consumer engages with the financial services provider using technology. The Central Bank acknowledged that there may be elements of artificial intelligence (AI) in a digital platform deployed to carry out or augment certain business processes. This could include the use of GenAI. The CPC does not seek to replicate the requirements of the AI Act, which reflects specific requirements in relation to the use of AI for certain financial services products and use cases.

3. Changes and Clarifications to Informing Effectively

Developed guidance for firms to support their implementation of the requirements regarding informing effectively. This guidance includes examples, which illustrate the actions and steps that firms can take to ensure that they are informing effectively, including where the content of disclosures is mandated by regulatory requirements (see section 2.2 of the General Guidance).

The General Guidance also provides an overview of important considerations for firms when they are developing and designing communications for customers. This includes consideration of customer profile, content, language, display, delivery channel, timing and the use of review, all of which are explored in the guidance.

4. Changes and Clarifications to Mortgage Credit and Switching

• Mortgage Incentives
  Made adjustments to the requirements, which are set out in the Table of Changes Post-Consultation in Annex 1. These include a requirement for firms to include additional signposting to mortgage calculators available on the website of the Competition and Consumer Protection Commission.
  Central Bank explains that research and analysis on the impact of mortgage incentives is now underway. However, at an overall level the research indicates that cashback incentives are not of primary importance when it comes to decisions about which type of mortgage to choose with factors such as interest rate, monthly repayments and the principal borrowed significantly more important. As a result, further consideration is required to determine if any additional policy response is warranted in this area. The Central Bank plans to publish its research and full policy consideration in due course
• Mortgage Switching - provision of information to enhance internal switching
  Added a legal requirement for mortgage lenders to provide title deeds to a borrower or their legal representative within a specified timeframe.
• Lifetime Mortgages and Home Reversion Agreements
  Small number of changes to the requirements. For example, there is no longer a need to warn a lifetime mortgage holder that their home might be at risk if they do not keep up repayments on their loan where repayments are not required under their contract.
  Made a specific change to the definition of lifetime mortgage to extend it to second properties. Further details of these updates are outlined in the Table of Changes Post-Consultation in Annex 1.
• Code of Conduct on Mortgage Arrears Developed criteria and expectations on Appropriate and Sustainable Alternative Repayment Arrangements ("ARAs") to support firms in implementing the existing requirements for ARAs in the CPC. Also made some specific drafting amendments to the regulations.

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