Consumer Protection and Financial Literacy Conference Bulgaria, June - PowerPoint PPT Presentation

Consumer Protection and Financial Literacy Conference Bulgaria, June 2014 (Session 2: Responsible lending and debt counselling – a European perspective) Bernard Sheridan, Director of Consumer Protection, Central Bank of Ireland Chair of The International Financial Consumer Protection Organisation (FinCoNet) 1 FinCoNet - The International Financial Consumer Protection Organisation

Introduction  Ireland and the Central Bank of Ireland  FinCoNet  FinCoNet Report on Responsible Lending  A Review of Supervisory T ools for Suitable Consumer Lending Practices 2 FinCoNet - The International Financial Consumer Protection Organisation

Ireland – An economic snapshot Labour Market Developments Index, 2002 Q1 = 100 3 FinCoNet - The International Financial Consumer Protection Organisation

Ireland – An economic snapshot House Price Growth: National, Dublin and Non-Dublin 4 FinCoNet - The International Financial Consumer Protection Organisation

Ireland – An Economic Snapshot Residential mortgage arrears 5 FinCoNet - The International Financial Consumer Protection Organisation

Role of the Central Bank of Ireland Prudential Consumer Regulation Protection Financial Stability 6 FinCoNet - The International Financial Consumer Protection Organisation

Firms in Ireland (subject to Conduct Risk supervision) Medium Medium Branches & High Low T otal High Low Passporting Banks 6 2 4 - 17 29 Insurance 10 4 6 1 22 43 Consumer Protection - 20 251 119 - 390 Credit Unions Investment & - 12 33 70 29 144 Stockbroking Intermediaries - - - 2964 55 3019 Payment Prudential & - 1 - 10 15 26 Consumer Institutions Protection Bureau De - - - 14 - 14 Change Debt - - - 24 - 24 Management Moneylenders - - - 41 - 41 Retail Credit & Home - - - 20 - 20 Reversion T otal 16 39 294 3263 138 3750 7 FinCoNet – The International Financial Consumer Protection Organisation

Consumer Protection – Strategic Priorities The 5 ‘C’s Consumer …. Playing our part in Confidence… In financial services, products and regulation putting Consumer Protection on everyone’s agenda Confidence Culture…. Promoting a consumer-focused ethos CONSUMER Culture Challenge among ourselves, those we regulate and others Challenge… T o ourselves, those we regulate and others Compliance Compliance…. Through effective supervision and credible deterrence and enforcement 8 FinCoNet - The International Financial Consumer Protection Organisation

Consumer Protection Code – Key Provisions  Knowing the Consumer and Suitability  Affordability Assessment  Arrears Handling Obligations  Contacts Rules  Provision of Information to assist Borrowers  Obligations on lenders to seek solutions for Borrowers 9 FinCoNet - The International Financial Consumer Protection Organisation

Code of Conduct on Mortgage Arrears – Key Provisions  Mortgage Arrears Resolution Process (MARP)  Communications policy required to be approved by board of directors  Level of communications must be proportionate and not excessive  Unsolicited personal visit permitted  Day 31 letter required (and updated version every three months thereafter)  Not co-operating borrowers  Warning letter (at least 20 business days before classification as not co-operating)  Final notification letter notifying borrower of being classified as not co-operating 10 FinCoNet - The International Financial Consumer Protection Organisation

Debt Management Code – Key Provisions  New Debt Management Code being prepared  Authorisation Framework including Fitness & Probity  2012 Code applies to Debt Management firms  Minimum Competency Standards  Key elements of the DM Code:  Transparency in relation to fees and services  Financial Assessment – Quality of Advice  Use of the Standard Financial Statement  Statement of Advice  Paying by Credit for Debt Management Services  Cooling Off Period  Referrals from Other Firms – Client Leads 11 FinCoNet - The International Financial Consumer Protection Organisation

Current Issues Resolving Mortgage Arrears Sales of Loan Books Sales Incentives Crowdfunding / Peer-to-Peer Lending Moneylenders Cost of Loans Impact of Mortgage Credit Directive 12 FinCoNet - The International Financial Consumer Protection Organisation

About FinCoNet FinCoNet was first founded in 2003 as an informal organisation Formerly established in October 2013, under French Law as a non-profit organisation, entered into an official partnership agreement with the OECD in May 2014. Overall aim is to promote sound market conduct and strong consumer protection through efficient and effective financial market conduct supervision Forum for National Supervisory Authorities Emphasis on Banking and Credit consumer protection issues Collaboration with other international bodies, contributes to advancing the G20’s financial consumer protection agenda 13 FinCoNet - The International Financial Consumer Protection Organisation

FinCoNet Membership as at May 2014 Governing Council Regular Members Observers Members FinCoNet Member Consumers Australia Indonesia International Countries Canada Korea EU Commission China Norway IAIS France Saudi Arabia Ireland United Kingdom Japan Portugal Spain South Africa Netherlands 14 FinCoNet - The International Financial Consumer Protection Organisation

FinCoNet Priorities • Identify effective approaches to assist supervisory authorities in carrying out their roles in financial consumer protection in banking 1 and credit • Examine how supervisory authorities can work to ensure responsible lending takes place 2 • Identify new areas of work and encourage new members to join 3 • Dynamic and Interactive knowledge and intelligence sharing 4 15 FinCoNet - The International Financial Consumer Protection Organisation

FinCoNet Report on Responsible Lending Survey  Based on research from 20 different countries  Working Group currently finalising report (lead by ASIC)  To strengthen supervisory tools aimed at determining unsuitable or irresponsible lending  Help countries identify gaps and weaknesses in frameworks  Report covers both secured and unsecured lending 16 FinCoNet - The International Financial Consumer Protection Organisation

Responsible Lending Survey Overall Findings • Responsible lending obligations and approaches developed significantly over the last ten years • Transition Phase – more robust and consumer- focused regulatory environment • Greater focus on affordability in decision making process • Scope of supervision and regulatory oversight is not consistent • Growing emphasis on effective supervision and enforcement. 17 FinCoNet - The International Financial Consumer Protection Organisation

Report Structure Regulatory Framework Consumer Engagement Industry Obligations Regulatory Controls Supervisory and Enforcement T ools 18 FinCoNet - The International Financial Consumer Protection Organisation

Call for New Members FinCoNet – Advancing the Financial Consumer Protection Agenda For more information please contact us at finconet@centralbank.ie 19 FinCoNet - The International Financial Consumer Protection Organisation