consumer protection and financial literacy conference...
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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)
FinCoNet - The International Financial Consumer Protection Organisation 1
Introduction
FinCoNet - The International Financial Consumer Protection Organisation
Ireland and the Central Bank of Ireland
FinCoNet
FinCoNet Report on Responsible Lending A Review of Supervisory Tools for Suitable Consumer Lending
Practices
2
Ireland – An economic snapshot Labour Market Developments
FinCoNet - The International Financial Consumer Protection Organisation 3
Index, 2002 Q1 = 100
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Ireland – An economic snapshot House Price Growth: National, Dublin and Non-Dublin
FinCoNet - The International Financial Consumer Protection Organisation 5
Ireland – An Economic Snapshot Residential mortgage arrears
Role of the Central Bank of Ireland
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Prudential Regulation
Consumer Protection
Financial Stability
Firms in Ireland (subject to Conduct Risk supervision)
7
High Medium High
Medium Low Low Branches &
Passporting Total
Banks 6 2 4 - 17 29
Insurance 10 4 6 1 22 43
Credit Unions - 20 251 119 - 390
Investment & Stockbroking - 12 33 70 29 144
Intermediaries - - - 2964 55 3019
Payment Institutions - 1 - 10 15 26
Bureau De Change - - - 14 - 14
Debt Management - - - 24 - 24
Moneylenders - - - 41 - 41
Retail Credit & Home Reversion
- - - 20 - 20
Total 16 39 294 3263 138 3750
Consumer Protection
Prudential & Consumer Protection
FinCoNet – The International Financial Consumer Protection Organisation
Consumer Protection – Strategic Priorities The 5 ‘C’s
CONSUMER
Confidence
Challenge
Compliance
Culture
Confidence…In financial services, products and regulation
Challenge…To ourselves, those we regulate and others
Consumer….Playing our part in putting Consumer Protection on everyone’s agenda
Culture….Promoting a consumer-focused ethos among ourselves, those we regulate and others
Compliance….Through effective supervision and credible deterrence and enforcement
FinCoNet - The International Financial Consumer Protection Organisation 8
Consumer Protection Code – Key Provisions
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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
Code of Conduct on Mortgage Arrears – Key Provisions
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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
Debt Management Code – Key Provisions
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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
Current Issues
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Resolving Mortgage Arrears
Sales of Loan Books
Sales Incentives
Crowdfunding / Peer-to-Peer Lending
Moneylenders Cost of Loans
Impact of Mortgage Credit Directive
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
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FinCoNet Membership as at May 2014 Governing Council
Members
Australia
Canada
China
France
Ireland
Japan
Portugal
Spain
South Africa
Netherlands
Regular Members
Indonesia
Korea
Norway
Saudi Arabia
United Kingdom
Observers
Consumers International
EU Commission
IAIS
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FinCoNet Member Countries
FinCoNet Priorities
1
• Identify effective approaches to assist supervisory authorities in carrying out their roles in financial consumer protection in banking and credit
2 • Examine how supervisory authorities can work to ensure responsible
lending takes place
3 • Identify new areas of work and encourage new members to join
4 • Dynamic and Interactive knowledge and intelligence sharing
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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
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Responsible Lending Survey
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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.
Report Structure
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Regulatory Framework
Consumer Engagement
Industry Obligations
Regulatory Controls
Supervisory and Enforcement Tools
Call for New Members
FinCoNet – Advancing the Financial Consumer Protection Agenda
For more information please contact us at
finconet@centralbank.ie
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