Central Bank of Ireland

The Central Bank of Ireland recently published an update on its investigation into the selling of payment-protection insurance (PPI) policies. PPI products provide coverage to customers in respect of financial obligations, such as loans and mortgages. Approximately 340,000 PPI policies were sold in Ireland in 2007-2012 and the current review relates to PPI sales by 10 financial institutions since July 2007.

The Central Bank has previously conducted 3 reviews on various aspects of PPI. Affected customers have previously been informed of this review and are receiving updates as it progresses. In the last few weeks, some 13,000 customers received letters from the financial institutions, and the remaining affected customers will be contacted with the outcome of the review by the end of 2013. The total amount to be refunded, and the number of consumers who will receive such refunds, will be announced following completion of the review process.

EIOPA

Also on the topic of PPI, the European Insurance and Occupational Pensions Authority (EIOPA) has issued an opinion on PPI consumer-protection issues.  The opinion recommends that supervisors, including the Central Bank, analyse their national PPI markets. Findings by EIOPA note, for example, that mis-selling often occurred on the basis of eligibility/suitability issues or the provision of misleading information. The background note to the opinion includes an interesting case study on Ireland, which highlights recent market problems that include:

  • Focusing on eligibility instead of suitability
  • Timing of information provision and
  • The scope of ‘key information’

EIOPA’s case study outlines pre-Consumer Protection Code (CPC) issues such as sales practices, inadequate staff training and ambiguity regarding refunds on cancellation.

The case study also outlines protections in place under the CPC, general provisions relevant to PPI (such as rules on information provision, ‘know your customer’ and record-keeping) and PPI-specific obligations (such as premium disclosure and separate application forms for the PPI and the relevant loan).