Mortgage lenders to tell switching customers about savings estimates under new Central Bank rules
The Governor of the Central Bank of Ireland, Gabriel Makhlouf, said the revised Consumer Protection Code is about 'modernising' the code for the digital era. File picture
Mortgage providers will have to provide switching customers with a personalised savings estimate alongside each refinancing option in order to ensure they understand if they are getting a good deal under new rules to be implemented by the Central Bank of Ireland.
On Monday, the Central Bank published its revised Consumer Protection Code which outlines a set of rules and business standards that regulated financial firms must follow when dealing with consumers. Gabriel Makhlouf, Governor of the Central Bank, said this revision is about “modernising” the code for the digital era.
Under the revised code, mortgage providers have to provide customers with a personalised saving estimate, in euros, alongside each alternative mortgage refinancing option.
The Central Bank said that firms must meet new disclosure requirements on switching options and the cost of incentives on the overall cost of credit of a mortgage. Under the current code, lenders have to inform customers about cheaper mortgage options 60 days before customers come out of a fixed rate mortgage.
In the area of insurance, the new code introduces “opt-in” renewal for dental, pet, gadget and travel insurance. This means that consumers will have to “opt-in” to auto-renew these insurance products which means customers are less likely to pay for products that they no longer need or that aren’t suitable for them.
“This requirement will reduce the risk of consumers missing out on opportunities to engage with their insurance provider or to shop around to find the most suitable or cost-effective product,” the Central Bank said.
Under the revised code, firms will have to ensure that the digital technology they use and implement is customer friendly and that their products and services are not designed in a way that seeks to unfairly exploit or take advantage of behaviours, habits, preferences or biases of customers.
Firms must also ensure that platforms are designed to be easy for customers to use and navigate and that associated technology is tested, and that it produces consistent and objective outcomes for users.
The revised code expands on the general duty on firms to ensure that all information that they provide to customers is clear, accurate, up to date, and written in plain and accessible language, avoiding the unnecessary use of technical terms.
The scope of application of the Consumer Protection Code has also been expanded to provide protection to small and medium-sized businesses with an annual turnover of less than €5m - the limit was previously €3m.
“This recognises the important role small businesses play in the economy, keeps pace with inflationary changes and brings important protections to small firms,” the Central Bank said.
Mr Makhlouf said changes to the code reflect the significant changes in how consumers buy, use and engage with financial services.
“In reviewing the code we have focused on modernising the regulatory framework to reflect the provision of financial services in a digital world. Consumers will benefit from a package of protections that better reflect how they are accessing financial services in the modern world.
“Regulated firms will benefit from an integrated regulatory format, and a clearer articulation of their code obligations, complementing the work they are already doing."
Firms subject to the code will have to have all these changes implemented by March 24, 2026.
