Are the risks emerging from digitalisation adequately addressed in the Consumer Protection Code? This is the core question raised by the Central Bank of Ireland in its recently published discussion paper, Consumer Protection Code and the Digitalisation of Financial Services.

The financial services industry is undergoing a digital transformation. Financial service providers ("firms") are increasingly embracing new digital models of distributing financial products, driven by consumers’ increasing demand for on-line services.

The Consumer Protection Code ("CPC") places obligations on a regulated firm across all areas of a consumer’s interaction with the firm. According to the Central Bank, these obligations are technologically neutral, meaning that the same principles of regulation apply equally to digital and other traditional delivery methods. Nevertheless, they were developed with more traditional retail financial services markets and distribution/engagement models in mind.

In its Discussion Paper, the Central Bank is seeking to generate discussion and simulate debate on:

  • the types of innovation emerging in retail financial services in Ireland;
  • how the CPC addresses emerging risks from digitalisation; and
  • whether the existing protections need to be enhanced or adapted in specific areas, including whether the CPC impedes firms from adopting technologies that may be beneficial to consumers.

In doing so, the Central Bank focuses on those areas of the CPC that follow the consumer journey with a regulated firm, namely:

  • requirements regarding access;
  • provision of information requirements;
  • suitability requirements;
  • complaints handling requirements;
  • claims handling requirements; and
  • retention of consumer records/record-keeping requirements.

Among other things, the Discussion Paper looks at Regulatory Technology ("RegTech") and the types of technology-enabled solutions being developed in Ireland to assist regulated firms to comply with their regulatory obligations and manage risks.

Next Steps

The Central Bank is interested in the views of consumers, financial entities, financial advisors, innovators, academics, researchers and any other interested parties. The Discussion Paper is open for comment until 27 October 2017. The Central Bank will use the feedback received to inform its consideration on whether the CPC protections for consumers should be enhanced or amended in the face of innovative trends and products. Any specific policy proposals advanced on foot of that feedback will be the subject of a further consultation paper in 2018.