Remarks by Deputy Governor Colm Kincaid to Central Bank of Ireland’s Consumer Protection Code Workshop - Modernising how we protect consumers in vulnerable circumstances

I am delighted to welcome you to the Central Bank of Ireland today.¹  It is great to have such a broad range of stakeholders here from public service, civil society, charitable organisations and the financial services sector to discuss protecting consumers in vulnerable circumstances. 

It is right to place a special focus on consumers in vulnerable circumstances, and that we reflect vulnerability in all its forms. If we are to have trust in financial services, we need to be confident our best interests will be secured when we are at our most vulnerable, when we are most likely to suffer financial detriment or harm.

Periods of vulnerability in our lives (from bereavement to illness to financial and other shocks) often carry with them a requirement to make financial decisions we don’t regularly make, such as claiming on an insurance policy, encashing a financial product or deciding what to do with an inheritance. Major life events that make us vulnerable are also often accompanied by challenges to meet new expenses or other financial difficulties. We may also have to face the challenges presented by an ongoing vulnerability that affects how we need to receive services or advice if we are to be financial included like everyone else. We are all prone to vulnerability through gaps in our financial or digital literacy or lack of confidence in managing our money (or asserting our rights).

The geopolitical context is also relevant. In his recent remarks following the Annual Meeting of the International Monetary Fund, Governor Makhlouf spoke to the vulnerabilities in the global financial system itself on which we will need to keep a very close eye and which, on the face of it, look uncomfortably familiar.² Those of us here today know how rapidly and profoundly shocks to the global financial system can be felt in household finances, augmenting the impact of any vulnerability that household may already face. Or to frame this more constructively, we know how concrete steps to build the resilience of household finances can help our society as a whole to withstand such shocks and rebound from them.

In all these circumstances, financial services needs to play its role to support consumers’ financial well-being, that is to say “a state in which individuals are able to smoothly manage their financial needs and obligations, can cope with negative shocks, can pursue aspirations, goals and capture opportunities, and feel satisfied and confident about their financial lives, keeping in mind country specific circumstances”.³

That is a challenging task, and a complex one, but not one any of us here today faces alone, since we all have a role to play.

Recognising the complexity of these issues, we have organised today’s workshop in order that we may learn from one another. We want to hear about different approaches and best practices, practical steps and measures you have put in place to ensure that culture, policies and processes take account of the needs of consumers in vulnerable circumstances.

I also encourage the financial services sector to learn from other industries and public services who may have better approaches to consumers facing particular vulnerabilities. I would like it to be said in future that the financial services sector is amongst the best at supporting consumers in vulnerable circumstances. Would that be said today I wonder? In some respects it might, but in others I expect it would not.

Our New Consumer Protection Code

The backdrop to today’s event is the Central Bank of Ireland’s new Consumer Protection Code.⁴ It will come into force in March next year and contains modernised provisions on consumer vulnerability. The new Code builds on work done this past decade to strengthen the consumer protection framework in Ireland, both to align with global standards and in reaction to specific challenges and cases of misconduct we had to deal with.⁵

The Consumer Protection Code is the cornerstone of our consumer protection framework for financial services, sitting within a wider framework of laws to protect consumers and investors. The recent review of the Code was a key strategic initiative of the Central Bank to ensure the Code remains fit for purpose and future-ready. We carried out the review in an open and engaged manner and I want to thank the more than 1,320 organisations and individuals who engaged with us through the process. In particular I thank those who responded to our public consultation. Our new Consumer Protection Code would not be what it is without your insights.

As we move to implement the new Code, we want to continue to get the benefit of your insights, just as we did in the Code Review itself. Today’s event is an example of this approach, to take a modernised component of the new Code (vulnerability) and workshop with you what it should mean in practical terms. We will continue to arrange engagements such as this as we head towards the go-live date on 24 March 2026 and beyond. In doing so, we recognise the Code contains new provisions on which we need a shared understanding if we are to continue to improve financial services over time.

At the Central Bank of Ireland, we are committed to continuing to engage with you on these topics. We are also committed to sharing and disseminating information as our understanding of the Code and its impact evolves.

New protections for consumers facing vulnerable circumstances

One of the new Code’s key enhancements is to broaden the concept of "vulnerability" to which specific protections apply. In doing so, we are aligning ourselves with the more sophisticated articulation of vulnerability in the revised G20/OECD High Level Principles on Financial Consumer Protection. The OECD’s recent review of our supervisory approach included specific recommendations to enhance our supervisory approach with respect to vulnerable consumers.⁶ We will factor what we hear today into our development of that approach under our new supervisory framework.

