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

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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

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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 T

ols for Suitable Consumer Lending

Practices

2

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Ireland – An economic snapshot Labour Market Developments

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Index, 2002 Q1 = 100

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Ireland – An economic snapshot House Price Growth: National, Dublin and Non-Dublin

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Ireland – An Economic Snapshot Residential mortgage arrears

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Role of the Central Bank of Ireland

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Prudential Regulation Consumer Protection

Financial Stability

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Firms in Ireland (subject to Conduct Risk supervision)

7 High Medium High Medium Low Low Branches & Passporting T

tal

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

T

tal

16 39 294 3263 138 3750

Consumer Protection Prudential & Consumer Protection

FinCoNet – The International Financial Consumer Protection Organisation

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Consumer Protection – Strategic Priorities The 5 ‘C’s

CONSUMER

Confidence Challenge Compliance Culture

Confidence…In financial services, products and regulation Challenge…T

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

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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

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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

f 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

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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

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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

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About FinCoNet

FinCoNet was first founded in 2003 as an informal organisation Formerly established in October 2013, under French Law as a non-profit

rganisation, 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

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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.

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Report Structure

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Regulatory Framework Consumer Engagement Industry Obligations Regulatory Controls Supervisory and Enforcement T

ols

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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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