Elderfield pledges to ‘get tough’

A GET tough approach, making examples of financial companies engaged in over-charging and slack practices, is to be a key tool employed by the Financial Regulator in his battle to protect consumers.

The head of financial regulation at the Central Bank of Ireland Matthew Elderfield said that part of its overall strategy is to place greater emphasis on the use of enforcement as a strong deterrent.

“Taking tough enforcement action when we see slack practices is a more effective way of providing a deterrent across a wide population of firms, to encourage better practice in the future,” he told the Association of Compliance Officers in Ireland in UCC.

Mr Elderfield said his intention is to ensure that there is a continuing focus on consumer protection and he has set this as one of his top three priorities, along with strengthening the banking system and adopting a more assertive risk-based supervisory approach.

“The Central Bank is determined to keep consumer protection a top priority and to reinforce the framework governing the various ways financial firms interact with consumers by strengthening our Consumer Protection Code. The proposed revisions to the code herald an important strengthening of consumer protection standards in Ireland.

“While prudential problems are indeed pressing, it is equally clear that consumers continue to struggle in getting treated fairly, as evidenced by the issues we continue to see and the complaints received by the Financial Services Ombudsman,” he said.

Mr Elderfield said the centrepiece of our consumer protection framework is the Consumer Protection Code.

“By the end of the month we will publish our proposals for revisions to this code which will herald an important strengthening of consumer protection standards in Ireland. We plan to finalise the code by mid-2011. Our review of the code, which was originally published in 2007, is overdue and it is time to take account of recent experiences in consumer protection,” he said.

Mr Elderfield said he believes the creators of financial products should have a responsibility to consider the types of customers their product would – and would not – be suitable for.

Mr Elderfield said they are also proposing a category of “vulnerable consumer” to whom financial services companies owe a different standard of treatment, and will be consulting around how broadly to draw that definition.

He is also working with the Financial Services Ombudsman to get key information about how firms are dealing with complaints. “If a firm’s judgment about a complaint is being regularly overturned by the Ombudsman, then that says something about the effectiveness of the complaint handling process.”