Our implementation of the new Consumer Protection Code

I know you will also be keen to understand how the Central Bank is approaching implementation of the new Code in general.

There are four points I want to make:

1. We expect regulated firms to now be well advanced in their implementation of the new Code underpinned by clear plans, resources and senior level accountability. Your care and attention to implementing the Code is something we will take into account in future supervisory actions. Here, I want to commend those industry bodies who have been so proactive in playing their role to support member firms through dedicated workstreams and groups.
2. We recognise the Code introduces new requirements. We will work with firms and stakeholders across the system to build understanding of those requirements. We will be open and engaged on this, recognising the Central Bank does not always have the answer to what represents best practice in terms of operationalising a given provision of the Code. Today’s workshop is an example of this – you will understand better than us what a good approach to supporting a consumer facing a given vulnerability will be.
3. We will weave the requirements of the Code throughout our supervisory work, consistent with our new integrated supervisory approach. As I outlined in recent remarks⁷, in the immediate period ahead this will involve a particular focus on: 
   

• How firms operate and the consumer/investor experience: We expect firms to be well run, secure their customers’ interests and effectively manage any conflicts of interest by placing consumers and investors at the heart of decision making.
• Digitalisation: Digital innovation can support consumers and investors. However, it also comes with potential risks in terms of ensuring consumers are enabled to make the digital transition and given appropriate information and support when making transactions digitally.  There is also a need to ensure operational resilience, recognising the significant impact service disruption has on consumers.   
• Financial crime: This should be a priority for all firms and agencies involved with financial services. We all need to actively safeguard the integrity of the financial system and consumer interests by combatting financial crime.

How firms have enhanced their supports for consumers facing vulnerable circumstances can be expected to feature in our supervisory engagements across each of these three themes.

4.  We will assess the effectiveness of the Code through the substantive outcomes firms achieve. This will include enhancing how we gather and consider insights from consumers through our research, new capabilities we are equipping our supervisors with to monitor online activity and how we use conduct of business returns.⁸ Here I have a particular ask of regulated firms when it comes to implementing the Code: build a better understanding of your customers’ financial well-being, their needs and the challenges they face (including listening more closely to what their complaints are telling you about their experience of your firm).  I have seen good examples of this being done already and I believe, if done well, it can support good outcomes for both consumers and the businesses involved.

Keeping track of progress

When I say we need to assess the effectiveness of our regulatory frameworks through the substantive outcomes achieved for consumers, I generally see people nod in agreement. But I wonder do we know or agree what those outcomes should be?

Perhaps today’s workshop will be an interesting insight into that.

In recent remarks I spoke about the need to support a better social conversation on financial well-being. I am committed to this conversation because I want us to be able to keep track of how we are delivering better outcomes for consumers in real terms. How are we to assess these outcomes if we don’t have a shared concept of what ‘financial well-being’ means to begin with?

The Central Bank supports Ireland’s Well-being Framework and we are working at OECD level to develop the conceptual framework for financial well-being specifically.  To support this work and our social conversation here in Ireland, I am keen that we build more structured data on this topic, hence my encouragement to regulated firms to place a focus on this. For its part, the Central Bank will continue to put information into the public domain to inform this conversation. In addition to our ongoing research and statistical publications, we are putting in place a new Consumer Insights Model, to understand the position of Irish consumers via a nationally representative survey of 4,000 consumers of financial services across a range of topics relevant to financial well-being. We will collect, measure and analyse data on these consumers’ behaviours and experience of different financial services. We will also measure their attitudes and sentiment across a range of consumer finance topics.  We will publish the outputs to inform policy as well as our own supervisory strategies.

The Consumer Insights Model will enhance our understanding of the financial products consumers and investors buy, their experiences of financial service providers, their financial situation and their attitudes towards current issues affecting financial services.  It will also inform our risk analysis of sectors and markets and how we prioritise our work. 

Events like today and our forthcoming Consumer Insights Model reflect the Central Bank’s demeanour towards how we will implement the Code. We realise the reforms of the Code will take work to implement and that we must support that work going in the right direction.

We will also be monitoring closely the extent to which firms’ implementation of the Code is leading to demonstrably better outcomes for consumers. I suggest regulated firms put increasing focus on doing so too, so that together we keep track of how regulation is contributing to creating the right conditions for financial services to support financial well-being.

Let me pause there and thank you for your attention and your participation in our workshop today.